2024 Annual Report To Congress

2024
REPORT TO CONGRESS
of the
U.S.-CHINA ECONOMIC AND

SECURITY REVIEW COMMISSION
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
NOVEMBER 2024
Printed for the use of the

U.S.-China Economic and Security Review Commission
Available online at: www.USCC.gov
2024
REPORT TO CONGRESS
of the
U.S.-CHINA ECONOMIC AND

SECURITY REVIEW COMMISSION
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
NOVEMBER 2024
Printed for the use of the

Available online at: www.USCC.gov
u.s. government publishing office

washington : 2024
For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800
Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001
U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION
ROBIN CLEVELAND, Chairman

REVA PRICE, Vice Chair
COMMISSIONERS
AARON FRIEDBERG LELAND R. MILLER
KIMBERLY T. GLAS Hon. RANDALL SCHRIVER
Hon. CARTE P. GOODWIN CLIFF SIMS
JACOB HELBERG Hon. JONATHAN N. STIVERS
MICHAEL KUIKEN MICHAEL R. WESSEL
Michael Castellano, Executive Director

Christopher P. Fioravante, Deputy Executive Director
The Commission was created on October 30, 2000 by the Floyd D. Spence Na-
tional Defense Authorization Act for Fiscal Year 2001, Pub. L. No. 106–398
(codified at 22 U.S.C. § 7002), as amended by: The Treasury and General
Government Appropriations Act, 2002, Pub. L. No. 107–67 (Nov. 12, 2001)
(regarding employment status of staff and changing annual report due date
from March to June); The Consolidated Appropriations Resolution, 2003,
Pub. L. No. 108–7 (Feb. 20, 2003) (regarding Commission name change,
terms of Commissioners, and responsibilities of the Commission); The Sci-
ence, State, Justice, Commerce, and Related Agencies Appropriations Act,
2006, Pub. L. No. 109–108 (Nov. 22, 2005) (regarding responsibilities of the
Commission and applicability of FACA); The Consolidated Appropriations
Act, 2008, Pub. L. No. 110–161 (Dec. 26, 2007) (regarding submission of
accounting reports; printing and binding; compensation for the executive
director; changing annual report due date from June to December; and
travel by members of the Commission and its staff); The Carl Levin and
Howard P. ‘‘Buck’’ McKeon National Defense Authorization Act for Fiscal
Year 2015, Pub. L. No. 113–291 (Dec. 19, 2014) (regarding responsibilities of
the Commission); Pub. L. No. 117-286 (Dec. 27, 2022) (technical amendment).
The Commission’s full charter and statutory mandate are available online at:
www.USCC.gov/charter.
(ii)
November 19, 2024

The Honorable Patty Murray
President Pro Tempore of the U.S. Senate, Washington, DC 20510
The Honorable Mike Johnson
Speaker of the U.S. House of Representatives, Washington, DC 20510
Dear Senator Murray and Speaker Johnson:
On behalf of the U.S.-China Economic and Security Review Com-
mission, we are pleased to transmit the Commission’s 2024 Annual
Report to Congress. This Report responds to our mandate “to moni-
tor, investigate, and report to Congress on the national security im-
plications of the bilateral trade and economic relationship between
the United States and the People’s Republic of China.” The Com-
mission reached a broad and bipartisan consensus on the contents
of this Report, with all 12 members voting unanimously to approve
and submit it to Congress.
In accordance with our mandate, this Report, which is current as
of October 11, 2024, includes the results and recommendations of
our hearings, research, and review of the areas identified by Con-
gress in our mandate, as defined in Public Law No. 106–398 (Octo-
ber 30, 2000) and amended by Public Laws No. 107–67 (November
12, 2001), No. 108–7 (February 20, 2003), 109–108 (November 22,
2005), No. 110–161 (December 26, 2007), No. 113–291 (December
19, 2014), and No. 117-286 (December 27, 2022). The Commission’s
charter, which includes the 11 directed research areas of our man-
date, is included as Appendix I of the Report.
The Commission conducted six public hearings, taking testimony
from 59 expert witnesses from government, the private sector, aca-
demia, think tanks, research institutions, and other backgrounds.
For each of these hearings, the Commission produced a transcript
(posted on our website at www.USCC.gov). This year’s hearings in-
cluded:
• Current and Emerging Technologies in U.S.-China Economic
and National Security Competition;
• Consumer Products from China: Safety, Regulations, and Sup-
ply Chains;
• China’s Evolving Counter Intervention Capabilities and Impli-
cations for the United States and Indo-Pacific Allies and Part-
ners;
• China and the Middle East;
• Key Economic Strategies for Leveling the U.S.-China Playing
Field: Trade, Investment, and Technology; and
• China’s Stockpiling and Mobilization Measures for Competition
and Conflict.
The Commission received a number of briefings, both unclassified
and classified, by executive branch agencies, the intelligence com-
munity, foreign government officials, and U.S. and foreign nongov-
iii
ernmental experts on topics such as Europe’s views on China, the
impact of Article 23 on Hong Kong, Taiwan’s priorities under the
new Lai Administration, the climate for U.S. businesses in Hong
Kong, China’s overhead surveillance capabilities, and U.S.-China re-
lations. The Commission includes key insights gained through these
briefings either in its unclassified Annual Report or, as appropriate,
in a classified annex to that Report.
The Commission conducted official fact-finding travel this year to
Taiwan and Japan to hear and discuss regional perspectives on the
United States’ relations with China as well as trans-Pacific coopera-
tion. In these visits, the Commission delegation met with U.S. diplo-
mats, foreign government officials, business representatives, academ-
ics, journalists, and other experts. In Taiwan, Commissioners were
received by President Lai Ching-te and discussed the importance of
strong U.S.-Taiwan relations in the face of China’s increasing coer-
cive activities. The Commission also conducted official fact-finding
travel to U.S. Indo-Pacific Command, U.S. Central Command, and
U.S. Special Operations Command to hear their insights on the ef-
forts our military is undertaking to counter challenges presented by
China. The Commission also relied substantially on the work of our
excellent professional staff (see Appendix IV) in accordance with our
mandate (see Appendix I).
The Report includes 32 recommendations for congressional con-
sideration. The Commissioners agreed that ten of these recommen-
dations, which appear on page 27, are the most important for
congressional action. The complete list of recommendations appears
on page 733 at the conclusion of the Report.
We offer this Report to Congress in the hope that it will be useful
in helping guide policies for the U.S.-China relationship that ad-
vance American interests and values. Thank you for the opportunity
to serve. We look forward to continuing to work with Members of
Congress in the upcoming year to address issues of concern in the
U.S.-China relationship.
Sincerely,
Robin Cleveland Reva Price

Chairman Vice Chair
iv
Commissioners Approving the 2024 Report
Commissioners Approving the 2024 Report
Robin Cleveland, Chairman Reva Price, Vice Chair
Aaron Friedberg, Commissioner Kimberly T. Glas, Commissioner
Carte P. Goodwin, Commissioner Jacob Helberg, Commissioner
Michael Kuiken, Commissioner Leland R. Miller, Commissioner
Randall Schriver, Commissioner Cliff Sims, Commissioner
Jonathan N. Stivers, Commissioner Michael R. Wessel, Commission
v
CONTENTS
Page
Transmittal Letter to the Congress ................................................................... iii
Commissioners Approving the Report .................................................................. v
Introduction ............................................................................................................. 1
Executive Summary .................................................................................................. 5
Key Recommendations ...................................................................................... 27
2024 Report to Congress of the

Part I: The Year in Review ................................................................................. 31

Chapter 1: U.S.-China Economic and Trade Relations (Year in Review) ......... 31
Abstract ............................................................................................................... 31
Key Findings ....................................................................................................... 31
Introduction ......................................................................................................... 33
China’s Domestic Macroeconomic Outlook ...................................................... 33
U.S.-China Bilateral Commercial Relations .................................................... 54
China’s External Economic Relations .............................................................. 69
Chapter 2: U.S.-China Security and Foreign Affairs (Year in Review) ............ 92
Abstract ............................................................................................................... 92
Key Findings ....................................................................................................... 92
Introduction ......................................................................................................... 94
Xi Jinping Strengthens Party Control and Oversight ................................... 94
China Seeks One-Sided Adjustments in Its Relations with the
United States .................................................................................................. 102
China’s Foreign Policy Aims to Temper Risk and Expand Opportunities ... 109
Part II: Technology and Consumer Product Opportunities and Risks . 169
Chapter 3: U.S.-China Competition in Emerging Technologies ......................... 169
Abstract ............................................................................................................... 169
Key Findings ....................................................................................................... 169
Recommendations ............................................................................................... 171
Introduction ......................................................................................................... 173
Securing U.S. Advantage in Emerging Technologies ...................................... 173
China Has Long Sought Dominance in Emerging Technologies .................. 174
Case Studies in U.S.-China Technology Competition ..................................... 179
Implications for the United States .................................................................. 233
Chapter 4: Unsafe and Unregulated Chinese Consumer Goods: Challenges
in Enforcing Import Regulations and Laws .................................................... 271
Abstract ............................................................................................................... 271
Key Findings ....................................................................................................... 271
Introduction ......................................................................................................... 273
U.S. Consumer Product Sourcing from China ................................................ 275
Challenges to Tariff Enforcement at the Border ............................................ 278
Consumer Safety Enforcement inside China’s Domestic Market ................. 292
U.S. Import Regulations and Consumer Goods from China ......................... 294
Case Study: The Safety Risks and Health Hazards of Low-Quality Toys
from China ...................................................................................................... 308
(VII)
VIII
Page
Part III: Competition and Conflict ................................................................... 333
Chapter 5: China and the Middle East ............................................................... 333
Abstract ............................................................................................................... 333
Key Findings ....................................................................................................... 333
Introduction ......................................................................................................... 335
China’s Diplomatic Activities in the Middle East: Wide, Varied, and
Designed to Enhance Beijing’s Influence ..................................................... 336
China’s Economic, Trade, and Investment Interests in the Middle East ... 355
China-Middle East Technology Relations ........................................................ 364
China’s Military and Security Presence in the Middle East ........................ 370
Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing
Field ..................................................................................................................... 403
Abstract ............................................................................................................... 403
Key Findings ....................................................................................................... 403
Introduction ......................................................................................................... 407
Economic Security as a Whole-of-Government Approach .............................. 408
Deploying Tariffs and Other Trade Measures ................................................ 409
Export Controls .................................................................................................. 421
Investment Screening ........................................................................................ 431
Chapter 7: China’s New Measures for Control, Mobilization, and
Resilience ............................................................................................................. 458
Abstract ............................................................................................................... 458
Key Findings ....................................................................................................... 458
Introduction ......................................................................................................... 460
Chinese Leaders Worry about Interlocked Internal and External Risks .... 461
Assessing the Party-State’s Activity: New Measures for Control,
Mobilization, and Resilience .......................................................................... 463
Chapter 8: China’s Evolving Counter-Intervention Capabilities and the Role
of Indo-Pacific Allies ........................................................................................... 540
Abstract ............................................................................................................... 540
Key Findings ....................................................................................................... 540
Introduction ......................................................................................................... 542
China’s Approach to Countering U.S. and Allied Military Actions in the
Indo-Pacific ...................................................................................................... 543
U.S.-Allied Efforts to Address Challenges from China’s Military ................ 564
Part IV: Taiwan and Hong Kong ...................................................................... 611
Chapter 9: Taiwan ................................................................................................... 611
Abstract ............................................................................................................... 611
Key Findings ....................................................................................................... 611
Introduction ......................................................................................................... 613
Cross-Strait Political Relations Remain Dismal as Taiwan Elects New
DPP Government ............................................................................................ 613
China Continues to Apply Military Pressure on Taiwan, Adopts
Enhanced Gray Zone Tactics ......................................................................... 624
Taiwan Advances Unofficial Ties while Beijing Works to Build Support
for Its Territorial Claim ................................................................................. 642
Taiwan Seeks to Diversify Trade ..................................................................... 647
Chapter 10: Hong Kong .......................................................................................... 686
Abstract ............................................................................................................... 686
Key Findings ....................................................................................................... 686
IX
Page
Introduction ......................................................................................................... 688
Hong Kong’s Safeguarding National Security Ordinance (Article 23
Ordinance) ....................................................................................................... 689
Hong Kong’s Political and Judicial Systems Subjugated by Authoritarian
Overreach ......................................................................................................... 692
Draconian Laws Threaten Civil Liberties ....................................................... 695
Economics and Trade ......................................................................................... 701
Comprehensive List of the Commission’s Recommendations .................. 733
Additional Views of Commissioners ................................................................. 742
Appendices:
Appendix I: Charter ............................................................................................ 743
Appendix II: Background of Commissioners ..................................................... 751
Appendix III: Public Hearings of the Commission in 2024 ............................. 761
Appendix IIIA: List of Witnesses Testifying before the Commission in 2024 .. 765
Appendix IV: List of Research Material ............................................................. 769
Appendix V: Conflict of Interest and Lobbying Disclosure Reporting ........... 771
Appendix VI: Acronyms and Abbreviations ........................................................ 773
2024 Commission Staff and Acknowledgements ........................................... 781
INTRODUCTION
In 2024, under the leadership of General Secretary Xi Jinping,
the Chinese Communist Party (CCP) continued to pursue a technol-
ogy-focused strategy to drive rapid military modernization, expand
internal political surveillance and suppression of dissent, and assert
China’s political and economic agenda in the international arena.
At the same time, amid a domestic property market collapse, weak
consumer demand, and rising debt and employment challenges, the
Party leadership has aggressively continued to advance its econom-
ic, political, and security goals through non-market practices. Xi
clearly has calculated that these approaches are not only paramount
in defining his leadership and claiming China’s global role, but are
also essential to addressing its endemic economic weaknesses and
further tightening the Party’s grip on the economy and society. The
centralized top-down approach is reminiscent of Mao-era authori-
tarianism. With few remaining avenues for dissent and a political
system that demands absolute loyalty to the individual leader, it has
become unlikely that anyone could dissuade Xi should he decide to
take actions that risk igniting a catastrophic conflict.
The CCP’s efforts to consolidate economic control are evident in
numerous ways: its systematic restriction of access to national fi-
nancial and economic data as well as basic corporate data necessary
for due diligence and safety controls, security threats to foreigners
engaged in business in China, persistent pressure on foreign gov-
ernment partners to conduct trade in renminbi, and the concentra-
tion of resources and support for state-owned enterprises (SOEs).
Although Xi has consistently emphasized the importance of small
and medium-sized enterprises in providing jobs and accelerating in-
novation, the data show that the CCP’s post-COVID policies have
strengthened the position of SOEs. From June 2021 to June 2024,
of the top 100 firms listed on Chinese exchanges, SOEs’ share of
aggregate market capitalization grew to 54 percent, rising from $2.7
trillion to $3.2 trillion. Over the same period, non-public enterprises’
share of market capitalization dropped to 33 percent and aggregate
revenue stagnated. While the increased flow of resources into SOEs
may serve the Party’s short-term interests, other challenges remain.
In the past two years, Chinese universities have graduated record
levels of students who are finding the market offers jobs they do not
want or needs skills they do not have.
Ignoring the advice of many of his own economists and financial
leaders, Xi has taken limited steps to open markets and boost con-
sumer spending and confidence. Instead, China is reinforcing its
longstanding, market-distorting approach of massive subsidies to
targeted industries, this time focusing on high-tech manufacturing
in order to unleash “new quality productive forces” and generate
more earnings through its exports and traditional dumping ap-
(1)
2
proaches. Designed to strengthen self-sufficiency and achieve global

dominance in key sectors—including but not limited to advanced
and legacy semiconductor chips, aviation, advanced batteries, robot-
ics, and artificial intelligence—China’s strategy is also intended to
integrate it more deeply into global supply chains and continue to
increase every other country’s dependence on it for a wide array of
goods and materials. As the United States and its partners move to
further curb access to military and dual-use technologies and ad-
dress China’s blatant disregard for global norms and international
agreements, China is shifting production overseas to circumvent re-
strictions while expanding its own access to critical minerals, mar-
kets, key enabling technologies and tools, and labor. Because its sub-
sidized goods undercut foreign competitors, China’s approach comes
at the expense of both advanced and emerging economies.
In 2024, the United States, Canada, and the EU have increased
efforts to review both incoming and outgoing investment flows,
strengthen trade investigation and enforcement actions, and ap-
ply export controls and sanctions. The intensification of recent ef-
forts reflects rising concern with Chinese predatory and debt-trap
practices and control of resources essential to our defense capabil-
ities, along with expansion of China’s dominance in multiple mar-
ket sectors. Countries in Asia, Africa, and Latin America have also
launched trade remedy investigations and imposed new tariffs on
Chinese imports. Nevertheless, these responses have been largely
uncoordinated as individual countries and international institutions
struggle to address the scale of China’s economy, its integration into
global supply chains, and its defiance of WTO and other internation-
al agreements and norms.
China has sought to strengthen its international position through
bilateral coercion to secure economic, trade, and security agree-
ments with select countries and by manipulating international and
regional institutions to win collective support of China’s policy po-
sitions. Of importance is China’s aggressive and coercive effort to
convince other countries to adopt statements endorsing its positions
on Taiwan, Tibet, Xinjiang, and more. At the recent triennial Forum
on China-Africa Cooperation, representatives of 53 of the 55 African
members adopted a declaration pledging to support “all efforts” by
China to “reunify” with Taiwan. According to the Chinese Loans to
Africa database released by the Boston University Global Develop-
ment Policy Center, at least 49 of the 53 signatories have received
loan commitments from China or Chinese lenders.
China’s quest for “multipolarization” aims to create a world in
which the United States and its democratic allies are weakened and
constrained, while states such as China, Russia, Iran, and North Ko-
rea have free rein to threaten their neighbors and defy any notion of
universally agreed-upon norms or a rules-based international order.
In 2024, NATO issued its strongest criticism of China to date, la-
beling it a “decisive enabler” of Russia’s war in Ukraine. China con-
tinues to provide substantial support for Russia’s war of aggression
against Ukraine by exporting vital dual-use goods that power Rus-
sia’s military while shielding Russia’s economy from international
sanctions. Similarly, with respect to Iran, China’s oil purchases
3
equate to about 90 percent of that country’s government budget, en-

abling Tehran to finance terrorist groups and other regional proxies.
In the Indo-Pacific, China’s aggressive actions have expanded. In
addition to launching its first intercontinental ballistic missile test
into the South Pacific in more than 40 years, China has engaged in
large-scale military exercises around Taiwan that for the first time
involved the China Coast Guard. It has pursued violent actions in
contravention of international law against Philippine vessels in an
attempt to block the resupply to Second Thomas Shoal in the Phil-
ippines’ exclusive economic zone. It has also increased the tempo of
incursions, the weapons onboard, and the number of ships entering
waters around the Japanese-administered Senkaku Islands in the
East China Sea. These actions are part of a troubling and persistent
trend of escalation of pressure with the goal of asserting China’s
claim of authority and control across the region. China’s approach
has strengthened U.S. efforts to enhance security cooperation and
base access arrangements with allies and partners in the region.
As China continues to pursue its goal of displacing the United
States as the leading global power, Xi’s consolidation of personal
authority has increased the risk of miscalculation and conflict. Xi
has attempted to compensate for China’s poor economic performance
by further strengthening his grip over the Party and the Party’s grip
over government, the military, and society. Xi continued to purge
high-level officials from the national security establishment and im-
posed stricter disciplinary measures on rank-and-file Party mem-
bers. In Hong Kong, through the imposition of a new national se-
curity ordinance, China has further quashed the city’s once vibrant
civil society and increased the Mainland’s control.
Looking forward to 2025, even as China’s economy falters, the
CCP will continue to pursue its geopolitical ambitions, strengthen
the Party-state, attempt to “sanctions proof” its financial position,
and reduce Western leverage in the event of a conflict. A clearly co-
ordinated, U.S.-led effort to build a coalition of like-minded countries
and more closely align trade and investment policies is an essen-
tial step in responding to China’s ambitions. The United States will
need to strengthen work with allies and partners to build consensus
domestically and internationally on the full range of policies needed
to defend our shared interests and values from the threat posed by
China and its partners as they seek to increase their power, extend
their reach, and reshape global norms to reflect the interests of their
authoritarian regimes.
EXECUTIVE SUMMARY
Part I: The Year in Review
Chapter 1: U.S.-China Economic and Trade Relations (Year
in Review)
China’s economy grew in 2024, albeit at a much slower pace than
it did pre-pandemic. Chinese officials have introduced stimulus mea-
sures throughout the year, including a series of announcements in
September and October that will likely provide a short-term boost
to economic growth. While the latest stimulus round has the po-
tential to be among the largest China has passed to deal with the
current crisis, the measures are insufficient in scale compared to
the scope of China’s economic challenges, and their long-term im-
pact is questionable. The fallout from the property sector collapse
continues to be China’s largest domestic economic headwind and
a source of weakness for local government finances and consumer
spending. Officials remain focused on mitigating systemic economic
risks and achieving a controlled deflation of the property bubble
rather than reversing the sector’s decline. Although Chinese policy-
makers have repeatedly stated their intention to increase the contri-
butions of services and consumption to economic growth, in reality,
China has doubled down on a variant of its traditional manufactur-
ing and export model. China has increased government subsidies
and targeted supply-side stimulus toward favored industries, espe-
cially those involving advanced technology. The Chinese Communist
Party’s (CCP’s) prioritization of supply-side policies aims to further
strengthen China’s manufacturing base and increase its self-suffi-
ciency while simultaneously increasing Party-state control over do-
mestic capital allocation and global supply chains and increasing
dependency by other nations. While this strategy has led to China’s
emergence as a leader in the manufacture and export of goods such
as solar panels and electric vehicles (EVs), China’s export of ex-
cess capacity is leading to increasingly aggressive pushback from
China’s major trading partners and the imposition of tariffs by the
United States, the EU, and others. Meanwhile, uncertainty over Chi-
na’s economy and heightened geopolitical tensions have weighed on
investment in China. A shift in U.S. imports toward Mexico, Viet-
nam, and other economies suggests that a broader diversification
of trade away from China may be emerging. Due to the deliberate
restructuring of supply chains to avoid U.S. tariffs, many imports
from third countries still contain parts and materials that originate
in China.
China intensified its economic statecraft with the rest of the world
as it seeks to promote its alternative frameworks for economic de-
velopment and cooperation. In defiance of the U.S.-led sanctions re-
gime, China continues to offer material support to Russia, acting
(5)
6
opportunistically to win energy concessions and promote alterna-

tive payment systems. Meanwhile, China has retooled its flagship
Belt and Road Initiative to limit its exposure to default risks. It is
again increasing lending throughout the developing world, though
this time mainly in the form of emergency rescue loans to bail out
indebted countries rather than fund new infrastructure projects. As
advanced economies implement tariffs, China is shifting exports of
manufactured goods to emerging economies, enlarging its bilateral
trade surpluses across the developing world. Concerned about the
impact of rising Chinese imports on their own prospects for develop-
ment, some emerging economies have launched trade investigations
or imposed tariffs to protect domestic industries.
Key Findings
• Chinese authorities have reasserted and expanded control over
the economy centrally, regionally, and locally. General Secretary
of the CCP Xi Jinping’s vision for future economic growth in
China is politically driven and differs from Western economic
orthodoxy.
• The continuing slowdown in economic expansion has led to
greater reliance on specific growth drivers, allocating capital to
those targeted sectors and exporting excess capacity to sustain
growth.
• China continues to rely on manufacturing and exports to drive
growth while also trying to move up the value chain to pro-
duce and export high-technology goods. This growth strategy
assumes the rest of the world will continue to absorb China’s
excess capacity at the expense of their own domestic manufac-
turing and technology sectors.
• China has pivoted from an emphasis on aggregate gross domes-
tic product growth to a strategy that targets “higher quality”
production in emerging technologies. China hopes that becom-
ing a dominant producer of high-tech goods will allow it to side-
step systemic economic problems and enhance its overall global
economic position and national power.
• Substantial risks remain in the property sector, which have al-
ready had serious ramifications for the Chinese economy. The
CCP introduced new support measures for the property sector
in 2024 and helped local government financing vehicles refi-
nance maturing debt. However, the scale of unfinished housing
and the large amount of local and regional government debt
far exceeds the amount of capital allocated for financial sup-
port. These issues may weigh down economic performance in
the near future as households await delivery of apartments for
which they have made substantial down payments and develop-
er bond defaults reverberate through the financial sector.
• While Chinese data measuring youth unemployment have
shown recent improvement, China’s college-educated youth are
growing more pessimistic about their personal financial sit-
uation as they continue to enter a workforce that prioritizes
manufacturing jobs they do not want and focuses on skills they
7
do not have. A combination of slowing growth post-pandemic

and targeted policy crackdowns have weakened some consumer
technologies and other service sectors that previously employed
a large majority of youths. To the extent that the CCP’s societal
legitimacy is based on delivering economic growth and opportu-
nity, the increase in youth unemployment has called that into
question.
• The CCP has directed state-owned banks and asset managers
to intervene to prop up the stock market and issue credit to
state-owned enterprises (SOEs) and regional and local govern-
ments on favorable terms. As long as these measures remain a
common practice, Chinese households will remain skeptical of
passive long-term domestic investment opportunities as a way
to generate wealth, forcing them to save a larger share of their
income. Uncertainty regarding Chinese investment opportuni-
ties dampens China’s attempts to bolster consumption.
Chapter 2: U.S.-China Security and Foreign Affairs (Year in
Review)
In 2024, China sought to mitigate internal and external risks
by exercising a combination of coercive and persuasive strategies
abroad and continuing to tighten political control at home. Inter-
nationally, China attempted to promote itself as the world leader
best positioned to solve and prevent conflicts, represent low- and
middle-income countries, and promote economic growth while also
making it clear that it opposed U.S. policies and alliance relation-
ships. In its diplomacy with the United States, China sought to use
the promise of bilateral dialogues on narrow areas of common in-
terest to derail what it perceives as the United States’ policy of
strategic competition. It also aimed to tighten ties with Europe and
encourage divisions within the transatlantic alliance but continued
to undermine its own credibility through its intensifying economic,
military, diplomatic, and political support for Russia. At the same
time, China is increasingly providing support and resources to coun-
tries involved in military operations against Western allies. China
has turned a blind eye as Iran and North Korea act in ways that
undermine global stability, and it has demonstrated willingness to
exploit tensions in the Middle East for geopolitical gain. Overall,
China reacted to other countries’ efforts to protect their economic
and physical security by portraying them as hostile, exclusionary,
and destabilizing. In the case of the South China Sea, China re-
sorted to more dangerous, violent actions. China also expanded its
campaign to persuade Pacific Island states to adopt Beijing’s pre-
ferred policies on a range of issues and intensified its longstand-
ing diplomatic efforts in Africa, Latin America, and the Caribbean.
Despite the willingness of some governments to deepen cooperation
with Beijing in various domains, many other countries remained
deeply skeptical of China’s intentions and proposals.
Domestically, the year saw a further consolidation of the CCP’s
control over the state bureaucracy and a continued concentration
of power within the Party into the hands of General Secretary Xi.
To combat persistent problems of corruption and fears of political
disloyalty, Xi and a small circle of top leaders tightened their grip
8
on the Party rank and file while continuing to unseat and in some
cases disappear high-ranking figures across the government and
military. Meanwhile, the CCP increased emphasis on “political dis-
cipline” across Party ranks and introduced new Party loyalty tests,
including potential removal from internal Party positions for simple
acts like “privately reading, browsing, and listening to newspapers,
books, audio-visual products, electronic reading materials, and on-
line materials with serious political problems.” In 2024, the People’s
Liberation Army (PLA) also announced a major reorganization that
elevated the importance of space, cyber, and information capabilities
and created three new forces under the more direct control of the
top military leadership, led by Xi.
Key Findings
• As part of its efforts to solidify its control across the Party, state,
and military, in 2024 the CCP leadership introduced new mea-
sures on political discipline and anticorruption, targeting every-
one from low-ranking Party members to senior military officers.
From the top of the system, Xi delivered dire messages to Party
and military audiences on the severity of remaining problems,
revived some Maoist concepts and slogans, and emphasized the
importance of political loyalty and enduring hardship. China’s
leaders viewed enhanced domestic control as a key factor in
China’s ability to accomplish its domestic and international ob-
jectives.
• China continues to assert that the United States poses inten-
sifying strategic risk. Despite a bilateral agreement reached in
late 2023 to pursue limited cooperation on military communi-
cation, climate change, countering fentanyl and other drugs,
artificial intelligence (AI), and people-to-people ties, China has
continued its efforts to counter or weaken U.S. policies without
changing its own behavior. Fundamental divergences on issues
such as Taiwan and access to markets, capital, and technology
remain.
• In 2024, China accelerated efforts to build international support
from as many countries as possible—with a focus on the devel-
oping nations of what it calls the “Global South”—for China’s
claims to global leadership, its continuing efforts to isolate and
subjugate Taiwan, and its desired forms of economic coopera-
tion. At the same time, Beijing sought to portray actions taken
by the United States and many of its allies and partners to
protect their own interests and established global norms as un-
dermining the prospects for peace, stability, and prosperity and
the future of collective international progress led by China. (For
information on China’s activities in the Middle East in 2024,
see Chapter 5, “China and the Middle East.”)
• China and Russia committed to further deepening their joint
efforts against the United States. China has sustained its eco-
nomic, diplomatic, political, and material support for Russia’s
war effort in Ukraine. China also provided satellite imagery and
dual-use materials that Russia is using for the reconstitution
of its defense industry—such as weapons components, machine
9
tools, and microelectronics—all while claiming to play a leading

role in advancing a political solution to the conflict. In exchange
for such support, Moscow has reportedly provided submarine,
aeronautic, and missile technologies to Beijing as defense coop-
eration between the two countries continues to strengthen.
• China sought to counteract a deteriorating strategic relation-
ship in Europe, using mainly positive rhetoric and promises of
deepened cooperation to persuade the EU and individual Euro-
pean countries to distance themselves from the United States
and abandon their efforts to de-risk relations with China. Xi
tried to reframe Europe’s economic dependencies on China as
the byproducts of a beneficial symbiosis, to downplay political
differences, and to emphasize supposed shared interests in the
creation of a more equal international system.
• China’s destabilizing behavior in the Indo-Pacific region contin-
ued. China’s naval and coast guard presence around the Japa-
nese-administered Senkaku Islands and flights near Japanese
airspace in the East China Sea represented a significant es-
calation from previous activity. In the South China Sea, Chi-
na’s aggressive behavior escalated to new levels in 2024 as the
China Coast Guard (CCG) took increasingly aggressive, unsafe,
and even violent measures to attempt to block the Philippines,
a U.S. treaty ally, from exercising its lawful rights in its exclu-
sive economic zone (EEZ). China’s officials continued to leverage
lawfare tactics to attempt to normalize their efforts to impose
their will upon other countries in the region through coercive
and illegal actions, superior force, and numbers.
Part II: Technology and Consumer Product

Opportunities and Risks
Chapter 3: U.S.-China Competition in Emerging Technologies
The United States is locked in a long-term strategic competition
with China to shape the rapidly evolving global technological land-
scape. Innovation in emerging technologies could transform society,
create new industries, foster new dependencies, and alter the char-
acter of warfare. Whichever country secures a lead in key technol-
ogies—particularly those with first mover advantages—will tip the
balance of power in its favor and reap economic benefits far into
the 21st century. China under General Secretary Xi has recognized
the potential advantages of seizing the innovation “high ground” in
this competition and has aggressively designed, implemented, and
funded programs to dominate technologies of the future. In doing so,
Beijing hopes its efforts will underpin national rejuvenation, mak-
ing the country powerful, self-sufficient, and impervious to perceived
technological “containment” from the United States and its allies
and partners.
China has focused on developing emerging technologies such as AI,
quantum information science (QIS), biotechnology, and battery ener-
gy storage systems. The race for superior AI across industries relies
on successfully bringing together enabling technologies and building
blocks, including advanced chips, computing power, well-designed al-
10
gorithmic models, and rich datasets for model training. While the
United States has a lead in most of these AI-related categories,
China is making rapid advancements and has demonstrated some
ability to innovate around U.S. and allied export controls. QIS is still
in its infancy, yet it may eventually spawn paradigm-shifting break-
throughs enabling computation and remote sensing at a speed and
scale heretofore impossible. Quantum breakthroughs could provide
technology capable of easily breaking existing encryption, ensuring
secure communications, solving complex computations rapidly and
at scale, and accelerated processing of military data to provide a
decisive edge on the battlefield. China is regarded by some experts
as leading in the subfield of quantum communications, while the
United States maintains a lead in quantum computing and quan-
tum sensing. In the field of biotechnology, China is quickly closing
the innovation gap with the United States in novel biopharmaceu-
tical, genomic, and new material applications. Moreover, Chinese
biopharma companies have expanded their footprint internationally
and become integral in U.S. drug development and bio-manufactur-
ing supply chains. Finally, due in large part to substantial and sus-
tained subsidies, Chinese companies have established a global lead
in battery energy storage systems. China has consolidated control
over much of the battery supply chain, from upstream mining and
processing of critical minerals to mid- and downstream production
of battery components and end products such as batteries for EVs.
China’s rapid progress in establishing itself as a leader in these
emerging and foundational technology fields raises a host of eco-
nomic and national security concerns for the United States, from
questions of dependence and economic leverage to potential threats
to U.S. military superiority. The United States has realized the im-
portance of technology competition with China and has significantly
altered the policy environment around key technologies, particularly
semiconductors, advanced computing, and clean energy. China faces
many challenges, including these U.S. policies, a faltering domestic
economy, and inefficiencies inherent in its state-directed innovation
system. However, despite these challenges, China’s rapid technolog-
ical progress threatens U.S. economic and military leadership and
may erode deterrence and stability in the Pacific as well as tip the
global balance of power.
Key Findings
• The CCP is prioritizing research in key emerging technology
areas such as AI, quantum technology, biotechnology, and bat-
teries with the goal of becoming a world leader in science and
technology. Xi is placing a bet that China’s investments in high-
tech industries will unleash “new quality productive forces,”
transcend an old growth model reliant on infrastructure and
lower-technology exports, and help China achieve its goal of
becoming a superpower in the 21st century. China’s focus on
emerging technologies is also motivated by its desire to attain
self-sufficiency in what its leaders describe as “chokepoint” tech-
nologies amid an international environment they perceive as
increasingly hostile and to better prepare for a potential conflict
with the United States over Taiwan or in other contingencies.
11
• China’s state-centric approach and heavy investments in do-

mestic innovation reflect similar techno-nationalist initiatives
dating back to the Mao Zedong era. Under Xi, these efforts have
intensified as the Party has sought to impose tighter top-down
control in the innovation ecosystem to make breaking depen-
dencies on foreign technologies a focal point.
• The United States and China are neck-and-neck, with one being
ahead or behind depending on the specific critical and emerging
technology. On certain manufacturing-intensive technologies,
like advanced batteries and EVs, China’s various efforts have
enabled its companies to obtain a clear advantage.
• Artificial intelligence: China is making rapid advancements
and noteworthy investments in its AI capabilities. It is devel-
oping AI not only to advance China’s economic growth more
broadly but also for military applications, such as autonomous
unmanned systems, data processing, decision-making, and cog-
nitive warfare. Across key aspects of AI competition, however,
China is having mixed success.
○ Advanced semiconductors: The United States and
like-minded countries currently have an advantage in the ad-
vanced semiconductors needed to power AI technologies. Chi-
na is aggressively working to address this deficit.
○ Compute and cloud: The United States leads in total com-
pute and cloud, but several Chinese companies have notable
cloud capabilities. Further, the nature of cloud computing cre-
ates a heightened threat of “leakage” into China of advanced
compute capabilities located outside of China.
○ AI models: The United States currently leads the world in
developing robust AI models, but China is pursuing numer-
ous government-led and ostensibly private efforts to develop
advanced AI models.
○ Data: Data are critical to AI capabilities. Each country has
certain advantages in terms of collection, use, and availability
of data for AI systems. China understands the value of data
to AI and has taken active measures to increase the availabil-
ity of quality data within its AI ecosystem.
• Quantum technologies: Both the United States and China
are heavily funding research in quantum computing, sensing,
and communications, the three subdomains that together make
up QIS. While QIS is still in an early stage of development, it
will have significant competitive and military impacts if it be-
comes commercially viable. China’s Party-state drives quantum
research through support to a major state laboratory in Anhui
Province as well as a growing roster of state-backed startup
companies. China appears to be an early leader in quantum
communications, launching the world’s first quantum commu-
nications satellite and connecting two ground stations with
quantum key distribution. In other areas, China appears to be
lagging behind the United States, though its scientists have
claimed breakthroughs in cracking encrypted communications
12
systems and developing advanced radar technology, claims that

are difficult to confirm.
• Biotechnology: Biotechnology is another key emerging technol-
ogy with the potential for transforming many industries. Chi-
na aims to use biotechnologies to make itself less dependent
on U.S. agriculture while embedding Chinese firms in U.S. food
production and supply chains in genomic, pharmaceutical, and
other biotechnologies. The major research and market presence
of Chinese genomic and biotech services companies in the Unit-
ed States gives these companies access to key technologies and
data.
• Advanced batteries: China has attained a sizable advantage
at each stage of the battery supply chain, ushering in rapid
global market share increases for Chinese EV and battery mak-
ers. China’s near monopoly on battery manufacturing creates
dependencies for U.S. auto manufacturers reliant on upstream
suppliers as well as potential latent threats to U.S. critical in-
frastructure from the ongoing installation of Chinese-made bat-
tery energy storage systems throughout U.S. electrical grids and
backup systems for industrial users.
Chapter 4: Unsafe and Unregulated Chinese Consumer
Goods: Challenges in Enforcing Import Regulations and
Laws
The rapid escalation of e-commerce sales impedes U.S. efforts to
ensure the safety and regulatory compliance of consumer products
flooding the market from China. These new channels, combined with
China’s reinvigorated focus on export manufacturing as a pillar of
economic growth, mean that Chinese factories will remain major
suppliers across the consumer products space. Though the quality
of goods sourced from China has improved somewhat over the past
two decades as a result of increased due diligence and monitoring
on the factory floor, significant exceptions remain, and overall prod-
uct quality and safety still fall short of U.S. standards. Many Chi-
nese companies that disregard manufacturing best practices utilize
cross-border e-commerce channels to send products directly to con-
sumers under a de minimis exemption that provides duty-free entry
for small parcel shipments. A continually rising flood of small par-
cels at U.S. ports of entry compounds the difficulty of detecting po-
tentially risky products before they reach households and children.
Holding Chinese manufacturers and exporters accountable remains
challenging—if not virtually impossible—under the Xi regime. Ef-
forts by oversight agencies, including the U.S. Consumer Product
Safety Commission, to protect U.S. consumers have been hampered
by falsification of safety documents, the rise of small parcel ship-
ments, and lack of responsiveness from many Chinese exporters.
In the event that a Chinese made product causes injury or hazard,
U.S. regulatory agencies have no authority to unilaterally order an
immediate recall of the item, and often have limited other options
to protect consumers.
Accurate data on consumer product imports are crucial to enforce-
ment, but an increased number of Chinese exporters are seeking to
exploit loopholes in U.S. law and disguise the nature and/or origins
13
of their imports to dodge higher tariffs on products from China. Du-

ty-free entry under de minimis provides a means for some Chinese
manufacturers to avoid China-specific tariffs. Unscrupulous Chinese
entities also take advantage of the import channel to funnel fentan-
yl-related materials into the North American market, fueling the
illicit supply of synthetic opioids in the United States. Other firms
employ a wide range of illegal and deceptive tactics to lower or evade
U.S. import duties. Trade misinvoicing and other U.S. customs viola-
tions have grown more widespread since 2018. Trade data indicate
that some countries have emerged as hubs for the transshipment of
goods and duty evasion through circumvention and related strate-
gies. It remains challenging, however, to quantify the full extent of
duty evasion, and it is likely that additional illicit activity has gone
undetected. These tactics create risks for the United States by ob-
scuring an import’s source country and factory, creating additional
challenges to stopping unsafe Chinese products from entering the
U.S. market. Moreover, China is home to the world’s largest counter-
feiting industry, harming not only U.S. businesses but also consum-
ers who face increased safety risks from shoddily made imitations.
Key Findings
• China aims to continue growing its manufacturing sector, lead-
ing to further industrial overcapacity and a surge in exports.
Chinese manufacturers have, in general, improved in quality
and reliability over the past decade, owing in part to increased
enforcement by Chinese authorities domestically and increased
due diligence by foreign firms. However, the scale and dyna-
mism of China’s manufacturing sector means regulators in the
United States struggle to respond to emergent product safety
issues. New online platforms and the multitude of third-party
e-commerce sellers and resellers compound these issues.
• U.S. regulators are overwhelmed by the volume of imports ar-
riving from China, and they are only able to inspect a small
fraction of imports, potentially leaving large numbers of unsafe
or illegal goods to enter the U.S. market daily.
• Unscrupulous China-based sellers lack the diligence, capacity,
and skill required to produce high-quality goods that meet U.S.
safety regulations, thus increasing U.S. consumers’ exposure to
risks stemming from unsafe, counterfeit, and poor-quality goods
from China. These deceptive tactics by Chinese producers are
particularly concerning in industries such as batteries and med-
ical products, where defective products pose potentially debili-
tating or deadly consequences.
• U.S. import regulators face significant challenges in monitoring
the growing volume of Chinese e-commerce shipments specifi-
cally, which typically enter under a de minimis exemption that
provides duty-free treatment for parcels valued under $800.
The growth of smaller, China-based sellers on U.S. e-commerce
sites and the rising popularity of Chinese e-commerce platforms
present a novel and growing risk to U.S. consumers and the
ability to enforce safety regulations and other laws. Insufficient
14
data, personnel, and overwhelming volume mean these ship-

ments receive less scrutiny.
• Some Chinese companies have tried to circumvent normal U.S.
customs channels in response to tariffs and other U.S. laws.
Though the true scale of customs fraud is unknowable, some
actors are using illegal tactics such as transshipment, circum-
vention, and import undervaluation to evade paying customs
duties. These tactics worsen the information available to U.S.
agencies, increasing the challenge of identifying hazardous im-
ports.
Part III: Competition and Conflict

Chapter 5: China and the Middle East
The Middle East is a region of strategic importance to China due
to its energy resources, location astride key trade routes, and pos-
sible receptivity to Chinese efforts to construct an alternative, illib-
eral world order. As China has deepened its trade and investment
interests in the Middle East over the past decade, it has also built
a variety of diplomatic partnerships and sought to present itself as
a neutral arbiter of regional disputes while expanding its military
activity in the region. In the short run, China benefits from its re-
lationships in the Middle East focused on energy trade and secur-
ing infrastructure contracts for its SOEs. In the long term, Beijing
aims to expand market share for renewable energy and high-value
exports, gain supporters in its bid for global leadership, and poten-
tially establish new outposts capable of supporting its military for
increased power projection. China’s involvement in the Middle East
thus presents U.S. policymakers with an array of economic, norma-
tive, and geopolitical challenges.
Chinese engagement with the Middle East is selective and trans-
actional, focused on advancing its own interests; Beijing appears
to have little desire to play a significant role in advancing region-
al security or to meaningfully contribute to a resolution of ongoing
disputes, including the recent Israel-Hamas war. Instead, China ap-
pears content for the moment to free-ride on the U.S. and allied re-
gional security infrastructure—including most recently the defense
of maritime shipping from Houthi attacks—while blaming the Unit-
ed States for promoting instability. China also works to undermine
U.S. ties with key Middle Eastern partners while supporting adver-
sarial countries like Iran. China takes advantage of Iran’s interna-
tional isolation by purchasing nearly 90 percent of its exported oil at
a steep discount, generating revenue equivalent to about 90 percent
of Iran’s total government budget. Chinese companies are critical to
the development of Iran’s drone and ballistic missile programs, sup-
plying dual-use components that are utilized in unmanned aerial
vehicles used by Russia and the Houthis. Chinese strategists likely
also assess that the turmoil in the Middle East deflects a portion of
U.S. attention and resources away from the Indo-Pacific.
As the technology competition between the United States and
China has intensified, the Middle East is emerging as a key stake-
holder and potential conduit for Chinese end users to gain access
to leading-edge technology. Chinese technology companies have had
15
market presence in the region for decades and are working to deploy
telecommunications equipment and other underlying technology in-
frastructure across the region in both wealthy and underdeveloped
countries. Emerging technologies like AI and advanced computing
play a central role in the ambitious national strategies of Gulf Coop-
eration Council countries as they seek to diversify their economies
away from reliance on fossil fuel. Countries like Saudi Arabia, the
United Arab Emirates, and Qatar have dedicated massive invest-
ment to build up domestic technology industry and innovation hubs.
The Middle East will be an important region for U.S.-China technol-
ogy competition, both in terms of partnerships and market access
and the effectiveness of technology controls by the United States,
its allies, and partners.
Key Findings
• China’s engagement with the Middle East has expanded during
General Secretary Xi’s tenure and is driven partly by deepen-
ing strategic rivalry with the United States. In contrast to the
Indo-Pacific, where China clearly seeks to displace the Unit-
ed States and consolidate a position as the dominant power,
the Middle East is a region Chinese leaders view as a source
of intractable security challenges and value primarily for its
resources and economic potential. While China does not have
the willingness and ability to replace the United States as a
major contributor to regional security, it is nonetheless eager
to instrumentalize the region in its efforts to construct a new,
illiberal world order at the United States’ expense. China offers
the region’s autocratic governments a vision of a new regional
security architecture under the Global Security Initiative and is
deepening its diplomatic relations with U.S. partners and adver-
saries alike to erode Washington’s influence.
• Beijing’s reaction to the Israel-Hamas war has illustrated both
the limits of its diplomatic influence in the Middle East and
its willingness to exploit regional tensions for geopolitical gain.
China has played no significant role in the U.S.- and Arab-facil-
itated negotiations between Israel and Hamas, having lost its
credibility as a neutral actor by refusing to directly condemn
the terrorist group for the October 7th attacks. It has not con-
tributed to coalition efforts to protect maritime shipping from
Houthi attacks, and in contravention of international maritime
law and norms it has declined to use its naval ships deployed
in the region to respond to distress signals from non-Chinese
vessels. Rather, Beijing has sought to appeal to Arab states and
burnish its image as the self-declared leader of what it calls the
“Global South” by portraying itself as an ardent supporter of
Palestinian national liberation and condemning Israel and the
United States as oppressors.
• China is the largest trading partner for many countries in the
region, with growth in total trade and direct investment be-
tween China and the Middle East outpacing that of China with
the rest of the world over the past five years. While China ben-
efits from infrastructure contracts and expanding market share
for its exports to the region, its principle economic objective re-
16
mains securing steady flows of energy resources, with between

40 and 50 percent of China’s total imported energy coming from
the region.
• China and Iran have a similar interest in opposing the U.S.-
led rules-based international order, but the relationship is to
a large degree one of convenience. Just as it is using Russia’s
diplomatic isolation to extract favorable terms on energy deals,
China is opportunistically leveraging its consumption market to
purchase discounted oil from Iran while going to great lengths
to avoid the appearance of sanctionable transactions through
the use of smaller purchases and shell companies.
• China’s military activities in the Middle East advance its eco-
nomic interests while allowing the PLA to gain operational ex-
perience and lay the foundation for a more robust future mili-
tary presence.
• China is emerging as a global competitor in niche sectors of the
Middle Eastern arms market. China is crucial to the develop-
ment of the Iranian drone industry. Although the U.S. Depart-
ment of the Treasury and the Department of Commerce have
placed sanctions on a number of Chinese companies, Chinese
actors are crucial to supplying components that enable Iran to
build drones, which it sells to Russia and to its Middle Eastern
proxies such as the Houthis. China continues to either directly
or indirectly provide regional actors with technologies that con-
travene its voluntary but nonbinding commitment to adhere to
the Missile Technology Control Regime (MTCR). This includes a
continued occasional and covert role in supplying Iran’s ballistic
missile program by Chinese SOEs and non-state actors.
• The Gulf is emerging as a new arena in U.S.-China technology
competition, with concerns that close ties between sanctioned
Chinese entities and technology firms in the region may be facil-
itating transfer of leading-edge technology subject to U.S. export
controls. Countries and companies in the Gulf may be compelled
to choose between technology infrastructure and partnerships
with China’s tech ecosystem or those with the United States
and its allies. Increased deployment of Chinese-made surveil-
lance technology is also a point of concern given its potential
to enhance suppression tactics commonly used by authoritarian
governments.
Chapter 6: Key Economic Strategies for Leveling the U.S.-
China Playing Field
Many of China’s economic, technological, and military policies are
at the expense of and contrary to U.S. and allied interests. U.S. offi-
cials have long been aware that China’s non-market economic prac-
tices advantaged Chinese companies at the expense of U.S. firms and
workers and resulted in significant shifts in supply chains. However,
for many years, optimism that a complex and interdependent global
economy would deter conflict and help liberalize China tempered
the U.S. response, keeping the focus on more narrow industry-spe-
cific issues or better enforcement of existing trade rules. Similarly,
despite periodic concerns that technology transfers might be assist-
17
ing the PLA’s military modernization drive, until very recently this
was viewed as an issue for narrow export controls on weapons and
dual-use products, not a reason to broadly challenge China’s inno-
vation ecosystem or limit flows of U.S. capital and know-how that
help build up China’s technological capabilities. Today, China con-
tinues to flood global markets with exports in an attempt to boost
its domestic economic growth while simultaneously pursuing the de-
velopment of emerging technologies to assert its global geopolitical
interests and spur military modernization. In response, the United
States’ economic approach toward China is evolving to combat Chi-
na’s state-led, non-market practices. The United States’ toolkit for
addressing these challenges includes trade policy tools, such as tar-
iffs on imports from China, controls on the transfer of technology,
and restrictions on inbound and outbound investment that might
advance China’s development of sensitive technologies.
At the same time, there remains a lack of consensus on the scope
and implementation of these measures. Lacking an overarching set
of objectives and a comprehensive strategy for achieving them, some
policies are implemented at cross-purposes, weakening the United
States’ approach to economic competition with China. For exam-
ple, while the United States has tightened controls on key dual-use
technologies like semiconductors, it only recently began considering
restrictions on U.S. outbound investment into those same sectors in
China. Simultaneously, U.S. export controls have pushed Chinese
chip makers to focus their additional efforts on legacy chip pro-
duction. However, legacy chips are also critical to U.S. commercial
and military supply chains. Policies that allow China’s non-market
practices to lead to dominance of the sector are thus incongruent
with U.S. strategic goals. Unlike the National Security Strategy, the
United States does not yet have a unified strategy organizing its ap-
proach to economic security. The effectiveness of the United States’
economic security strategy faces further limits at present from a
lack of data and analytic capabilities as well as a lack of adequate
alignment of policies with key allies and partners.
Key Findings
• U.S. trade policy is a key tool for defending against China’s
non-market economic practices, diversifying U.S. supply chains,
and preserving U.S. economic security.
• Efforts to de-risk supply chains are undermined by a lack of a
cohesive trade policy as well as the continued presence of Chi-
nese value-added content in non-Chinese imports.
• As China increasingly asserts itself as a significant military
power, export controls have emerged as a central tool in U.S.
efforts to deny China direct access to critical dual-use goods
and advancements in national security-sensitive technologies.
However, a number of operational challenges diminish their
effectiveness, including lack of coordination among key allies,
compliance challenges, and uneven enforcement.
• While Congress in 2018 strengthened the U.S. inbound invest-
ment screening mechanism, it considered but did not implement
matching rules on outbound investments. In the last few years,
18
policymakers have actively explored creating an outbound in-

vestment screening mechanism. Such a mechanism would curb
important U.S. economic support to China’s advanced technol-
ogy ambitions, such as the transfer of management expertise,
know-how, and capital that is unaddressed by the United States’
existing toolkit, including a yet-to-be-implemented executive or-
der.
• A lack of adequate detailed data on U.S. trade and investment
flows poses an acute challenge to effective policy scoping and
implementation.
• Economic partners in the G7 and other developed markets
have implemented trade measures to address trade distortions
caused by China’s state-led economy; these measures continue
to evolve. They are also exploring parallel export controls and
outbound investment screening policies to limit the flow of key
technologies. At times, the United States has had difficulty ob-
taining alignment with allies, which can undercut the effective-
ness of U.S. policy and put U.S. companies at a disadvantage.
Chapter 7: China’s New Measures for Control, Mobilization,
and Resilience
After a long period of “peace and development” during which CCP
leaders felt the international environment was conducive to China’s
economic development, growing power, and international influence,
the views of China’s leadership have changed. General Secretary Xi
now believes China has entered a period of increased challenges both
domestically and internationally and has taken a number of steps to
better prepare the Party and country for this period of threat and
uncertainty. On the political front, Chinese leaders have broadened
conceptions of national security to enhance the Party-state’s power,
build out the national security state, and expand tools of societal
control at the grassroots level. An empowered security apparatus is
warning Chinese citizens to be hypervigilant about interactions with
foreigners. Many of these efforts have echoes of Maoist-era methods
of mass mobilization. On the military front, China’s armed forces
have improved their mechanisms for mobilizing available manpower,
leveraging resources in the civilian economy, and priming the Chi-
nese public to contribute to national defense. One such program is
the establishment of “new type” militias within enterprises made up
of civilians with skills in high-tech sectors such as robotics, AI, and
unmanned systems. On the economic front, China has implemented
measures to strengthen food and energy security by building stock-
piles of key grains and oil and redirecting supply chains toward
trusted partners. In addition to pursuing the internationalization of
its currency, the renminbi (RMB), China is also working to promote
an alternative payments infrastructure as a possible mechanism to
bypass future U.S. financial sanctions.
China’s numerous and varied actions are driven by multiple goals,
including the desire to suppress domestic challenges, prepare for
a more volatile and less open international economic environment,
and position itself effectively for long-term strategic competition
with the United States. At the same time, many of these actions
serve to increase China’s capacity for rapid military mobilization
19
and resilience in the case of hostilities. Recent changes have made

China significantly more prepared for war compared to five years
ago while potentially obscuring the signals that would normal-
ly precede an imminent or near-term mobilization. These changes
have already altered the strategic and operational environment in
China’s favor by challenging outside observers’ ability to monitor
traditional warnings and indicators and reducing timelines for the
United States to make decisions in response to China’s actions. Chi-
nese officials likely also believe they have moderated the economic
costs the United States and its allies could impose on them through
sanctions, blockades, and trade restrictions in the event there is an
outbreak of hostilities, potentially reducing the deterrent effect of
non-military policy options and external constraints.
Key Findings
• China’s leaders believe they have entered a new historical
phase characterized by greater internal and external threats.
This heightened threat perception has fueled numerous poli-
cy efforts to better prepare the Party, China’s society, and the
military for what the Party believes will be a more hostile and
uncertain period.
• China’s leaders have intensified their rhetoric about risk over
the last few years, increasingly invoking a concept called “ex-
treme scenario thinking” that suggests Chinese policymakers
are increasingly thinking through the potential ramifications of
a wide range of scenarios, including the repercussions of ac-
tions they might initiate on the international stage. At the same
time, CCP rhetoric toward Taiwan and the United States has
not escalated to the degree that preceded China’s conflicts in
past decades or to what some experts expect to see if China
were imminently preparing for war.
• China is continuing longstanding efforts to address concerns
over food insecurity. China is largely self-sufficient in four of
five key staples, though it is becoming increasingly dependent
on corn and wheat imports. China relies on imports for the fifth
(soybeans) and is overall a significant net food importer. China
is believed to have the world’s largest stockpiles of its key sta-
ples and has taken measures to diversify its soybean supplies
away from the United States and reduce overall soybean con-
sumption.
• China is taking measures to enhance its energy security and
to ensure it can address its oil energy needs for long periods of
time without imports. China is largely self-sufficient in coal, its
primary energy source for power generation, and it has devel-
oped a coal surge capacity to deal with temporary disruptions.
Perhaps because natural gas is not a major part of China’s en-
ergy mix, China seems less concerned about its significant reli-
ance on imports and only has a short-term stockpile of natural
gas. China is heavily dependent on oil imports for transporta-
tion and appears to be building very large stockpiles—with es-
timates of one to two years’ supply.
20
• China is taking measures to enhance its financial security, chal-

lenge global dollar dominance, and protect itself from U.S. fi-
nancial sanctions by creating alternatives to dollar-based trade
and the U.S.-controlled financial payments system. These efforts
have accelerated since the imposition of sanctions in the wake
of Russia’s war of aggression against Ukraine. While the RMB
is not on pace to supplant the U.S. dollar as a medium of global
exchange, China is developing these tools with the intention to
insulate itself from many types of U.S. financial sanctions.
• Party leaders have developed an exceedingly broad conception
of national security and expanded their tools for domestic con-
trol. These include an increasingly robust internal security ap-
paratus, the revival of some Maoist-era methods of mass mobi-
lization, and efforts to leverage the public for surveillance and
control, including by outsourcing public security tasks to gov-
ernment-sanctioned “vigilante groups.” This heightened focus on
security has been formalized through an expansion of relevant
legal infrastructure, with new laws defining national security as
touching upon virtually every aspect of society.
• There is currently no evidence that China is preparing for an
imminent war, but the various reforms China has made to its
defense mobilization system over time undeniably make it more
confident and prepared for hostilities than it was five years ago.
Many of these measures reduce the time needed for China to
mobilize and transition from peacetime or gray zone activities
to active hostilities and could be read as efforts to prepare the
operational environment for a conflict over Taiwan. Given the
decreasing amount of open source data available about China,
the United States and international observers will have less
visibility of warnings and indicators that may presage Chinese
military action, a shorter timeline to react once indicators are
discovered, and fewer non-military tools to respond.
Chapter 8: China’s Evolving Counter-Intervention Capabilities
and the Role of Indo-Pacific Allies
Over the past two decades, China has invested heavily in capabil-
ities to counter military action by the United States and its allies
in the event of a conflict in the Indo-Pacific. As a result, U.S. forces
and bases in the region would face a significant threat from the PLA
in any regional contingency involving treaty allies and/or security
partners, and the outcome of any such conflict is far from certain.
China’s leadership views the U.S. military’s presence, activities, and
alliance commitments in the Indo-Pacific region as hostile, leading
the PLA to focus significant efforts on planning and training for the
possibility of U.S. military involvement in a regional conflict.
China’s plan to counter U.S. military intervention requires the ca-
pacity to find U.S. forces, thwart their operations, hamper their abil-
ity to rely on satellites and other networked systems, and destroy
forward-based assets as well as assets at long distances. Among
the most important capabilities for these missions are the PLA’s
Command, Control, Communications, Computers, Intelligence, Sur-
veillance, and Reconnaissance (C4ISR) networks, electronic warfare
(EW) assets, and offensive missile forces. China has significantly
21
improved each of these capabilities over the past two decades, with
an increased capability to disrupt or paralyze an adversary’s C4ISR
system and a large arsenal of missiles with ranges capable of posing
a threat to U.S. forces. At the same time, however, the PLA contin-
ues to contend with issues sustaining and maintaining its warfight-
ers in combat. China’s government, military, and academic sources
also note trends in U.S. military development with the potential to
undermine China’s counter-intervention capabilities, such as evolu-
tion in U.S. strike and missile defense capabilities, new operational
concepts, and increased cooperation between the United States and
its Indo-Pacific allies.
U.S. alliances represent a critical part of the United States’ ap-
proach to pursuing security and advancing stability in the Indo-Pa-
cific region. Geographic access from these alliances is an important
element of U.S. military posture in the Indo-Pacific region, as the
majority of U.S. defense sites west of the International Date Line
are located in host countries. U.S. allies Japan, the Philippines, and
Australia perceive China’s military buildup and aggressive actions
as a growing threat to their national security and are deepening de-
fense collaboration with the United States. Nevertheless, differences
remain in the specific activities each allied country might be will-
ing to participate in or to support, driven by differences in political
will and the capabilities of their militaries. As the United States
continues to enhance its capacity to respond to Chinese aggression,
it must navigate these potential differences in the parameters of
cooperation during a conflict as well as questions about how to best
adapt its force posture, capabilities, and defense industrial base.
Key Findings
• The PLA plans to counter military action by the United States
and potentially U.S. allies in the event of a regional conflict.
Since at least the early 2000s, China’s leadership has viewed
the U.S. military’s presence and alliance activities in the In-
do-Pacific as threatening, and it continues to express concern
about new developments that combine deepening allied coop-
eration with an expanded U.S. military footprint in the region.
• China’s assertion that it will militarily defend its disputed ter-
ritorial and maritime claims threatens U.S. allies and security
partners in the Indo-Pacific. Should China’s leadership decide to
use force to enforce its claims in the South or East China Seas
or with regard to Taiwan, this aggression could trigger U.S. de-
fense commitments.
• The PLA continues to improve the quality and quantity of mil-
itary capabilities needed to counter U.S. military action in the
event of a conflict, including a large arsenal of ballistic and
cruise missiles, air defense systems, advanced fighter jets, mar-
itime forces, and EW capabilities.
• The PLA has also developed a redundant and resilient architec-
ture for C4ISR to protect its own systems from attack, and it
increasingly has the capability to disrupt or paralyze an adver-
sary’s C4ISR system. China’s advancements in counter-C4ISR
capabilities such as directed energy weapons and anti-satellite
22
technologies may threaten the United States’ ability to access

its own C4ISR networks for reconnaissance, targeting, and oth-
er functions in peacetime or wartime.
• Despite improvements to a broad suite of capabilities, the PLA
still faces challenges in logistics and sustainment. The PLA’s
maintenance system may struggle to quickly repair and resup-
ply its advanced platforms and weapons systems under harsh
battlefield conditions, impacting the PLA’s ability to project and
sustain combat power.
• Chinese military experts perceive that U.S. and allied militar-
ies are adapting to the PLA’s improved capabilities and force
posture. They observe that the United States and its allies
are strengthening their missile defense capabilities while also
working to improve their ability to strike China’s forces. They
also note that new operational concepts emphasizing geograph-
ic dispersion and joint integration across warfighting domains
could also contribute to U.S. and allied forces’ survivability.
• U.S. allies in the Indo-Pacific are adjusting their defense pol-
icies in response to Beijing’s aggressive military posture and
activities. Japanese leaders are concerned about a possible re-
gional conflict and therefore seek to enhance Japan’s military
capabilities and interoperability with the United States. The
current government of the Philippines views cooperation with
the United States and other partners as core elements of its
response to China’s military and gray zone threats in the South
China Sea and its own military modernization efforts. Australia
seeks to deepen security cooperation with the United States,
its chief defense partner, while reposturing its own military for
the possibility of great power conflict. Nevertheless, allies’ inter-
est in working with the United States to address threats from
the PLA does not necessarily imply a commitment to allow U.S.
military access to their bases during a conflict or guarantee the
participation of allied military forces.
Part IV: Taiwan and Hong Kong

Chapter 9: Taiwan
China’s actions toward Taiwan in 2024 have been intended to sig-
nal strong discontent with the new administration of Lai Ching-te, a
president whom the CCP regards as a “separatist” challenging Bei-
jing’s stated aspiration to “reunify” Taiwan with the Mainland. Chi-
na has sustained a high level of military, diplomatic, and economic
pressure toward the ruling Democratic Progressive Party (DPP) of
Taiwan, timing actions around events both to undermine DPP lead-
ership and to extend olive branches to opposition figures who signal
support for closer cross-Strait relations. China sought to dissuade
Taiwan’s voters from electing Lai by harshly denouncing him while
waging robust influence and disinformation campaigns asserting
that a vote for Lai would lead to war. The CCP has expanded its
toolkit of tactics for intimidating Taiwan, including greater usage
of the China Coast Guard (CCG) around the outlying islands, new
guidelines for punishing “separatists,” and heightened harassment
23
of Taiwan travelers to the Mainland. Soon after Lai’s inauguration,

China launched large military exercises around the island, similar to
exercises in each of the past two years and designed to suggest that
Beijing’s planning for hostilities includes blockade scenarios. China
continues near-daily incursions into Taiwan’s air defense identifi-
cation zone (ADIZ) and waters. Taiwan has enhanced its defensive
capacity through U.S. assistance and its own internal reforms, with
an increased focus on military and societal resiliency. Taiwan’s mil-
itary continues to take notable steps to develop, manufacture, and
adopt asymmetric systems and improve training for conscripts and
reservists, but domestic factors and China’s near-daily coercion re-
main challenges to this progress. The United States continues to
work through the backlog of arms shipments promised to Taiwan,
but a number of big-ticket systems such as F-16 fighter aircraft re-
main plagued by delays.
Despite China’s aggressive posture, Taiwan’s vibrant and ad-
vanced economy has performed strongly this year, thanks to sub-
stantial global demand for its high-value exports integral to AI and
technology supply chains. China remains Taiwan’s top trading part-
ner, though trade and investment continued to shift away from the
Mainland toward other partner countries, with Taiwan’s exports to
the United States in the first half of 2024 exceeding its exports to
China for the first time in more than two decades. Internationally,
Taiwan has sought to deepen its engagement with like-minded de-
mocracies. Countries in Europe and the Indo-Pacific have expressed
interest in peace and stability in the Taiwan Strait, even while Chi-
na continues its efforts to isolate the island diplomatically. China
is also pressing countries across the world to voice support for its
preferred framing that cross-Strait relations are an internal matter
for China and in support of “reunification.” U.S.-Taiwan relations
remain constructive and robust, with the United States continuing
to signal and provide steadfast support for Taiwan in a variety of
ways, even as China’s disinformation efforts attempt to paint the
United States as an unreliable partner.
Key Findings
• Lai’s election to the presidency signals broad support for his pol-
icies among Taiwan’s populace; however, the DPP’s losses in Tai-
wan’s legislature may restrain the Lai Administration’s agenda.
Beijing reacted to Taiwan exercising its right to self-governance
with immediate, extreme rhetoric as well as policy adjustments
aimed at intimidating Taiwan. China escalated its indirect
threats against not only Taiwan’s leadership but also its inter-
national supporters by defining “separatism” in law as a crime
punishable by death in certain circumstances.
• China has refused to communicate directly with the new DPP
president and has chosen to intensify its political coercion ef-
forts against Taiwan, suggesting that the frigid relationship be-
tween the DPP Administration and the Mainland will persist.
Rather, the CCP has shown that it would prefer to go around
the Lai Administration by interacting with opposition parties
and interfering in Taiwan’s political system.
24
• China has intensified its military coercion around Taiwan, aim-

ing to gain operational experience, degrade the Taiwan mili-
tary’s readiness, and intimidate the island’s population while
routinizing its increased presence. The PLA launched its second
named military exercise around Taiwan immediately after Lai’s
inauguration in May, as well as a follow-on exercise in October,
and continued to violate the island’s ADIZ on a near-daily basis
with conventional aircraft, drones, and balloons.
• Beijing has also expanded its use of so-called “gray zone” tac-
tics—blurring the line between military and non-military ac-
tions—against Taiwan in the maritime and air domains under
the guise of law enforcement and administrative activity in an
attempt to propagate its claim that Taiwan and the Taiwan
Strait are its territory. The CCG’s robust role in the May PLA
exercise was novel and suggested that the CCG could augment
future PLA operations against Taiwan. The reported presence of
CCG ships around Taiwan’s outlying islands outside the context
of a PLA exercise is similarly concerning, laying the groundwork
for a more persistent presence and representing an attempt to
extend “lawfare” to its gray zone activities. China’s unilateral
modifications of civilian flight paths in the Taiwan Strait also
abrogated a prior commitment made in 2015 to allay Taiwan’s
security concerns, increasing the risk of an air accident and fur-
thering its efforts to nullify the median line.
• Taiwan continues to shore up its remaining diplomatic partners
in the face of Chinese pressure to break ties while deepening its
unofficial relationships with major countries in North America,
Europe, and Asia. Using various points of leverage and influ-
ence, Beijing has engaged in an effort to get other countries
to endorse its false claim that the 1971 UN General Assembly
Resolution 2758 recognizes China’s sovereignty over Taiwan as
a matter of international law and to make statements support-
ive of China’s unification goals for Taiwan.
• Taiwan’s economy performed strongly in 2024, with AI-fueled
demand for leading-edge chips and other high-tech manufac-
tured products bringing about a surge in exports and a runup
in the domestic stock index. This growth came as cross-Strait
trade tensions heightened in the form of China’s Ministry of
Finance revoking preferential tariff exemptions on 134 products
Taiwan exports to the Mainland in a move announced less than
two weeks after Lai’s inauguration.
• Approved outbound foreign direct investment (FDI) from Tai-
wan into the Mainland fell 39.8 percent year-over-year in 2023
to its lowest level in over 20 years. Meanwhile, approved FDI
from Taiwan into the United States surged 791 percent in the
same time period to $9.7 billion, a record high. In April 2024,
Taiwan Semiconductor Manufacturing Company announced it
would expand its planned investment in the United States over
60 percent to $65 billion after receiving a $6.6 billion federal
grant as part of the CHIPS and Science Act.
25
Chapter 10: Hong Kong

Under the influence of China’s central government, Hong Kong
has installed General Secretary Xi’s view of “holistic” national se-
curity, weakening the city’s once vibrant institutions, civil society,
and business environment. Hong Kong has experienced a serious
erosion in its autonomy from the Mainland, although the manifes-
tation of this erosion to date has been far more prominent in civil
rights compared with the business environment. Hong Kong’s new
national security legislation, often called the Article 23 Ordinance,
introduces new and ambiguous offenses that target all remnants
of resistance to Beijing’s control over the city’s political, religious,
and civil society organizations. The continued implementation of the
mainland National Security Law (NSL) and the imposition of the
Article 23 Ordinance, which has already been invoked to make new
arrests, have diminished the former distinctiveness of Hong Kong.
The vaguely defined offenses in both national security laws create
an atmosphere of fear and uncertainty, intended to coerce Hong
Kongers to self-censor or face legal repercussions. Political partic-
ipation and expression in Hong Kong have withered as convictions
rise for activities considered by the CCP to be seditious, including
for singing Les Misérables’ “Do You Hear the People Sing” and for
wearing a t-shirt with the slogan “Liberate Hong Kong; revolution
of our times.” Hong Kong police and CCP operatives are attempting
to repress international discourse on the topic by harassing over-
seas activists who have fled and intimidating their families who
remain in Hong Kong. Local and international press organizations
are self-censoring or leaving. The seven million residents of Hong
Kong continue to enjoy greater freedoms than those living on the
Mainland—including a freely convertible currency and comparative-
ly uncensored internet and media—but only so far as they refrain
from violating the CCP’s broad and opaque conceptions of political
dissent.
Hong Kong’s status as an international business hub has deterio-
rated, and its economy has lost significant ground since the passage
of the NSL in 2020. Normal business activities, including research
and due diligence, collaboration with international colleagues, and
fact-based analysis, face restrictions as Hong Kong’s definition of
national security expands. The changes raise questions about Hong
Kong’s ability to maintain its position as the financial connecter
between mainland China and the world. Hong Kong’s stock markets
hit symbolic lows in 2024, while global trade increasingly bypasses
Hong Kong for mainland Chinese ports. Despite the relaxation of
COVID controls in 2023, international firms and expats continue
their exodus from Hong Kong. The impacts have been pronounced
within the legal sector, where notable international law firms have
downsized their physical presence or left entirely. Meanwhile, main-
land firms and people have moved into Hong Kong for its perceived
comparative opportunities as mainland China’s economic slowdown
worsens. Hong Kong’s pro-Beijing leadership, desperate for new
sources of economic growth, welcomes these trends. Beijing uses
Hong Kong to further its military aims through Hong Kong’s place
in the Greater Bay Area economic zone, funneling capital into Chi-
nese technology startups. Hong Kong’s looser business restrictions,
26
which historically have supported Hong Kong’s status as a global

legal and business hub, now are used by bad actors to circumvent
sanctions and export controls. Although notable pockets of society,
including the business community, remain sanguine about Hong
Kong’s status as a regional financial and trade hub, that status was
based on a set of freedoms and the rule of law, which Beijing is
actively eroding.
Key Findings
• Imposition of the Article 23 Ordinance further equips Hong
Kong’s government with legal tools to oppress any vestiges of
dissent. Hong Kong’s robust civil society, which once set it apart
from the Mainland, is being eroded and replaced with a society
where individuals, religious organizations, and the press must
censor themselves or face possible criminal prosecution for ac-
tivities that were previously protected by law.
• The rule of law in Hong Kong is under threat. Hong Kong’s
courts no longer maintain clear independence from the govern-
ment and are being weaponized as the Article 23 Ordinance is
enforced. The court’s verdict in more than a dozen of the Hong
Kong 47 cases to convict pro-democracy advocates for offens-
es that allegedly threatened national security, and subsequent
resignations by international jurists in protest, illustrate the
degradation of the city’s judicial integrity.
• Imposition of the Article 23 Ordinance introduces uncertainty
for businesses in Hong Kong. Firms and business professionals
could potentially face criminal conviction for conducting normal
business activity, including research, international collabora-
tion, and due diligence.
• Hong Kong’s repressive new security regime not only threatens
Hong Kong residents but also can endanger foreign business
professionals in Hong Kong and be wielded as a cudgel to re-
press the overseas activist community, including in the United
States, through its extraterritorial application.
• Chinese nationals and businesses have flooded Hong Kong’s la-
bor force and economy, advancing Beijing’s ambitions to inte-
grate Hong Kong along with Macau and nine nearby mainland
Chinese cities into the broader Greater Bay Area economic hub.
• Hong Kong has become a key transshipment node in a global
network that assists Russia and other adversaries in evading
sanctions and circumventing export controls. This diminishes
the efficacy of U.S. and allied government efforts to advance
important national security interests, and it exposes Western
investors, financial institutions, and firms to financial and rep-
utational risks when they do business in Hong Kong.
27
THE COMMISSION’S 2024 KEY

RECOMMENDATIONS
The Commission considers 10 of its 32 recommendations to Con-
gress to be of particular significance. The complete list of recommen-
dations appears at the Report’s conclusion on page 733.
The Commission recommends:
I. Congress establish and fund a Manhattan Project-like pro-
gram dedicated to racing to and acquiring an Artificial Gen-
eral Intelligence (AGI) capability. AGI is generally defined as
systems that are as good as or better than human capabilities
across all cognitive domains and would usurp the sharpest
human minds at every task. Among the specific actions the
Commission recommends for Congress:
• Provide broad multiyear contracting authority to the exec-
utive branch and associated funding for leading artificial
intelligence, cloud, and data center companies and others
to advance the stated policy at a pace and scale consistent
with the goal of U.S. AGI leadership; and
• Direct the U.S. secretary of defense to provide a Defense
Priorities and Allocations System “DX Rating” to items in
the artificial intelligence ecosystem to ensure this project
receives national priority.
II. With respect to imports sold through an online marketplace,
Congress eliminate Section 321 of the Tariff Act of 1930 (also
known as the “de minimis” exemption), which allows goods
valued under $800 to enter the United States duty free and,
for all practical purposes, with less rigorous regulatory in-
spection. Congress should provide U.S. Customs and Border
Protection adequate resources, including staff and technology,
for implementation, monitoring, and enforcement.
III. Congress consider legislation to eliminate federal tax expen-
ditures for investments in Chinese companies on the Entity
List maintained by the U.S. Department of Commerce, or iden-
tified as a Chinese military company on either the “Non-Spe-
cially Designated National (SDN) Chinese Military-Industrial
Complex Companies List” maintained by the U.S. Department
of the Treasury or the “Chinese military companies” list
maintained by the U.S. Department of Defense. Among the
tax expenditures that would be eliminated prospectively are
the preferential capital gains tax rate, the capital loss car-
ry-forward provisions, and the treatment of carried interest.
IV. To enhance the effectiveness of export controls, Congress
should:
• Improve the analytic and enforcement capabilities of the
U.S. Department of Commerce’s Bureau of Industry and Se-
curity (BIS) by providing resources necessary to hire more
in-house experts; establish a Secretary’s Fellows Program
to more effectively attract interagency talent; expand part-
nerships with the national labs; increase access to data and
data analysis tools, including the acquisition of proprietary
28
datasets and modern data analytic systems; and hire ad-

ditional agents and analysts for the Office of Export En-
forcement.
• Amend the Export Control Reform Act to require that with-
in 30 days of granting a license for export to entities on
the Entity List, including under the Foreign Direct Product
Rule, BIS shall provide all relevant information about the
license approval to the relevant congressional committees,
subject to restrictions on further disclosure under 50 U.S.C.
§ 4820(h)(2)(B)(ii).
• Direct the president to:
○ Designate a senior official to coordinate efforts across the
Administration to prioritize bilateral and multilateral
support for U.S. export control initiatives; and
○ Establish a Joint Interagency Task Force, reporting to
and overseen by the national security advisor and with
its own budget and staff, to assess ways to achieve the
goal of limiting China’s access to and development of ad-
vanced technologies that pose a national security risk to
the United States. The task force should include desig-
nees from the U.S. Departments of Commerce, Defense,
State, Treasury, and Energy; the intelligence community;
and other relevant agencies. It should assess the effec-
tiveness of existing export controls; provide advice on
designing new controls and/or using other tools to maxi-
mize their effect while minimizing their negative impact
on U.S. and allied economies; and recommend new au-
thorities, institutions, or international arrangements in
light of the long-term importance of U.S.-China technol-
ogy competition.
○ Codify the “Securing the Information and Communica-
tions Technology and Services Supply Chain” Executive
Order to ensure that as the authority is used more ro-
bustly, challenges to its status as an executive order will
not constrain BIS’s implementation decisions or delay
implementation.
V. Congress consider legislation to:
• Require prior approval and ongoing oversight of Chinese
involvement in biotechnology companies engaged in oper-
ations in the United States, including research or other
related transactions. Such approval and oversight opera-
tions shall be conducted by the U.S. Department of Health
and Human Services in consultation with other appropri-
ate governmental entities. In identifying the involvement
of Chinese entities or interests in the U.S. biotechnology
sector, Congress should include firms and persons:
○ Engaged in genomic research;
○ Evaluating and/or reporting on genetic data, including
for medical or therapeutic purposes or ancestral docu-
mentation;
29
○ Participating in pharmaceutical development;

○ Involved with U.S. colleges and universities; and
○ Involved with federal, state, or local governments or
agencies and departments.
• Support significant Federal Government investments in
biotechnology in the United States and with U.S. entities at
every level of the technology development cycle and supply
chain, from basic research through product development
and market deployment, including investments in inter-
mediate services capacity and equipment manufacturing
capacity.
VI. To protect U.S. economic and national security interests, Con-
gress consider legislation to restrict or ban the importation of
certain technologies and services controlled by Chinese enti-
ties, including:
• Autonomous humanoid robots with advanced capabilities of
(i) dexterity, (ii) locomotion, and (iii) intelligence; and
• Energy infrastructure products that involve remote servic-
ing, maintenance, or monitoring capabilities, such as load
balancing and other batteries supporting the electrical grid,
batteries used as backup systems for industrial facilities
and/or critical infrastructure, and transformers and associ-
ated equipment.
VII. Congress direct the Administration to create an Outbound
Investment Office within the executive branch to oversee in-
vestments into countries of concern, including China. The of-
fice should have a dedicated staff and appropriated resources
and be tasked with:
• Prohibiting outbound U.S. investment through a sec-
tor-based approach in technologies the United States has
identified as a threat to its national or economic security;
• Expanding the list of covered sectors with the goal of align-
ing outbound investment restrictions with export controls.
The office should identify and refine the list of covered
technologies in coordination with appropriate agencies as
new innovations emerge; and
• Developing a broader mandatory notification program for
sectors where investment is not prohibited to allow policy-
makers to accumulate visibility needed to identify potential
high-risk investments and other sectors that pose a threat
to U.S. national or economic security. In addition to direct
investments, the notification regime should capture passive
investment flows to help inform debates around the expan-
sion of prohibitions to cover portfolio investment.
VIII. Congress amend the Consumer Product Safety Act to (1) grant
the U.S. Consumer Product Safety Commission (CPSC) uni-
lateral mandatory recall authority over products where the
Chinese seller is unresponsive to requests from the CPSC for
further information or to initiate a voluntary recall and the
30
CPSC has evidence of a substantial product hazard, defined

as either failing to comply with any CPSC rule, regulation,
standard, or ban or posing a substantial risk of injury to the
public; and (2) classify Chinese e-commerce platforms as dis-
tributors to allow for enforcement of recalls and other safety
standards for products sold on these platforms.
IX. Congress repeal Permanent Normal Trade Relations (PNTR)
for China. The PNTR status allows China to benefit from the
same trade terms as U.S. allies, despite engaging in practices
such as intellectual property theft and market manipulation.
Repealing PNTR could reintroduce annual reviews of China’s
trade practices, giving the United States more leverage to ad-
dress unfair trade behaviors. This move would signal a shift
toward a more assertive trade policy aimed at protecting U.S.
industries and workers from economic coercion.
X. Congress direct the Office of the Director of National Intel-
ligence, within 180 days, to conduct a classified assessment,
and brief its findings to Congress, of the intelligence commu-
nity’s (IC) ability to accurately monitor strategic, nonmilitary
indicators that would signal that China is preparing for im-
minent conflict and the extent to which China’s increasing
lack of transparency affects the IC’s ability to monitor this
information. The assessment should include, but not be limit-
ed to, the following:
• The IC’s ability to monitor:
○ China’s energy storage locations and stockpiling rates,
particularly for crude oil, coal, and natural gas;
○ Production shifts from civilian to military industries;
○ China’s national defense mobilization system; and
○ China’s strategic reserves and their compositions and lo-
cations;
• The IC’s ability to coordinate with non-Title 10 and -Title
50 federal agencies that have technical expertise in agricul-
ture and trade to monitor China’s food and energy stockpil-
ing and any derived indicators that may signal a potential
preparation for conflict;
• Whether the IC’s current geospatial intelligence posture is
adequate to compensate for the loss of open source infor-
mation from China; and
• The desirability and feasibility of establishing an Energy
Strategic Warning system involving coordination between
relevant entities including the National Geospatial-Intel-
ligence Agency and the U.S. Departments of Energy, Com-
merce, State, and the Treasury.
PART I
THE YEAR IN REVIEW
CHAPTER 1: U.S.-CHINA ECONOMIC AND
TRADE RELATIONS (YEAR IN REVIEW)
Abstract
China’s economy grew in 2024, albeit at a much slower pace than
it did pre-pandemic. Chinese officials have introduced stimulus mea-
sures throughout the year, including a series of announcements in
September and October that will likely provide a short-term boost
to economic growth. While the latest stimulus round has the po-
tential to be among the largest China has passed to deal with the
current crisis, the measures are insufficient in scale compared to the
scope of China’s economic challenges, and their long-term impact is
questionable. The fallout from the property sector collapse contin-
ues to be China’s largest domestic economic headwind and a source
of weakness for local government finances and consumer spending.
Officials are focused on mitigating systemic economic risks and
achieving a controlled deflation of the property bubble rather than
reversing the sector’s decline. Although Chinese policymakers have
repeatedly stated their intention to increase the contributions of
services and consumption to economic growth, in reality, China has
doubled down on a variant of its traditional manufacturing and ex-
port model. China has increased government subsidies and targeted
supply-side stimulus toward favored industries, especially those in-
volving advanced technology. The Chinese Communist Party’s (CCP)
prioritization of supply-side policies aims to further strengthen Chi-
na’s manufacturing base and increase its self-sufficiency while si-
multaneously increasing Party-state control over domestic capital
allocation and global supply chains and increasing dependency by
other nations. While this strategy has led to China’s emergence as a
leader in the manufacture and export of goods such as solar panels
and electric vehicles (EVs), China’s export of excess capacity is lead-
ing to increasingly aggressive pushback from China’s major trading
partners and the imposition of tariffs by the United States, the EU,
and others. Concerned about the impact of rising Chinese imports
on their own prospects for development, some emerging economies
have launched trade investigations or imposed tariffs to protect do-
mestic industries.
Key Findings
• Chinese authorities have reasserted and expanded control over
the economy centrally, regionally, and locally. General Secretary
(31)
32
of the CCP Xi Jinping’s vision for future economic growth in

China is politically driven and differs from Western economic
orthodoxy.
• The continuing slowdown in economic expansion has led to
greater reliance on specific growth drivers, allocating capital to
those targeted sectors and exporting excess capacity to sustain
growth.
• China continues to rely on manufacturing and exports to drive
growth while also trying to move up the value chain to pro-
duce and export high-technology goods. This growth strategy
assumes the rest of the world will continue to absorb China’s
excess capacity at the expense of their own domestic manufac-
turing and technology sectors.
• China has pivoted from an emphasis on aggregate gross do-
mestic product (GDP) growth to a strategy that targets “higher
quality” production in emerging technologies. China hopes that
becoming a dominant producer of high-tech goods will allow it
to sidestep systemic economic problems and enhance its overall
global economic position and national power.
• Substantial risks remain in the property sector, which have al-
ready had serious ramifications for the Chinese economy. The
CCP introduced new support measures for the property sector
in 2024 and helped local government financing vehicles (LG-
FVs) refinance maturing debt. However, the scale of unfinished
housing and the large amount of local and regional government
debt far exceeds the amount of capital allocated for financial
support. These issues may weigh down economic performance
in the near future as households await delivery of apartments
for which they have made substantial down payments and de-
veloper bond defaults reverberate through the financial sector.
• While Chinese data measuring youth unemployment have
shown recent improvement, China’s college-educated youth are
growing more pessimistic about their personal financial sit-
uation as they continue to enter a workforce that prioritizes
manufacturing jobs they do not want and focuses on skills they
do not have. A combination of slowing growth post-pandemic
and targeted policy crackdowns have weakened some consumer
technologies and other service sectors that previously employed
a large majority of youths. To the extent that the CCP’s societal
legitimacy is based on delivering economic growth and opportu-
nity, the increase in youth unemployment has called that into
question.
• The CCP has directed state-owned banks and asset managers
to intervene to prop up the stock market and issue credit to
state-owned enterprises (SOEs) and regional and local govern-
ments on favorable terms. As long as these measures remain a
common practice, Chinese households will remain skeptical of
passive long-term domestic investment opportunities as a way
to generate wealth, forcing them to save a larger share of their
income. Uncertainty regarding Chinese investment opportuni-
ties dampens China’s attempts to bolster consumption.
33
Introduction
China has renewed its strategy of relying on export-oriented
manufacturing as a primary driver of growth, expanding exports
to encompass traditional goods and advanced technologies. Chi-
nese officials believe new investments in advanced technology will
also mitigate potential disruptions brought about by a more hostile
geopolitical environment while simultaneously revitalizing China’s
productivity growth, which has slowed dramatically over the past
decade. The United States, EU, and other trade partners have taken
steps to address China’s unfair trade practices that they deem to be
market-distorting; however, the CCP has not been willing to manage
the economy consistent with its obligations under the WTO. As long-
standing trading partners take actions to counter these challenges,
China has deepened its close relationships with adversarial coun-
tries, including Russia. This section examines key developments and
trends in China’s domestic economy and external economic relations,
including U.S.-China bilateral relations and other key relationships.
China’s Domestic Macroeconomic Outlook
As China seeks to deleverage and manage challenges posed by
the property sector, its leaders are faced with two broad pathways
to drive the country’s economy: double down on the traditional ex-
port-led economic growth model they have long pursued or shift the
economy structurally toward stronger household consumption as the
new primary driver of economic expansion.1 Over the past year, Chi-
na has decisively shown that it will continue its traditional growth
path.
Figure 1: Year-over-Year Change in Chinese Loans by Sector,
Q1 2013–Q1 2024
$1000B
$800B
Manufacturing
$600B
$400B
$200B
$0B
Real Estate
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: People’s Bank of China, “China Loan: Manufacturing, China Loan: Real Estate [2013–
2024],” via CEIC database.
34
China’s focus on manufacturing stems from a long tradition of

economic planning that emphasizes industrial production and in-
frastructure development to promote growth, facilitate economic
modernization, and ensure Party control over the economy. Chinese
officials have built a system predicated on low consumption and
high savings where capital can be funneled by government-con-
trolled banks into investments in sectors prioritized by the Party.2
In this model, household consumption is at odds with Xi’s goals of
strengthening the Party and making China the dominant industrial
and technological superpower.3 Putting an increased portion of the
nation’s wealth in the hands of ordinary citizens could decrease the
Party’s control over economic resources, which is core to its ability to
exert power through its authoritarian hierarchy.* A system based on
investment-led growth reinforces the political status quo by preserv-
ing the Party’s grip on the economy. Overinvestment makes China’s
industrial base dependent on cheap financing to survive. Because
this financing is overwhelmingly managed by state banks, Chinese
businesses are subservient to Party interests.4
An increasingly hostile geopolitical environment, in which other
countries have implemented export controls and pursued de-risk-
ing, has also motivated China to double down on this approach.5
Through increased investments in manufacturing, Xi hopes to make
the Chinese economy more self-sufficient while simultaneously in-
creasing the control China exerts over global supply chains.6 Top
Chinese officials believe industrial security sits at the core of Chi-
na’s stability.7 Though a reorientation toward consumption could
revitalize overall GDP growth, Chinese leaders have long believed
a slowdown was inevitable.8 Nonetheless, they appear willing to ac-
cept slower growth in exchange for increased Party control.9
Traditional Growth Drivers
Manufacturing
Chinese officials have reemphasized manufacturing as the
central pillar of the country’s economic growth and are at-
tempting to supplement their dominance of commodified
manufactured goods with new, advanced technological prod-
ucts. China has structured its economy to dominate global manu-
facturing. In 2022, value-added manufacturing contributed around
27 percent of China’s GDP, the highest percentage among any large
economy.† 10 Given that China’s GDP is the second largest in the
world, this means that by 2022, the most recent year with available
data, China accounted for 30 percent of the world total of value-add-
ed manufacturing.‡ 11 China’s share of value-added manufacturing
dwarfs its 18 percent share of global GDP; following China’s policy
* For more on how the Chinese Party-state exercises control, see U.S.-China Economic and
Security Review Commission, Chapter 1, “CCP Decision-Making and Xi Jinping’s Centralization
of Authority,” in 2022 Annual Report to Congress, November 2022, 25–120.
† Manufacturing contributed 24 percent of South Korea’s GDP, 19 percent of Germany’s GDP,
19 percent of Japan’s GDP, and 11 percent of U.S. GDP as of most recent data in either 2022 or
2023. World Bank, “Manufacturing, Value Added (% of GDP) [2022–2023].”
‡ In 2023, China’s manufacturing trade surplus was higher than Germany and Japan’s com-
bined surplus during their respective peaks from 1970 to 1980, indicating that China increasingly
dominates global manufacturing output at the expense of its trade partners. Brad W. Setser, Mi-
chael Weilandt, and Volkmar Baur, “China’s Record Manufacturing Surplus,” Council on Foreign
Relations, March 10, 2024.
35
shifts to support new manufacturers, this share is likely trending

higher.12
However, in 2022, Chinese consumers only accounted for 13
percent of global consumption.13 Instead, China continues to be
heavily reliant on external demand and global willingness to ab-
sorb its manufacturing surplus. With Chinese demand insuffi-
cient to absorb the country’s excess of cars, appliances, and other
products, about 45 percent of China’s manufacturing output is
being exported abroad.14
Chinese policymakers are increasing export-oriented manufactur-
ing, with particular emphasis now on higher-technology products.
Building upon industrial and innovation policies such as Made in
China 2025, the Innovation-Driven Development Strategy, and the
14th Five-Year Plan, in September 2023 Xi called upon the nation to
develop “new quality productive forces,” allowing for China to “guide
the development of strategic emerging industries and future indus-
tries.” 15 He echoed this message again in December 2023 at the
annual Central Economic Work Conference, which sets the nation-
al agenda for the country’s economy and its financial sector.16 The
slogan also featured prominently during the March 2024 meeting
of the National People’s Congress and in the CCP Central Commit-
tee’s Third Plenum in July 2024.17 In practice, the phrase has been
interpreted to mean a reemphasis on manufacturing, particularly
in clean energy and other “future industries,” to offset the economic
drag caused by the collapse of the country’s housing bubble.* 18
Chinese lending to the manufacturing sector, which was already
experiencing rapid growth following China’s pandemic export boom,
has matched this rhetoric. From 2020 to 2023, Chinese industrial
lending grew at an average 24.2 percent year-over-year.19 This is
more than four times faster than the four years prior to COVID-19,
when it grew an average of 5.2 percent.† 20 In Q1 2024, this amount-
ed to $623 billion in new loans to the sector from the previous year.21
Exports are surging as well. From 2019 to 2023, Chinese manufac-
turing exports grew 40.5 percent.22 In comparison, global trade grew
by 24.5 percent over that same time period.23 This growth has been
driven in part by what Chinese officials call the “new three sectors”:
solar panels, lithium-ion batteries, and EVs.24 From 2019 to 2023,
exports for each have grown 77 percent, 399 percent, and 7,690 per-
* The official list of “future industries” published by China’s Ministry of Industry and Informa-
tion Technology in January 2024 spans several broad fields such as manufacturing, information,
materials, energy, space, and health but also mentions specific items such as humanoid robots,
nanomanufacturing, quantum computing, nuclear fusion, hydrogen energy, exploration of the
moon and Mars, deep-sea mining, and genetic technologies. Xinhua, “China Releases Full Text
of Government Work Report,” March 13, 2024; China’s Ministry of Industry and Information
Technology, MIIT and Seven Other Departments’ Opinions on the Implementation of Promoting
Innovation and the Development of Future Industries (工业和信息化部等七部门关于推动未来产业创
新发展的实施意见), January 29, 2024. Translation.
† In comparison, over the same time period, loan growth toward services and real estate were
much more muted at 11.8 percent and 4.4 percent, respectively. However, not all this industrial
lending is going toward new productive capacity. Researchers at Rhodium Group reported that
this credit growth has been inflated by lending to local government-related entities and financial
speculation. They have shown that the share of loans to manufacturing companies in overall new
industrial credit declined to 63 percent in the fourth quarter of 2023, down from 80 percent in
early 2020. Even though this is a sign of weak credit demand in the sector, lending is still ele-
vated and policymakers are also leaning on other avenues to ensure financing reaches industries
covered by the “new productive forces.” People’s Bank of China, “China: Financial Institutions:
Property Loans, China: Fin Inst: Med/Long Term [MLT] Service Sector Loans,” via Haver Ana-
lytics; Bloomberg, “China’s Surging Industrial Loans Aren’t Going to Its Factories,” May 7, 2024.
36
cent, respectively.* 25 Even with these export surges, the country’s

production capacity and potential future exports are more worrying
for China’s trading partners.26 China now has the capacity to man-
ufacture half of the world’s 80 million new vehicles, and by 2030 its
production capacity could climb to three-fourths of projected global
production.27 China has also built enough solar panel factories and
battery production plants to be the sole supplier of global demand.28
There is little expectation this will change. China accounted for 75
percent of global investments in clean technology manufacturing in
2023 and 85 percent in 2022.29 Bloomberg Economics projects that
high-tech sectors will contribute 22.7 percent of China’s GDP by
2026, almost double the 11.9 percent they comprised in 2017.† 30
Simultaneously, China is trying to maintain its dominance of more
traditional manufacturing industries. During the May 2023 annual
meeting of a top economic policymaking body, General Secretary Xi
laid out plans for a “modernized industrial system” while also re-
taining and upgrading traditional industries.31 Combined with new
overcapacity fears relating to China’s “new three sectors,” countries
are increasingly concerned that the wide range of surging exports
are reminiscent of the “China Shock” that happened in the years
following its entry into the WTO.‡ 32 Indeed, China’s traditional ex-
ports are surging, with Chinese global steel exports nearing their
2015 peaks in terms of volume.33
China’s focus on producing a wide spectrum of manufactured
goods impacts the global trading ecosystem in several ways, dom-
inating not only at the macro level but also at the product level. A
group of scholars showed that China was the world’s dominant pro-
ducer (defined as producing more than 50 percent of global exports
within a product category) of six times as many products as the
United States, Japan, or any other country and twice the number of
products for the EU considered as a whole.§ 34 Chinese dominance
is significant because it means China is currently irreplaceable for
a large set of goods on international markets. China’s role in supply
chains also creates dependencies that give China alarming leverage
over its buyers, and potentially over foreign governments, and puts
its competitors at a disadvantage.35 Furthermore, there are hardly
any goods China does not make and export to some extent, even in
sectors where it is not the dominant producer.¶ While China has
long emphasized manufacturing and exports as a growth strategy,
China now justifies its efforts in part as a reaction to its ongoing
* Photovoltaics were defined as HS 854143, lithium-ion batteries were defined as HS 850760,
and EVs were defined as HS 870380.
† High-tech sectors are defined here as EVs, batteries, solar panels, medicine, advanced equip-
ment, IT/communications equipment and services, and research and development. For additional
background, see Chapter 3, “U.S.-China Competition in Emerging Technologies.”
‡ The term “China Shock” was popularized by a seminal paper published in 2016 by economists
David H. Autor, David Dorn, and Gordon H. Hanson, who argued that a flood of Chinese exports
replaced domestic manufacturers in the United States, creating localized but highly negative im-
pacts on import competing regions across the country. David H. Autor, David Dorn, and Gordon H.
Hanson, “The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade,”
Annual Review of Economics 8 (2016): 205–240.
§ Products were defined at the six-digit level of the Harmonized System, which distinguishes
over 5,000 different products. Sebastien Jean et al., “Dominance on World Markets: The China
Conundrum,” CEPII, December 2023.
¶ While the previous analysis was done at the six-digit level of the Harmonized System, when
researcher Andrew Batson looked at the four-digit level, he found zero exports from China in
fewer than 50 of the possible 1,241 product categories. Andrew Batson, “China Wants Those Low-
End Industries after All,” Tangled Woof, October 3, 2023.
37
trade conflicts with the West and its fears over future sanctions.36
Former People’s Bank of China (PBOC) official Yu Yongding explains,
saying, “Re-emphasizing the importance of comprehensiveness is a
reaction to the new geopolitical reality . . . . [China] should be able
to quickly launch or increase production of critical goods, as need-
ed.” 37 Chinese officials hope broad-based productive capacity will
insulate the Chinese economy against disruptions if its companies
are blocked from importing from advanced industrialized countries,
while market dominance will make it irreplaceable in key nodes at
every level in the global supply chain, giving it economic and poten-
tial political leverage.
Heavy state subsidization has been central to China’s con-
trol of both emerging and existing industries. Conservative
estimates from the Kiel Institute suggest that in 2019, Chinese
industrial subsidies amounted to $242 billion (renminbi [RMB]
1.8 trillion).* 38 This is at least three to four times and up to nine
times higher than in the major EU and Organisation for Econom-
ic Co-operation and Development (OECD) countries.39 More recent
data looking at some of the industries championed by China’s “new
productive forces” suggest direct government subsidies for some of
the dominant Chinese manufacturers of green technology products
could be significantly higher.40 These estimates of direct government
subsidies fail to quantify additional support measures such as access
to subsidized inputs, preferential access to critical raw materials,
forced technology transfers, the strategic use of public procurement,
lack of foreign competition in the domestic market, and the prefer-
ential treatment of domestic firms in administrative procedures.41
Overall, in 2023, China’s manufacturing trade surplus with the EU
as a share of the EU’s GDP increased by 0.5 percentage points, and
its surplus with the United States remained flat as a share of U.S.
GDP.42 Emerging markets have had to absorb the brunt of China’s
surplus. China’s manufacturing trade surplus with ASEAN more than
doubled between 2019 and 2023, rising from 3 percent to 6 percent of
the region’s GDP.43 China’s surplus with Mexico reached 3.8 percent
of Mexico’s GDP in 2023, up from 2.7 percent in 2019.44 (For a discus-
sion of transshipment issues, see Chapter 4, “Unsafe and Unregulated
Chinese Consumer Goods: Challenges in Enforcing Import Regulations
and Laws.”) This has galvanized some governments into action as well.
After Chinese imports took nearly 20 percent of Brazil’s domestic mar-
ket share of steel, Brazil’s Ministry of Development, Industry, Trade,
and Services introduced import quotas and raised import taxes to 25
percent on 11 rolled steel products to protect domestic producers.45 A
number of other countries have followed suit, including India, Chile,
Mexico, Indonesia, and South Africa.46
Property Sector
Chinese officials see the need to reduce leverage and ex-
cess investment in the property sector but are constrained
from acting too aggressively due to the trillions of dollars in
household wealth invested in real estate. Policy makers appear
content to allow the sector to decline steadily while mitigating sys-
* Unless noted otherwise, this section uses the following exchange rate throughout: $1 = RMB
7.25.
38
temic financial risk as the sector resets. China’s real estate sector has
been a central pillar of its economy since the late 1990s, with sectoral
growth consistently exceeding the country’s GDP growth.47 Because of
this growth, some estimates suggest the sector could account for 29
percent of the country’s overall GDP, more than double that of most
other countries.* 48 Rapid growth, however, attracted speculation. A
lack of alternative savings options meant Chinese households began
to pour their massive savings into the housing market.49 Real estate
development as a share of all fixed asset investment climbed from 18
percent in 1999 to 27 percent in 2021.† 50 Real estate comprises around
70 percent of Chinese household wealth.‡ 51 Just before the bubble de-
flated, a considerable share of the 16 billion square feet of purchased
residential property was speculative investments rather than real de-
mand.52 Further, these properties were often presold and paid in full
in advance—no deposits or down payments.53 This generated a broad-
based affordability crisis, with average sales prices rising almost 350
percent from 2006 to 2021, causing prices to become considerably high-
er relative to incomes.54
Simultaneously, Chinese developers have long been reliant on debt
to sustain their activities. The sector’s business model was charac-
terized by rapid project turnover, quick sales, and high leverage.55
As a result, the country’s developers had a debt-to-asset ratio far
higher than their peers in other major real estate markets like the
United States or Japan.56 Recent economic downturns exacerbated
these trends. In response to economic crises in 2008, 2012, and 2015,
Chinese policymakers stimulated the economy by extending credit
to the non-financial private sector.57 Utilizing this stimulus, the av-
erage debt-to-asset ratio of Chinese real estate developers rose from
around 72 percent in 2008 to more than 80 percent by 2021.§ 58
In August 2020, the PBOC and the Ministry of Housing and Ur-
ban-Rural Development directed representatives from the largest
private and state-owned companies in the sector to reduce their
leverage.59 The set of policies became known as the “three red
lines.” ¶ Chinese officials intended the policy to prevent developers
* This is a contested value with estimates and the methodologies used to derive them ranging
widely. Economists Kenneth Rogoff of Harvard and Yuanchen Yang of the International Monetary
Fund (IMF) estimate the sector to be 28.7 percent of the economy, a widely cited figure; econo-
mists at the Asian Development Bank (ADB) estimate it to be closer to 15.4 percent; and econo-
mists at Goldman Sachs, an investment bank, estimated its value to be 23 percent. Regardless,
the share of the property sector in China’s GDP is large. Economist, “Measuring the Universe’s
Most Important Sector,” November 26, 2021.
† As a share of overall GDP, investment in real estate development climbed from about 4 per-
cent in 1999 to a peak of 14.8 percent in 2014. By 2021, it had fallen to 12.8 percent. Tianlei
Huang, “Why China’s Housing Policies Have Failed,” Peterson Institute for International Econom-
ics, June 2023, 22.
‡ Estimates put the 2012 share of housing in urban wealth at 78.7 percent and rural wealth
at 60.9 percent. Including land and housing raised the share to 81.3 percent of rural wealth.
In comparison, this is more than double the average U.S. household, which holds an estimated
36 percent of total wealth in real estate. Briana Sullivan, Donald Hays, and Neil Bennett, “The
Wealth of Households: 2021,” United States Census Bureau, June 2023, 4; Yu Xie and Yongai Jin,
“Household Wealth in China,” Chinese Sociological Review, 47:3 (2015): 203–229.
§ Debt was even more concentrated within China’s largest property developers. The five largest
developers measured by revenue and debt ratio at the end of 2020 were China Evergrande (84.77
percent), Country Garden (87.25 percent), Vanke (81.28 percent), Zhongnan (86.54 percent), and
Sunac (83.96 percent). Tianlei Huang, “Why China’s Housing Policies Have Failed,” Peterson In-
stitute for International Economics, June 2023, 5.
¶ The “three red lines” criteria to which developers must adhere are (1) a liability-to-asset ratio
less than 70 percent, (2) net debt not exceeding equity, and (3) enough cash on hand to cover
short-term borrowing. Developers who meet all three criteria are allowed to increase their overall
debt by at most 15 percent annually. If a developer breaches one red line, it is allowed to grow its
debt by 10 percent annually. If a developer breaches two red lines, it is allowed to grow its debt
39
from incurring additional debt until they reduced their liabilities

to more sustainable levels.60 In December 2020, regulators further
tightened lending rules and imposed caps on banks’ exposure to
property developer loans and mortgages.* 61 Policymakers hoped
this would force the deeply indebted sector to deleverage while also
limiting the financial sector’s exposure to the property sector, avoid-
ing potential systemic risks.† 62 Although regulators likely expect-
ed some pain from these reforms, they miscalibrated their impact,
which was amplified by China’s Zero-COVID lockdowns.63
In 2021, real estate developers across the country began default-
ing on their debt.64 By 2022, the entire sector was in a deep reces-
sion. Across the country, real estate investment and property sales
fell by 9 percent and 27 percent, respectively, compared to 2021.65
This drop in cash flow caused a 17 percent decrease in housing com-
pletions and a nearly 40 percent decline in housing starts.66 The
year 2022 was the sector’s worst since China’s nationwide housing
market was created in 1998.
Falling property values and investment losses have destroyed tril-
lions in household wealth, particularly for the middle class, who were
supposed to galvanize the shift to consumption-led growth.67 This
demographic has instead scaled back consumption across the board
in the absence of stronger policy support for the property sector.68
Fallout from the property sector also spilled over into the banking
sector, impacting trusts and wealth management products that had
concentrated investments in property under the misconception that
housing values would only rise.69 Many individual investors who
put their savings into the funds have not received their principal
back, much less the outsized returns they hoped for at inception.70
While the sector has begun to stabilize, it still remains the
largest drag on Chinese growth. In the first seven months of
2024, China’s housing sales and investment for new housing proj-
ects fell by 18.6 percent and 10.2 percent, respectively, compared
with the same period in 2023.71 China still faces a surplus of un-
finished homes. At the end of 2023, Nomura Securities, a Japanese
financial firm, estimated that there were 20 million units of presold
homes that still need to be finished and would require $440 billion
in funding to complete.‡ 72 Under the guidance of the country’s reg-
ulators, Chinese developers have devoted a greater portion of their
remaining resources to completing presold unfinished projects.
by 5 percent annually. If all three red lines are breached, the developer is not allowed to incur
any new debt. UBS Asset Management, “China’s Three Red Lines: Opportunities in China Real
Estate,” January 11, 2021.
* The rule required China’s largest state-owned banks to reduce loan exposure to property
developers to 40 percent or less in their total loan balance and mortgage lending to 32.5 percent
or less. Smaller banks faced stricter requirements and lower caps on the allowed exposures to
developer loans and mortgages. All lenders that exceeded the caps when they were imposed were
allowed a grace period of up to four years to meet these requirements. Tianlei Huang, “Why Chi-
na’s Housing Policies Have Failed,” Peterson Institute for International Economics, June 2023, 13.
† Real estate loans—including property developer loans and household mortgages—as a share
of all loan balances in the Chinese banking sector grew from less than 20 percent in 2011 to more
than 27 percent in 2021. This growth was often concentrated within specific banks. Important-
ly, the non-performing loan (NPL) ratio for property developer loans across the banking sector
increased nearly threefold from 2013 to 2019 to around 6 percent. Tianlei Huang, “Why China’s
Housing Policies Have Failed,” Peterson Institute for International Economics, June 2023, 5.
‡ Others, like Goldman Sachs, estimate the value to be even higher, calculating that Chinese
developers need $553 billion to complete housing they presold to buyers and then failed to finish.
Lulu Yilun Chen and Tom Hancock, “China’s Private Builders Face $553 Billion Gap to Complete
Homes,” Bloomberg, April 14, 2024.
40
Figure 2: China’s Residential Real Estate Sector, Prices, Sales, Starts,
2019–2024
150
100 Residential
property prices
Index, 2018 = 100
Real estate starts
50
Real estate sales
0
2019 2020 2021 2022 2023 2024 2025
Note: Sales and starts are adjusted with a three-month rolling average. Residential property
prices are a quarterly data series.
Source: China’s National Bureau of Statistics, “New Residential Sales, New Residential Starts
[2019–2024],” via Haver Analytics; Bank for International Settlements, “Residential Property
Prices for China [2019–2024],” via Federal Reserve Economic Data.
In 2024, Chinese officials focused on targeted policies that

support demand and address the supply glut. As early as 2023,
Chinese cities had taken the lead in reducing local barriers to home
purchases, which they continued to do through 2024 in the form
of relaxed credit requirements for first-time homebuyers and lower
down payment requirements.73 In early 2024, the Chinese govern-
ment began designating a “whitelist” of in-progress housing proj-
ects whose developers would be allowed to apply for bank loans in
order to complete and deliver housing to owners.74 The program is
available even to developers who have already defaulted on existing
loans.75 In May 2024, the government announced a long-awaited
rescue package. Policymakers at the central level made available
$42 billion (RMB 305 billion) in central bank funding to help gov-
ernment-backed firms buy excess inventory.76
The scale, however, is likely insufficient.77 Goldman Sachs es-
timates it would cost $1.1 trillion (RMB 7.7 trillion) to lower the
country’s housing supply to its 2018 levels.* 78 This amounts to 25
times the size of the rescue fund. Chinese markets recognized the
fund’s inadequate size, and prices have continued to fall. Month-
* Goldman’s calculations are based on the assumption that local governments and state compa-
nies can purchase inventory at 50 percent of market prices.
41
over-month new home prices, excluding state-subsidized housing,

slid 0.58 percent in April 2024, while the value of existing homes
dropped a further 0.94 percent.* 79 Both were the steepest declines
in a decade.80 As of the first half of 2024, Chinese housing prices
have experienced a total decline of 13 percent from their 2021 peak
levels.81
Because such a large portion of household wealth is held as
real estate, adjustments in the property sector have weakened
consumer sentiment.82 Investment also continues to fall, drop-
ping nearly 10 percent year-over-year in April 2024 as businesses,
investors, and individual households continue to view the sector
with skepticism.83
Geographic misallocation of housing has exacerbated Chi-
na’s housing crisis. Unlike China’s broader housing market, its
four largest cities—Beijing, Shanghai, Guangzhou, and Shenzhen—
face deep undersupply issues, generating a broader affordability cri-
sis.† From 2002 to 2022, average prices for these cities have risen
nine-fold.‡ 84 This has implications for the country’s societal makeup
and labor market. The difficulty of purchasing property has con-
tributed to a lower marriage rate because of the social expectation
that men should own a home before marriage.85 Lower marriage
rates are likely to exacerbate China’s looming demographic crisis, as
an aging population saves for retirement instead of spending. High
costs also constrain local labor markets, crowding out young pro-
fessionals from China’s most innovative and economically dynamic
cities.86 In contrast, China’s real estate overcapacity is concentrated
in its smaller cities in the interior of the country.§ From 2010 to
2021, those cities, referred to by Chinese statisticians as tier three
cities, contributed around 78 percent of the country’s total housing
stock, despite only hosting around 66 percent of China’s urban pop-
ulation.87 Those cities have been hardest hit by the market correc-
tion; real estate prices in tier three cities dropped nearly 20 percent
between early 2021 and mid-2022.88
In 2024, a number of substantial impediments to recov-
ery—including additional bankruptcies, local government
financial stress, and declining growth—remain unresolved.
While more than 50 Chinese developers have defaulted on their
* Since their peak in Q3 2021, aggregate housing prices have declined 12.4 percent through
Q1 2024. Bank for International Settlements, “Real Residential Property Prices for China,” via
Federal Reserve Economic Data.
† Chinese cites can be classified by a tier system that groups similar cities based on their
economic size, population, and political administration. The National Bureau of Statistics of
China, in its statistics on real estate activities, covers 70 large and medium-sized major cities
across China and divides them into three tiers. First-tier cities are Beijing, Shanghai, Guangzhou,
and Shenzhen. Second-tier cities are Tianjin, Shijiazhuang, Taiyuan, Hohhot, Shenyang, Dalian,
Changchun, Harbin, Nanjing, Hangzhou, Ningbo, Hefei, Fuzhou, Xiamen, Nanchang, Jinan,
Qingdao, Zhengzhou, Wuhan, Changsha, Nanning, Haikou, Chongqing, Chengdu, Guiyang, Kun-
ming, Xi’an, Lanzhou, Xining, Yinchuan, and Urumqi. Third-tier cities are Tangshan, Qinhuan-
gdao, Baotou, Dandong, Jinzhou, Jilin, Mudanjiang, Wuxi, Xuzhou, Yangzhou, Wenzhou, Jinhua,
Bengbu, Anqing, Quanzhou, Jiujiang, Ganzhou, Yantai, Jining, Luoyang, Pingdingshan, Yichang,
Xiangyang, Yueyang, Changde, Shaoguan, Zhanjiang, Huizhou, Guilin, Beihai, Sanya, Luzhou,
Nanchong, Zunyi, and Dali. Affordability is defined using the average home-price-to-income ratio,
which divides the average home price by the median household income. In 2024, major Chinese
cities’ price-to-income ratios were: Shanghai—47.9; Beijing—33.7; Shenzhen—33.7; and Guang-
zhou—33. In comparison, major U.S. cities’ price-to-income ratios were: New York—11; San Fran-
cisco—7.1; and Los Angeles—5.2. Numbeo, “Property Prices Index by City 2024.”
‡ Excluding these tier one cities, Chinese real estate prices have risen 576 percent.
China’s National Bureau of Statistics, “Residential Prices By City,” via CEIC database.
§ This primarily refers to China’s tier three cities.
42
debts since 2021, many developers have become nonviable and are
only avoiding bankruptcy because of policy interventions that have
compelled their lenders to delay recognizing their bad loans.89 If
unresolved, this could eventually spill over, further weakening real
estate prices and bank balance sheets.
China’s property sector crisis revealed a foundational instability
within a central pillar of China’s growth model.90 While Chinese
leaders have tried to do just enough to ensure it will not become a
systemic risk for the broader economy, spillovers from the cratering
real estate sector will constrain local government budgets, disrupt
the job market, and dampen confidence across the economy.91 As
the sector shrinks from its peak of around 29 percent of GDP to an
estimated 16 percent by 2026, it will continue to be a substantial
drag on the country’s overall GDP growth.92
The deflation of the property sector bubble has negatively impact-
ed the finances of local governments, which had regularly generated
between 20 percent and 30 percent of their total income from sell-
ing land usage rights to developers between 2012 and 2023.93 Land
sale proceeds and property- and land-related taxes accounted for 37
percent of total fiscal revenue for all local governments in China in
2021.94 For certain local governments, this reliance has been above
50 percent of total fiscal revenue, meaning the property crisis limits
their ability to raise revenues.95 Local government revenue gener-
ated from land sales dropped 23 percent in 2022 and an additional
18 percent in the first 11 months of 2023.* 96 To stabilize local gov-
ernment budgets, transfers from China’s central government rose by
18 percent in 2022.97 Many local governments have become reliant
on the central government to stabilize their budgets.98 For this to
change, Chinese officials will need to find new revenue sources or
their fiscal obligations will need to be reduced.99
Real estate is also one of the primary ways local governments
raise and service debt, typically through special-purpose vehicles
known as local government financing vehicles (LGFVs).100 Rapid
and lucrative real estate growth has meant that LGFVs have ac-
cumulated an estimated $7.5–8.2 trillion in off-balance-sheet debt
(RMB 55–60 trillion), equivalent to around 45 percent of China’s
GDP.101 There is little to no evidence that Beijing’s policies to ad-
dress these debt issues will have a long-term impact. Falling land
prices also mean that local governments and LGFVs will face chal-
lenges securing new debt.102
Local Government Fiscal Challenges Simmer
LGFVs are taking advantage of refinancing programs and
regulatory updates to shift debt around and stabilize balance
sheets in ways that may do more to improve optics than to
advance genuine structural reform. LGFVs face a record $651
billion (RMB 4.7 trillion) in bond maturities in 2024 that they will
either need to either pay off or refinance.† 103 Some local govern-
* Land sale revenue and land- and property-related taxes as a share of aggregate local govern-
ment revenue decreased from 37 percent in 2021 to 31 percent in 2022. Tianlei Huang, “Why Chi-
na’s Housing Policies Have Failed,” Peterson Institute for International Economics, June 2023, 32.
† LGFV bond repayments outpaced new bond issuances from Q4 2023 through Q2 2024, indi-
cating that LGFVs are making progress on deleveraging. Through the first half of 2024, LGFV
net financing was about negative $27 billion (RMB 197 billion). Bloomberg, “China’s $1.6 Trillion
LGFV Bond Market Shrinks by Most in Years,” July 8, 2024.
43
ments will likely take advantage of $138 billion (RMB 1 trillion)

government bond fund introduced last year to refinance LGFV debt
into official provincial government bonds.104 From the perspective
of the central government, the program increases transparency into
total debt levels by bringing “off-balance-sheet” LGFV debt onto the
books of provincial governments. LGFVs are also refinancing their
own “off-balance-sheet” debt, converting non-traditional borrowings
into LGFV bonds by taking advantage of a new government bond
swap program.* 105 The newly issued bonds have reduced interest
rates and longer maturity dates, which will help lower the risk of
defaults in the near term.† While bringing the debt back onto bal-
ance sheets should help increase transparency and insight into total
debt burdens, it may also encourage moral hazard if investors see
the rescue measures as proof that the government will not allow
these bonds to default.106 Longer debt maturities also extend fis-
cal problems into the future rather than addressing the underlying
issue of an imbalance between central and local tax receipts and
expenditure burdens.107 In addition to refinancing using regional
government funds, local governments are also shifting debt burdens
from weaker to stronger LGFVs, cutting expenditures, lowering in-
vestment, restructuring private debt, and selling assets to generate
funds as LGFV bonds come due.108 In heavily indebted Guizhou, a
state-owned firm provided a guarantee for new bonds issued by a
stronger LGFV to repay the debt of a weaker, unrelated LGFV.109
Together, these actions have contributed to a compression in the
risk premium paid on LGFV bonds compared with government
bonds, signaling that bond traders have regained some confidence
in regional governments to prevent defaults.110 However, as under-
lying weaknesses in local government finances remain unresolved,
this could be merely a reflection of investors’ confidence in the gov-
ernment’s unwillingness to allow LGFV defaults.111
LGFVs are also using creative accounting techniques to de-
leverage balance sheets. New accounting regulations promulgated
by the Ministry of Finance now allow firms to monetize data as
an intangible asset.‡ 112 Since these regulations became effective
on January 1, 2024, some LGFVs have classified data collected
* China’s central government maintains tight control over local government debt. In highly
indebted regions, only borrowing used to fund projects approved by the State Council or for key
development areas like affordable housing is permitted. Local governments are also required to
maintain balanced budgets, while LGFVs are not, which led to the rapid increase in LGFV debt.
Helen X. H. Bao, Ziyou Wang, and Robert Liangqi Wu, “Understanding Local Government Debt
Financing of Infrastructure Projects in China: Evidence Based on Accounting Data from Local
Government Financing Vehicles,” Land Use Policy 136 (2024): 1–17; Reuters, “Exclusive: China’s
Cabinet Curbs Debt Growth in 12 ‘High Risk’ Regions—Sources,” October 25, 2023.
† The refinanced bonds also come with new restrictions on use. Proceeds can only be used to
repay principal on outstanding debt or to fund any of the so-called “three major projects,” which
refer to affordable housing, urban village renovation, and dual-use public facilities that can be
used for everyday and emergency purposes. They cannot be used to make interest payments.
Cheng Siwei et al., “In Depth: Local Governments Struggle to Tackle Mountain of Hidden Debt,”
Caixin Global, March 20, 2024.
‡ Firms in the United States also monetize the data they collect, for example by tracking in-
ternet browsing history and selling the data to advertisers. U.S. firms are able to use this data
as loan collateral by engaging a third-party expert to perform a valuation on the data. However,
even in an industry worth billions, firms and lenders struggle to arrive at accurate valuations for
their data due to a lack of publicly available information on comparable transactions. In addition,
the developed market for personal data in the United States has sparked widespread data priva-
cy concerns. Brian X. Chen, “The Battle for Digital Privacy Is Reshaping the Internet,” New York
Times, June 23, 2023; Douglas B. Laney, “Leveraging Data as Collateral Starts with Knowing Its
True Value,” Forbes, December 23, 2022.
44
through business operations as a balance sheet asset, including

data on public transportation and utilities, with some data al-
ready serving as collateral for new loans.113 Chinese regulators
have been working on guidelines for how to value and recognize
data on financial statements, but the value of these datasets and
the degree to which they can be monetized are difficult to deter-
mine.114 Although the total amount of debt collateralized by data
is thus far small, the use of data of uncertain value as collateral
shows how desperate LGFVs are to stabilize balance sheets and
take out new debt.115
New national security laws may threaten the indepen-
dence of international credit agencies—which have identi-
fied the rising debt problems in China—and make it diffi-
cult to judge the effectiveness of ongoing property sector
reforms. In December 2023, Moody’s Ratings changed its outlook
of China’s A1 credit rating from stable to negative, citing the
increasing likelihood that the central government would need to
provide financial support for local and regional governments and
SOEs due in part to ongoing property sector weakness.116 In May
2024, Moody’s reaffirmed its A1 rating with a negative outlook for
China and added that weak consumer and business sentiment
continues to weigh on China’s economic outlook.* 117 While the
ratings action is unlikely to impact China’s finances directly, the
negative outlook underscores the difficulties China’s economy is
facing and may impact investor sentiment.† 118
In response to ratings actions, Chinese state-sponsored media
argue that international ratings agencies misunderstand China’s
economy and that their models are unsuitable for emerging econ-
omies in general.119 By labeling the ratings actions as “a delib-
erate attempt to undermine . . . confidence” in China’s economy,
Chinese media highlighted the risks for corporations when their
objective assessments contradict CCP policy edicts.120 Prior to
the release of its revised credit opinion, Moody’s reportedly ad-
vised China-based staff to work from home, a possible precau-
tion against a negative reaction from Beijing, which in the past
has included corporate raids and detaining local employees.‡ 121
Under tighter national security laws affecting international due
diligence firms, domestic investors may be directed to rely more
on China’s domestic ratings agencies, which were the subject of
intense criticism after they failed to identify deficiencies in prop-
erty developers’ financials.122
* Fitch Ratings also changed its outlook on China’s sovereign credit rating to negative in April
2024 and maintained its A+ rating, while S&P Global Ratings, the third-largest global credit rat-
ings agency, maintained its assigned stable outlook. Reuters, “Fitch Cuts China’s Ratings Outlook
on Growth Risks,” April 10, 2024; Reuters, “S&P: No Changes to China Credit Rating, Outlook,”
December 5, 2023.
† For more on how the CCP considers economic data and public perception of the economy
matters of national security, see U.S.-China Economic and Security Review Commission, Chapter
1, Section 1, “U.S.-China Bilateral and China’s External Economic and Trade Relations,” in 2023
Annual Report to Congress, November 2023, 55–56.
‡ In 2023, Chinese security officials raided three multinational corporate advisory firms, exacer-
bating tensions within the international business community. For more on China’s crackdown on
international due diligence and corporate advisory firms, see “Foreign Multinational Companies
Place Lower Priority on Investment in China” later in this chapter.
45
Lukewarm Policy Support for Alternative Growth Drivers
Chinese Consumption Data Are Contentious

Consumption trends in China are difficult to track due to dis-
crepancies in data. There is reason to suspect that consumption’s
share of GDP outpaces official Chinese statistics. Some house-
hold income earned by wealthy individuals and the benefits of
home ownership are likely underreported, as are transfers from
the Chinese state to households in the form of education, health-
care, cultural amenities, and food.123 Some have argued that after
properly including these social transfers, household consumption
increased its share of GDP by 6 percentage points from 2012
to 2019.124 However, the growth rate of consumption has likely
been overstated in more recent years. In 2022 and 2023, China’s
National Bureau of Statistics reported that consumption contri-
butions to GDP growth were 0.4 percentage points and 4.3 per-
centage points, respectively.125 Analysis by Rhodium Group esti-
mates that the reality was closer to -0.5 percentage points and 2.0
percentage points, respectively, based on a variety of alternative
data points.126 In 2022, retail sales declined, Zero-COVID policies
prevented consumers from spending money, household deposits
rose, and consumer confidence fell, all factors that would con-
tribute to lower consumption.127 Similarly, in 2023, households
paid down their debt by 13 percent and retail sales growth was
weak.128 Data on retail sales, sometimes used as a proxy for of-
ficial consumption data, present their own problems. First, re-
tail sales data include some purchases by government agencies,
schools, and the military.129 Second, consumption of services, a
growing portion of consumer expenditures, is not captured by re-
tail data.130 Third, and perhaps most importantly, Chinese statis-
tical authorities have in recent years retroactively amended retail
sales data, lowering the base of comparison to present rosier an-
nual growth numbers.131 Adjustments made to 2019 data were
on the scale of tens of billions of dollars.132 Ongoing revisions to
retail sales data, albeit on a smaller scale, make tracking China’s
consumption trends difficult.133
China remains reliant on manufacturing, exports, and the

declining property sector because household consumption
has not increased as a share of China’s GDP.134 As China’s
middle class is hit by deteriorating wealth from the property market
downturn and China’s older generations save for retirement, there
are few segments of society left that can drive consumption growth.
Key measures of consumption and consumer confidence continue to
indicate weakness compared with pre-COVID trends. Stimulus ini-
tiatives announced in mid-2023, including a trade-in program for
used cars, home renovation programs promoting energy efficiency,
and lower prices at tourism locations, have been small in scope and
not as effective as hoped.135 In 2019, year-over-year growth in month-
ly retail sales of consumer goods was consistently over 7 percent; so
far in 2024, the highest monthly figure has been 3.7 percent.136 Con-
sumption’s contribution to GDP growth was lower in the first quar-
46
ter of 2024 than it was in the last three quarters of 2023 and—ex-
cluding the period of the COVID-19 pandemic—has remained in the
same range since 2015.137 Chinese consumers continue to spend less
than their U.S. counterparts, driven by a combination of factors, in-
cluding lower household income, poor domestic investment options,
and a weak social safety net.138 China’s consumer confidence index
has remained below the 100 level (above which China’s consumers
would be considered more confident than not) since April 2022.139
Results from the annual “618” shopping festival exemplified weak
consumer sentiment as aggregate e-commerce sales results from
the event declined year-over-year for the first time.140 Although the
total number of trips taken during China’s 2024 Spring Festival
holiday was higher compared with pre-COVID, calculations based
on official data indicate that spending per individual trip fell.141
Reports of falling expenditures for services like after-school music
and sports activities demonstrate how far consumer confidence has
deteriorated given conventional wisdom that parents were willing to
spend more on their children, even if they chose not to spend money
on themselves.* 142
The Chinese government’s incremental measures to stimulate
consumer spending have failed to address structural impediments
to higher consumption and are overshadowed by efforts to promote
traditional drivers of growth. While Chinese policymakers have
identified consumption growth as a policy priority, stimulus mea-
sures thus far have been insufficient to overcome structural imped-
iments that sustain China’s high savings rate.† 143 Stimulus efforts
for consumer goods have been limited and are further constrained
by the large portion of household spending that already goes to
services like education, ‡ particularly for lower-income families.144
Because a large portion of family wealth is tied up in real estate,
stabilizing the property market will be another key component of
restoring consumer confidence.145 China has been battling deflation,
and the lack of direct demand-side stimulus from the government
has exacerbated weak consumer sentiment.146 Some analysts have
argued that China’s government should use fiscal policy to stimu-
late consumption, either through direct cash transfers or changes
to tax policies and subsidies.147 So far, the government has resist-
ed calls from economists and investors to institute a cash-trans-
* According to Chinese economist and former deputy managing director of the International
Monetary Fund Zhu Min, China’s parents and grandparents are willing to spend more on their
children before they attend university. However, once young adults become responsible for their
own costs of living, including marriage and housing, spending drops off naturally, exacerbated by
intense work schedules and a lack of enticing consumer products targeting their demographic. As
a result, as China’s birth rate has fallen, overall spending has fallen as well. China’s birth rate
has fallen from 21 births per 1,000 people in 1985 to just 6.4 births per 1,000 people in 2023.
China’s population declined for the first time in recent memory in 2022. Lin Qianbing, “Investiga-
tion: How Can We Give Consumers the Confidence to Spend? What Influence Does the Changing
Real Estate Market Have?” (观察 | 如何让消费者有信心消费? 房地产市场变迁有哪些影响?), Paper,
June 26, 2024. Translation; Jacob Funk Kirkegaard, “China’s Population Decline Is Getting Close
to Irreversible,” Peterson Institute for International Economics, January 18, 2024.
† Chinese consumers are largely barred from investing overseas as part of China’s strict capital
controls, while banks are constrained in what they can offer depositors in interest in part due to
low lending rates. Noriyuki Doi, “China’s Listed Banks See Interest Margins Fall below Warning
Line,” Nikkei Asia, May 2, 2024; Bloomberg, “China Scrutinizes Capital Flows as Online Brokers
Pull Apps,” May 16, 2023.
‡ Even with access to government-funded education, private spending on education still
makes up a significant portion of household spending. These expenses include extracurric-
ulars, tutoring, books, food, and higher education. Dezhuang Hu et al., “The High Cost of
Education in China,” Stanford Center on China’s Economy and Institutions, April 1, 2024.
47
fer-style stimulus program.* 148 Furthermore, because of China’s

high savings rate, policymakers may be limited in their ability to
boost the economy through fiscal policy, as excess cash may merely
be deposited into bank accounts or used to pay down outstanding
debt.149 Instead, government reforms have focused on stimulating
supply—and manufacturing in particular. Signs from recent policy
statements indicate that China intends to rely on production and
exports as drivers of economic growth, with a continued dearth of
support for consumer spending.† 150 (For more on China’s production
and export-led growth strategy, see Chapter 4, “Unsafe and Unreg-
ulated Chinese Consumer Goods: Challenges in Enforcing Import
Regulations and Laws.”)
Youth Unemployment
Successively larger classes of college graduates are enter-
ing a workforce prioritizing jobs they do not want and focus-
ing on skills they do not have. Worsening employment rates near-
ly two years after the end of China’s Zero-COVID measures suggest
Chinese youth unemployment is not the result of a lagging recovery
but rather a structural mismatch in labor force supply and demand.
Official Chinese statistics indicate that the overall urban unemploy-
ment rate has improved, returning to pre-pandemic levels.151 None-
theless, Chinese youth unemployment ‡ continues to worsen. When
China entered COVID, its young college graduates, a demographic
group that has increased in size by nearly 70 percent since 2012,
were primarily employed in service industries, private enterprises,
and the gig economy.152 The share of youth seeking employment in
construction or manufacturing was steadily decreasing.153 As Chi-
nese policymakers fought the pandemic with strict lockdowns, the
services sector and its disproportionately younger employees were
most harmed.154 As a result, while China’s overall unemployment
rate quickly returned to its pre-pandemic average of around 5 per-
cent, Chinese youth unemployment nearly doubled from an average
of 10.9 percent in the first half of 2019 to 19.6 percent in the first
half of 2023.§ 155 In August 2023, as China’s youth unemployment
rate continued to rise, officials in Beijing temporarily stopped pub-
* Boosting consumption is a key component to the success of Xi’s strategy of “dual circulation,”
which aims to rebalance China’s growth away from exports in order to insulate the Chinese
economy from external demand shocks and boost self-reliance. It also emphasizes supply chain
diversification and investment in the production of higher-value-added products. For more on
“dual circulation,” see U.S.-China Economic and Security Review Commission, Chapter 1, Section
1, “The Chinese Commuist Party’s Ambitions and Challenges at Its Centennial,” in 2021 Annual
Report to Congress, November 2021, 38. China Power Team, “Will the Dual Circulation Strategy
Enable China to Compete in a Post-Pandemic World?” Center for Strategic and International
Studies, December 15, 2021.
† In July 2024, the CCP held its twice-a-decade Third Plenum to discuss major milestones and
set the direction of China’s economic policy. The Third Plenum confirmed China would continue
to focus on manufacturing and technology as drivers of growth rather than placing more empha-
sis on household consumption. Rebecca Feng, “China’s Long Blueprint for Economy Falls Short
on Details, Raising Concerns,” Wall Street Journal, July 22, 2024; Jude Blanchette et al., “Third
Plenum Hot Takes: Skepticism and Concern,” Center for Strategic and International Studies,
July 22, 2024.
‡ Different countries use different definitions for youth unemployment, but China’s new defini-
tion, revised in January 2024, covers workers aged 16–24 not including students.
§ China’s unemployment rate for young university graduates is likely even worse. While Chi-
na does not release official statistics for the unemployment rate for 16- to 24-year-olds with a
university education, analysts have tried to estimate it. Using China’s census and its statistical
yearbooks, the Economist estimated it to be 25.2 percent in 2020, which was 1.8 times the un-
employment rate for all young people at the time. Economist, “Why So Many Chinese Graduates
Cannot Find Work,” April 18, 2024.
48
lishing the data series, citing a need to reassess its methodology.156

In January 2024, China resumed publication and announced a 14.9
percent jobless rate for December 2023.157 The drop was primarily
because officials implemented a new method that excludes students
seeking jobs.* 158 However, even with the new methodology, Chinese
youth unemployment remains elevated. By August 2024, China’s
youth unemployment rate had increased by 3.9 percent since the
start of the year to 18.81 percent.159
Figure 3: China’s Youth Unemployment Rate, 2019–2024
Youth
Unemployment
(Discontinued)
20%
Youth
Unemployment
(ex-Students)
15%
10%
5%
0%
Jan 19 Jan 20 Jan 21 Jan 22 Jan 23 Jan 24 Jan 25
Source: China’s National Bureau of Statistics, “Urban Unemployment Rate: Age 16–24 [2019–
2024],” via Haver Analytics.
China’s slow economic growth, tech and gig economy

crackdowns, and faltering private sector have narrowed
opportunities in the areas where most young, educated job
hunters are seeking employment. To boost China’s recovery
from COVID, Chinese officials relied on targeted stimulus toward
its property and manufacturing sectors.160 However, such jobs have
traditionally been filled by (internal) migrant workers and do not
match the expectations of new college graduates.161 As a result, de-
spite elevated youth unemployment, Chinese officials are projecting
a 30-million-person employment gap by 2025 for major manufac-
turing industries like automobiles.162 In 2023, total employment
at China’s largest tech firms—Baidu, Alibaba, and Tencent—fell by
nearly 25,000 jobs or 6.4 percent.163 Chinese limitations on the pri-
* Notably, the United States, the United Kingdom, and many other countries include young
people seeking jobs while studying when calculating their own rates. Economist, “Why So Many
Chinese Graduates Cannot Find Work,” April 18, 2024.
49
vate education industry have been even more damaging. Estimates

suggest China’s restrictions may have generated losses of three
million jobs, or over 30 percent of those employed in the sector.164
As China has recovered, private enterprises have also lagged far
behind their state-owned counterparts.165 Because these firms are
responsible for around 80 percent of urban employment and 90 per-
cent of new jobs, the employment implications have fallen hardest
on China’s youth.* 166 However, supply, particularly of college-edu-
cated youth, continues to grow. China’s Ministry of Education proj-
ects that 11.8 million students will graduate by the end of 2024, a
2 percent year-over-year increase.167
China’s elevated youth unemployment and pessimism to-
ward the labor market are indicative of larger issues af-
flicting China’s labor force. Surveys conducted by Martin K.
Whyte, professor of international studies and sociology at Har-
vard University, and Shen Mingming, director of the Research
Center of Contemporary China at Peking University, find that the
Chinese populace increasingly views their economic system as ar-
bitrary and unequal, assigning less responsibility to themselves
and more to the Chinese system for achieving success. Between
2004 and 2014, those surveyed identified lack of ability, lack of
effort, and low education as the main factors that explained pov-
erty in China. In 2023, lack of effort and lack of ability plummet-
ed to the fifth and sixth most prevalent explanations and were
replaced by structural factors like “unequal opportunity” (ranked
sixth in 2004 and first in 2023) and “unfair economic system”
(ranked eighth in 2004 and third in 2023).168 When asked in 2004
to react to the statement “Whether a person becomes rich or re-
mains poor is their own responsibility,” 49 percent of those sur-
veyed agreed; in 2023, that portion fell to 27 percent.169
Hard data suggest that, like youth unemployment, this senti-
ment reflects a disconnect between expectations and the reality
of China’s job market. China’s focus on industrial production has
created a labor force in which educational attainment has out-
paced an economy that is still predominantly based on manufac-
turing. While China’s Ministry of Human Resources and Social
Security estimates that almost half of all manufacturing roles
will go unfilled by 2025, Chinese job hunters have focused their
efforts elsewhere. For example, in 2023, a record 2.6 million peo-
ple, many with a master’s degree or even a doctorate, applied to
take the national civil service exam to compete for only 37,100
entry-level positions.170 This mismatch cuts across China’s econ-
omy. Zhaopin.com, a major Chinese recruiting site, estimates that
90 percent of applications go to sectors that provide less than 50
percent of jobs.171
China’s elderly are facing their own set of employment
challenges. An inadequate social safety net means workers must
stay in the labor force longer. In 2023, 94 million workers, or 12.8
percent of China’s 734-million-person labor force, were older than
* Estimates suggest around 50–60 percent of urban employed people aged 16–24 worked
for private firms during 2013–2020, which was around 20 percentage points higher than prime-
age workers. This proportion was significantly higher among vocational college graduates, with
nearly 70 percent employed in the private sector. Shuaizhang Feng et al., “A Closer Look at Caus-
es of Youth Unemployment in the People’s Republic of China,” ADB Briefs, June 2023.
50
60—China’s current statutory retirement age for men—up from 8.8

percent in 2020.172 Chinese leadership is magnifying this trend, and
in September 2024 it approved a plan to increase the statutory re-
tirement age for the first time since 1951.* 173
State Directives Weigh on Domestic Financial Markets
China’s non-commercial financial sector has long helped the CCP
achieve its economic and policy objectives. State-owned banks pro-
vide capital on advantageous terms to SOEs and conduct foreign
exchange transactions to support the value of the RMB, while
state-affiliated or licensed institutional investors under strong en-
couragement from the Party-state prop up the stock market via di-
rect purchases. The failure of Chinese domestic markets to provide
appealing investment opportunities for everyday people has contrib-
uted to both the development of unregulated and risky alternative
investments and a high national savings rate. As economic growth
has failed to recover since the COVID-19 pandemic, regulators and
state-owned financial firms have taken steps to support financial
markets, but both domestic and international investors remain
skeptical.
Banks Reluctantly Support the Property Sector at the Expense
of Private Enterprises
With existing real estate loans constituting a large portion
of balance sheet assets and new directives extending credit
to viable development projects, China’s banks are often un-
able to deploy capital into more productive sectors of the
economy. China’s banking sector has significant exposure to the
real estate sector, with almost 40 percent of loans related to proper-
ty.174 The banking sector’s exposure to the property sector makes it
likely that the percentage of non-performing assets will rise in 2025,
according to forecasts from S&P Global.175 After years of supporting
an expansionary bubble in real estate, Chinese banks have pulled
back from lending to the sector following a wave of policy changes
and developer defaults; however, banks remain significantly exposed
to property sector risks.
Banks have pulled back from lending more broadly as well. Chi-
na’s aggregate financing † shrank month-over-month in April 2024
for the first time since comparable data became available in 2017.176
Multiple factors contributed to the decline, including less overall re-
financing of local and regional government bonds under directives
from the central government to deleverage as well as less activity
in the shadow banking sector.177 Household medium- and long-term
loans, a proxy measure for mortgages, also showed the greatest con-
traction on record as fewer new mortgages were taken out than
repaid.178 Under pressure to stimulate economic growth, China’s
Ministry of Finance responded by announcing it would issue a total
* The retirement age will be raised from 60 to 63 years old for men. For women in white collar
work, it will be raised from 55 to 58 years old. For women in blue collar work, it will be raised
from 50 to 55 years old. The changes will come into effect in 2025 and be implemented over a 15-
year period. Farah Master, “China Approves Plan to Raise Retirement Age from January 2025,”
Reuters, September 13, 2024.
† Aggregate financing is a broad measure of credit that includes government bond issuance,
bank loans to firms and households, and other non-bank financing. Bloomberg, “China Credit
Shrinks for First Time, Loan Growth Disappoints,” May 11, 2024.
51
of $138 billion (RMB 1 trillion) in special long-term bonds, with the

first tranche sold in May 2024.179 Proceeds from the bonds will be
used to fund long-term projects, including transforming excess ca-
pacity in the property market into public housing and supporting
the development of strategic sectors.180
Chinese banks traditionally have granted more credit to SOEs,
which carry an implicit guarantee from the government, while un-
derserving small and medium-sized enterprises (SMEs).181 The Chi-
nese banking sector, led by large state-owned banks, is non-com-
mercial in nature and ultimately backstopped by the government,
making widespread bank failures highly unlikely.182 However, slow-
ing credit growth means banks are lending less to private sector
borrowers, despite the private sector in recent years accounting for
around 70 percent of jobs and 60 percent of GDP.183 Other recent
regulatory changes have harmed SMEs’ access to bank credit by
reducing access to a popular short-term financing tool in an effort
to support regional bank stability.184
The PBOC has reintroduced a COVID-era program to provide re-
lending facilities to banks that have extended credit to SMEs in the
tech sector.185 This follows past efforts by the central government to
encourage lending to SMEs through grant programs and other in-
centives.186 These programs often fail to spur lending by banks due
to the confluence of limits on the interest rates banks can charge
SMEs and implicit state guarantees for SOEs.187
Chinese policymakers are trying to mitigate systemic risk
in the banking sector with a controlled deflation of the prop-
erty bubble by ensuring viable projects still have access to
bank credit while also instituting reforms to strengthen the
banking sector. Chinese banks have been directed to lend to a
“whitelist” of in-progress housing projects in attempts to reduce the
stock of undelivered housing.188 At the same time, recent regula-
tory tightening in the banking sector will require banks to recog-
nize more assets as non-performing and set aside larger provisions
for these non-performing assets as the government continues its
efforts to rehabilitate the property sector. This is in part due to
regulations effective by the end of 2025 that will require Chinese
banks to recognize all exposure to a particular property developer
as non-performing once the developer defaults on over 10 percent of
outstanding credit owed to a bank.189 As of January 2024, banks are
also required to internally classify distressed developers as a higher
credit risk.* 190
Stock Market Slide Halted by Government Intervention
Official policy statements and actions by state-backed fi-
nancial institutions have managed to slow the slide of Chi-
nese stock market indices after years of deteriorating per-
formance.† Major indicators of stock market performance in China
rose overall in the first half of 2024 after the Chinese government
* Internal bank risk ratings determine the amount of capital banks need to set aside for a
particular loan, thereby directly impacting banks’ return on assets and indirectly affecting the
ability to extend capital to other borrowers. Higher-risk ratings require greater capital provisions.
Corporate Finance Institute, “Risk-Weighted Assets.”
† China’s stock market fails to reflect macroeconomic fundamentals. From 2007 to 2023, Chi-
na’s GDP grew from $3.6 trillion to $17.8 trillion. Over the same time period, the Shanghai
Composite, a stock market index of all companies traded on the largest stock exchange in China,
52
stepped in to halt automated trading and directed state-owned firms

to buy shares. Under overall poor conditions in the stock market
and ongoing regulatory scrutiny, Chinese companies withdrew plans
for domestic initial public offerings (IPOs), an ongoing trend from
the prior year that has accelerated so far in 2024.191 Beijing has
shown some awareness of the challenges. Beijing replaced the chair
of the China Securities Regulatory Commission (CSRC), installing
Wu Qing, a seasoned risk executive known as the “broker butcher”
for ordering the closure of a quarter of China’s securities dealers
during his last tenure as head of the CSRC.192 Market participants
also suspect that units of China’s sovereign wealth fund, pension
funds, insurers, and other state-backed asset management compa-
nies have been active in purchasing large volumes of exchange-trad-
ed funds (ETFs) in a directed and collective attempt to boost the
performance of the stock market.* 193 At the same time, regulators
have instituted stricter restrictions on types of trading seen as con-
tributing to volatility and downward pressure on stock prices, in-
cluding short selling and high-frequency trading by domestic hedge
funds and directives to avoid purchases of risky derivatives.194 Some
interventions were direct, with high-frequency trading firms report-
ing instances of their internet access being suspended and borrowed
shares being recalled.195 While these actions were effective in stem-
ming the fall of Chinese stock indices, they indicate that the govern-
ment intends to maintain tight control over trading activity rather
than encourage more market-driven trading.
More generally, the CCP has clearly articulated its vision for the
country’s financial sector to subdue profit-seeking behavior in favor
of Party ideals. The Central Financial Commission and the Central
Financial Work Committee have renewed calls to build a “socialist
financial powerhouse” and enact “strict and tough supervision.” 196
State conferences and newspapers have promoted a similar ideolog-
ically driven market that puts social responsibilities and serving
the real economy † above the pursuit of pure profits.197 The changes
extend to individuals in the industry, with employees of domestic
financial firms impacted by salary cuts and bonus clawbacks pres-
sured to adhere closely to Party ideology, such as avoiding extrava-
gant displays of wealth.198
Simultaneously, Chinese stock markets have become in-
creasingly dominated by state-owned companies. From June
2021 to June 2024, SOEs’ share of aggregate market capitalization
of China’s top 100 listed firms grew from 31.2 percent to 54 per-
cent.‡ 199 Over that period, valuations for China’s largest non-public
has remained flat. World Bank, “GDP (Current US$ - China) [2007–2013]”; Yahoo Finance, “SSE
Composite Index [7/1997–8/2024].”
* Similar buying behavior from what is known as China’s “national team” could be seen in
past periods of poor stock market performance, with large volumes of investments often flowing
suddenly into Chinese ETFs. Weilun Soon and Rebecca Feng, “How China Tried to Fix the Stock
Market—and Broke the Quants,” Wall Street Journal, March 13, 2024.
† According to Xi, the real economy includes sectors like manufacturing as well as scientific and
technological innovation.
‡ Analysts at the Peterson Institute for International Economics define SOEs as companies in
which the Chinese state holds 50 percent or more equity ownership and non-public enterprises
(NPEs) as those in which the Chinese state holds less than 10 percent equity ownership. They
also introduce a third category, mixed-ownership enterprises (MOEs), those in which the Chinese
state holds an equity ownership stake between 10 and 50 percent. Tianlei Huang and Nicolas
Véron, “The Private Sector Advances in China: The Evolving Ownership Structures of the Largest
Companies in the Xi Jinping Era,” Peterson Institute for International Economics, March 2022, 10.
53
enterprises have plummeted, while those of SOEs have risen. In

June 2021, the market cap of non-public enterprises within China’s
top 100 listed firms was $4.7 trillion.200 By June 2024, it had fallen
by more than half to $2 trillion.201 Conversely, over the same period,
Chinese SOEs’ market cap within China’s top 100 listed firms grew
from $2.7 trillion to $3.2 trillion.202
Against this backdrop, Beijing continued to pursue a number of
financial market reforms in 2024 to promote stability and investor
confidence in capital markets. High-quality development of capital
markets has been a key theme at annual conferences and in regula-
tory releases. In April 2024, the State Council released a document
outlining nine directives that would strengthen supervision, prevent
risks, and support the development of China’s capital markets.203
The policies would encourage the availability of a wider array of
investment products, including ETFs, while cracking down on mar-
ket manipulation by financial intermediaries and other actions that
violate the law.204
In September 2024, Chinese financial authorities introduced addi-
tional stimulus measures including interest rate cuts, lower reserve
requirements for banks, and support for the property and stock mar-
kets.205 The market reacted positively to the news, with a broad
index for the Chinese stock market rising over three percent in one
day.206 Beyond this temporary surge, analysts questioned whether
the measures would be sufficient to reverse China’s deflationary spi-
ral and achieve the stated 5 percent growth target.207
Ongoing RMB Currency Intervention *

In recent years, China’s central bank has continued to orches-
trate foreign exchange (FX) market interventions that support
the value of the Chinese RMB amid market pressures that would
otherwise weaken it.† The PBOC has soft-pegged the RMB with-
in a set trading band against the dollar since 2005 (notably the
value of the RMB’s value continues to fluctuate against a basket
of currencies).208
As the U.S. Federal Reserve has kept interest rates higher to
combat persistent U.S. domestic inflation, the PBOC has resist-
* The Omnibus Trade and Competitiveness Act of 1988, 22 U.S.C. § 5304(b) requires periodic
reporting by the U.S. Department of the Treasury on activities relating to a narrowly defined
concept of currency manipulation. From August 2019 to January 2020, the U.S. Department of
the Treasury labeled China a currency manipulator under that statute, which requires, among
other things, that China’s currency manipulation be “for purposes of preventing effective balance
of payments adjustments or gaining unfair competitive advantage in international trade.” While
the Treasury has removed this designation, China does still intervene persistently in currency
markets to manage the value of the RMB relative to the U.S. dollar. Alan Rappeport, “U.S. Says
China Is No Longer a Currency Manipulator,” New York Times, January 13, 2020; U.S. Depart-
ment of the Treasury, Treasury Designates China as a Currency Manipulator, August 5, 2019.
† China’s preference for a weaker RMB in the early 21st century was driven by its reliance on
exports for growth. As China’s trade surplus with the United States grew, China prevented its
currency from appreciating by intervening in currency markets. This led to vocal pushback from
its international trading partners whose own goods were relatively more expensive as a result.
Although China still maintains a trade surplus with the United States, this dynamic has since
reversed. China now intervenes to prevent the devaluation of the RMB in the face of pressures
including weaker economic growth, volatile financial markets, and high U.S. interest rates. Chris
Anstey, “The Promise and Peril of China’s Strong Yuan Policy,” Bloomberg, February 3, 2024;
Wayne M. Morrison and Marc Labonte, “China’s Currency Policy: An Analysis of the Economic
Issues,” Congressional Research Service CRS RS 21625, July 22, 2013.
54
Ongoing RMB Currency Intervention—Continued

ed large cuts to its “benchmark” loan prime rate * to avoid exac-
erbating depreciation pressure on the RMB.209 Since July 2023,
Chinese officials have regularly set the daily RMB fixing—or ref-
erence rate around which the currency is allowed to trade—at
a level significantly stronger than market consensus.† Markets
have reacted by maintaining exchange rates close to the weak
end of the fixed trading band for prolonged periods, and the RMB
has experienced depreciation of around 2 percent against the dol-
lar this year.210 Still, China has favored stability and is reluctant
to allow a rapid shift in the exchange rate. Analysts suggest the
PBOC is concerned that currency weakness will exacerbate neg-
ative sentiment among domestic and foreign investors and spur
capital flight.211 Additionally, at the start of 2024, Xi emphasized
“a strong currency” as one of his top priorities to support his
plans to strengthen China’s status as a financial powerhouse.212
Xi’s speech marked the first time in more than two decades that
a Chinese leader used this annual speech at the Central Party
School in Beijing to discuss finance, and it has likely encouraged
the PBOC to continue to maintain a strong exchange rate.213
Explicit steps by Chinese policymakers to support the RMB
include verbal guidance to speculators and investors when they
view trading activity as a threat to the lower bound of the fixed
trading band, the tightening of offshore RMB liquidity, and the
lowering of reserve requirements on foreign currency deposits.214
Despite these efforts, in the first half of 2024, the RMB remained
unusually stable close to the weaker end of the RMB trading
band. Historically, this has meant the PBOC is maintaining the
band through the sale of FX.215 However, the PBOC’s foreign cur-
rency balance sheet has moved slightly in the opposite direction,
suggesting the bank has not used its own funds to keep the RMB
inside the weak edge of the band.216 This contradiction has led
some analysts to suggest the PBOC has instead turned to state-
owned banks to actively manage FX markets and support the
RMB against further depreciation.217
U.S.-China Bilateral Commercial Relations

Bilateral Trade Slows
Total U.S.-China trade continued to be stagnant through
the first eight months of 2024 amidst weakening economic
conditions, price effects, increased geopolitical tensions, and
a rising trend of supply chain diversification. Although U.S.
official trade statistics capture only a portion of trade with China,
the data indicate a downward shift in the direct flow of goods (see
* After the U.S. Federal Reserve cut interest rates by 0.5 percentage points in September 2024,
the PBOC also lowered its benchmark interest rate from 1.7 percent to 1.5 percent. Christian
Shepherd and Anna Fifield, “China Moves to Boost Ailing Economy with Property, Stimulus Mea-
sures,” Washington Post, September 24, 2024.
† Any reference rate that is significantly stronger or weaker than the market expects is con-
sidered a signal from the PBOC on how it wants the currency to move. Allianz Global Investors,
“Currency Up, Equities Up,” November 24, 2023.
55
Figure 4). U.S. imports and exports of goods with China reached
just $575 billion in 2023, a decrease of 16.8 percent from the year
earlier.* 218 While the slowdown continued early in 2024, by August
total U.S.-China trade for the year to date was virtually unchanged
from the same period in 2023.219 Weakening Chinese demand for
most U.S. exports and stagnant U.S. imports caused the U.S.-China
trade deficit to increase slightly.220 In the first eight months of 2024,
the bilateral trade deficit rose to $186 billion, a 2.4 percent increase
over the same period in 2023.221
The U.S. trade statistics substantially understate the trade deficit
with China as tens of billions of dollars of small parcel imports that
enter duty free under the de minimis exemption are not incorpo-
rated in official U.S. trade estimates.† 222 Trade statistics prepared
by China’s customs agency, which capture all exports to the United
States including de minimis shipments, suggest the scale of mis-
measurement in U.S. customs figures. China reported that it export-
ed $506 billion in goods to the United States in 2023, $79 billion
more than the United States recorded as imports.223 (For more on
distortions to U.S. trade data caused by tariff avoidance strategies
including de minimis entry, see Chapter 4, “Unsafe and Unregulated
Chinese Consumer Goods: Challenges in Enforcing Import Regula-
tions and Laws.”)
Figure 4: Change in Quarterly U.S. Bilateral Goods Trade with China,
Q1 2021–Q2 2024
70%
Year-on-year percent change
50%
30%
10%
-10%
-30%
-50%
Change in exports Change in imports Change in deficit
Source: U.S. Census Bureau, Trade in Goods with China.
Imports
Following a sharp decline in 2023, U.S. goods imports from
China leveled off in the first eight months of 2024. According
to U.S. data, in 2023, the United States imported $427 billion in
goods from China, down by over 20 percent from 2022 and falling
* Trade data produced by China’s customs agency, which better account for cross-border e-com-
merce trade than U.S. data, also point toward a fall in the goods trade. In Chinese data, goods
exports and imports with the United States fell to $672 billion in 2023, down 11.5 percent from
the year prior. China’s General Administration of Customs, Customs Statistics, July 2024.
† The de minimis exemption, provided under Section 321 of the Tariff Act of 1930, provides
duty-free treatment for shipments valued under $800 entering the U.S. market per person, per
day. In fiscal year 2023, over one billion de minimis shipments crossed the U.S. border from all
origin countries. U.S. Customs and Border Protection, E-Commerce.
56
to the second-lowest import level since 2012, surpassed only by the

pandemic-induced slowdown in trade in 2020.224 Eight months into
2024, U.S. imports from China amounted to $279 billion, increasing
by 1.3 percent from 2023.225 Softening U.S. consumer confidence in
the first half of 2024 dragged on imports as growth in household
spending slowed in response to concerns about inflation and poor
consumer sentiment.226 U.S. tariffs and bilateral tensions have
also prompted some importers to reduce their dependence on Chi-
nese imports and shift to alternative sourcing hubs, contributing to
the continued weakness in direct imports from China (see “Supply
Chain Diversification from China Is Occurring, but the Extent Re-
mains Unclear” in this section).
In addition, price and exchange rate effects contributed to the
decline in import value and relieved some pressure on U.S. infla-
tion.227 The price of imports from China fell 1.4 percent in August
2024 from a year earlier.* 228 This deflation in price largely reflects
overproduction in China, with producers looking to shift a greater
share of sales overseas amid weak domestic demand.229 The price
of fabricated metal products, the United States’ fifth-largest import
category with China, fell 2.1 percent in August 2024 from a year
earlier.230 RMB depreciation further depressed the value of imports
from China, as a weaker RMB means Chinese goods are cheaper in
dollar-equivalent terms.231 Nonetheless, the volume of U.S. imports
could strengthen into 2025 as consumers and businesses take ad-
vantage of reduced prices from China.†
Exports
Overall U.S. exports to China continued to slow in 2024 due
in part to persistently weak Chinese consumption. Though
U.S. exports of goods in 2023 remained elevated above pre-COVID
levels, at $148 billion, the export volume shrunk 4.1 percent from
2022 levels as China’s economy remained stagnant after ending
its Zero-COVID policies.232 In the year through August 2024, the
flow of goods continued to fall, reflecting the ongoing sluggishness
in China’s domestic demand.233 The United States sent $93 billion
in goods to China in the first eight months of 2024, down 0.8 per-
cent from the previous year.234 U.S. exports were boosted by sales of
advanced technology products,‡ which grew 33 percent in the year
through August 2024, largely due to a resurgence in shipments of
U.S. semiconductors and airplane parts, as discussed below.235 How-
ever, export growth was weighed down in other sectors, including
agriculture, amid Chinese polices aimed at diversifying away from
U.S. products, notably soybeans.236
* Accounting for price effects, the real value of U.S. imports from China increased by 3.4 percent
in the year through August 2024 compared to a year earlier. U.S. Census Bureau, Trade in Goods
with China; U.S. Bureau of Labor Statistics, “Monthly Import Price Index by Origin for NAICS,
All Industries, China, Not Seasonally Adjusted,” October 11, 2024.
† Data on container freight volume suggest this is already taking place. Between January and
August 2024, containerized imports to U.S. seaports rose by 15.1 percent year-on-year in weight,
despite the more modest 1.3 percent increase in value. This likely reflects an increase in low-val-
ue, high-weight products. For instance, China’s exports of plastic products have surged in 2024.
U.S. Census Bureau, USA Trade Online, July 2024; Bloomberg, “China’s Plastics Boom Is Set to
Create Another Trade Headache,” July 1, 2024; Lori Ann LaRocco, “Imports from China to the
U.S. Are Rising at the Fastest Rate since Last Fall,” CNBC, April 10, 2024.
‡ Advanced technology products are a broad range of high-technology goods, including semi-
conductors, biotechnology, aerospace, and nuclear technology products. U.S. Census Bureau, Ad-
vanced Technology Product (ATP) Code Descriptions.
57
U.S. Shipments of Semiconductors Rebound

U.S. exports to China of non-export-controlled semiconduc-
tors expanded at the start of 2024. To curb China’s advance-
ments in critical technology, the U.S. Department of Commerce im-
plemented controls on U.S. exports of the most advanced computing
chips and advanced semiconductor manufacturing equipment to
China in October 2022 and expanded them in October 2023. The
controls did not apply to “legacy semiconductors” or less advanced
chips used in home appliances, automobiles, and many connected
devices. Though exports of semiconductors fell 45.5 percent in 2023,
in 2024 the flow of U.S. chips rose sharply.237 Between January and
August 2024, U.S. semiconductor companies exported $5.3 billion in
chips to China, an increase of 69 percent from the same period in
2023 but still down from 2022 levels.238 To comply with U.S. export
restrictions, U.S. chip companies such as Intel and NVIDIA have
developed AI chips for the China market that have lower perfor-
mance capabilities.239 Though these chips underperform relative to
the leading-edge AI chips sold to other customers, some Chinese
companies have turned to these tuned-down processors given the
country’s shortage of computing power.240 The growth in U.S. chip
exports at the start of 2024 likely also reflected an uptick in sales of
processors to Chinese consumer electronics manufacturers, though
this growth may have since slowed as U.S. authorities further re-
stricted sales to Huawei. In May 2024, the Commerce Department
revoked export licenses for Intel and Qualcomm that reportedly per-
mitted them to sell smartphone and laptop chips to Huawei.* 241
(For more on the design of U.S. export control policy toward China,
see Chapter 6, “Key Economic Strategies for Leveling the U.S.-China
Playing Field.”)
China’s Aviation Sector Surges Demand for U.S. Components
A post-Zero-COVID rebound in Chinese domestic air trav-
el boosted demand for U.S. planes and aviation components.
U.S. exports of civilian aircraft, engines, equipment, and parts grew
65 percent in the first eight months of 2024 relative to the same
period in 2023, reaching $7.7 billion.242 Exports of these products
reached their highest volume since the onset of the COVID-19 pan-
demic as air travel began to revive in China and are on track to
exceed 2019 levels.243 By August 2024, total air passenger traffic
rose to 492 million trips, increasing 20 percent over the same period
in 2023 and exceeding the pre-pandemic levels of 2019, according
to data from the Civil Aviation Administration of (CAAC).† 244 The
increased traffic led to higher demand for parts to maintain China’s
air fleet, boosting U.S. exports.245 In addition, China’s state-owned
aerospace company Commercial Aircraft Corporation of China, Ltd.
* Just prior to Intel’s license being revoked, Huawei launched a new laptop, the Mate X Pro,
that ran on Intel’s Core Ultra 9 processor, which is capable of running a large language model
developed by Huawei. Yifan Yu, “Intel Profit Plunges 85% as AI Chip Sales Fall behind Nvidia
and AMD,” Nikkei Asia, August 2, 2024.
† Though domestic tourism spending stands out as one of the few positive drivers in China’s
otherwise sluggish consumer spending growth in 2024, travelers have nonetheless remained par-
simonious compared to pre-pandemic years. During China’s Labor Day holiday in May, spending
per traveler had fallen by 11.5 percent compared to 2019. Sophie Yu and Casey Hall, “China May
Day Holiday Spending Shows Mixed Picture on Post-COVID Recovery,” Reuters, May 6, 2024;
Bloomberg, “China Holiday Spending Rise Shows Consumption Recovery on Track,” April 8, 2024.
58
(COMAC) is expanding production of its C919 narrow-body commer-

cial airliner, which relies on components supplied by multiple U.S.
aerospace companies (see textbox).246
China’s Aviation Industry Remains Dependent on

Foreign Suppliers
Despite China’s efforts to become self-sufficient in aviation,
it remains reliant on U.S. and European aerospace components.
China has aimed to develop a domestic civil aviation industry
since the 1970s.247 More recently, in 2014, Xi called on COMAC
to “independently develop and manufacture large passenger air-
craft as soon as possible,” and the Chinese government has since
issued many policy documents like the CCP Central Committee
and State Council’s Outline for Building a Powerful Transporta-
tion Country that called for “raising the technological level of do-
mestically produced aircraft and engines.” 248 Despite these goals
(and attempts to access foreign technology through joint ventures
and cyberespionage), China has only produced two commercial
jet models, and its aviation industry remains reliant on foreign
suppliers.249 For example, the engine used in the C919, COMAC’s
first “home-grown” narrow-body jet, is produced by a joint venture
between U.S. GE Aviation and French Safran.250 In 2016, CO-
MAC, Chinese defense contractor Aviation Industry Corporation
of China (AVIC), and the Beijing municipal government formed
the Aero Engine Corporation of China (AECC) to domestically
produce an engine for the C919, but that engine has yet to be
approved by the CAAC.251 Even if AECC’s engine is approved, it
will rely on components sourced from companies in Germany and
the United Kingdom.252 There are no plans to develop a domestic
alternative to the GE engine used in COMAC’s other commercial
model, the ARJ21 regional jet.253 A 2020 Center for Strategic and
International Studies report found that in addition to engines,
the C919 is reliant on U.S. and European companies for over 75
percent of its key components, with more recent research indicat-
ing components ranging from communications and flight control
systems to tires continue to be imported.254 China’s exposure to
U.S. and allied suppliers was clear when COMAC ran out of some
parts and struggled to meet production targets after being placed
on the U.S. Department of Defense’s (DOD) Communist Chinese
Military Companies list in 2021 (sanctions against COMAC were
dropped ten months later when it was not included on the Non-
SDN Chinese Military-Industrial Complex Companies List that
replaced this DOD list); it was also evident when, in the same
year, Canadian and U.S. denial of export licenses for the Pratt &
Whitney PW150 engine led to the effective cancelation of China’s
MA700 aircraft program.255
China resumed importing Boeing aircraft after a three-year

freeze, but the aerospace company continues to face scrutiny selling
into the Chinese market. China suspended most orders and deliver-
ies of Boeing aircraft in 2019 following two fatal crashes involving
Boeing’s 737 MAX 8, keeping the pause in place through most of
59
2023 even as other civil aviation bodies recertified the airframe. In

December 2023, Chinese regulators approved Boeing’s first delivery
of a 787 Dreamliner since 2019, though shipments were disrupt-
ed shortly thereafter.256 Chinese regulators again paused approvals
between May and July 2024, ostensibly for a regulatory inspection
of a component, before permitting further deliveries.257 The pause
coincided with Chinese sanctions issued on May 19, 2024—after the
inauguration of Taiwan’s President Lai Ching-te—against Boeing’s
defense unit along with two other U.S. defense firms over arms sales
to Taiwan.* 258 Though the sanctions placed no direct restrictions
on Boeing’s civil aviation unit, China’s coercion points toward its
willingness to leverage its commercial relationship with the United
States as it pursues its geopolitical objectives.
China Continues to Reduce Purchases of U.S. Agriculture Goods
U.S. exports of agriculture products to China fell in 2024
as China switched to lower-cost, non-U.S. sources. Though ag-
ricultural products continue to be one of the United States’ leading
exports to China, U.S. agriculture exports fell 15 percent by value
year-on-year in the year through August 2024, totaling $13.7 bil-
lion.259 This decline in value partially reflects falling food prices in
global commodity markets due to large harvests and weaker demand;
the volume of U.S. exports to China dropped at the slower rate of 5
percent by weight.260 The drop also reflects China’s ongoing shift to-
ward alternative suppliers, driven by a desire to reduce dependence
on the United States and strengthen its food security. Since 2018,
when China responded to U.S. tariffs on Chinese goods with retal-
iatory duties on many agriculture products and other goods, U.S.
producers have lost ground in China’s import market.261 The United
States’ share of China’s agriculture imports by value fell from 19
percent in 2017 to 13 percent in 2023.262 Much of the U.S. share was
taken over by Brazil.263 Brazil is now China’s top overseas supplier
for vital crops, including soybeans, which are used as animal feed
or converted into edible oils.264 In the year through August 2024,
Brazil supplied 74 percent of China’s soybean imports, exporting 3.6
times more than the United States.265 Nonetheless, the Party-state
continues to view China’s dependence on imported soybeans as a
significant challenge for ensuring China’s food security. (For more on
Beijing’s prioritization of food security, see Chapter 7, “China’s New
Measures for Control, Mobilization, and Resilience.”)
China Uses Its Leverage over Critical Minerals to Retaliate
against U.S. Economic Statecraft
China is using its dominance over key minerals to selec-
tively ramp up pressure on supply chains critical to U.S.
national security. On July 3, 2023, China announced new export
controls on germanium and gallium in response to U.S. technology
export controls.266 It further restricted the export of rare earth pro-
cessing technologies in December 2023.267 Nearly half of the world’s
rare earths resources are mined outside of China, but China current-
* China’s regulatory review of the Boeing 737 Max 8 flight recorder and suspension of deliveries
was first reported by Reuters on May 22, 2024. David Shepardson and Allison Lampert, “Boeing
Deliveries to China Delayed by State Regulator Review, Source Says,” Reuters, May 22, 2024.
60
ly performs almost 90 percent of processing across all rare earths,

including 60 percent of germanium and 90 percent of gallium as of
2022.* 268 In August 2024, China announced additional controls on
antimony, an element that is critical to a range of applications in
the electronics and defense industries.† 269
Germanium and gallium are both vital minerals for the produc-
tion of an array of goods, notably semiconductors, solar panels, and
EVs.270 These minerals are primarily recovered as a byproduct of
processing bauxite (aluminum) and zinc ores (germanium is also
a byproduct of producing coal).271 The United States has alterna-
tive domestic sources of germanium, and the U.S. National Defense
Stockpile maintains a germanium reserve, so the controls have pri-
marily impacted the United States’ gallium supply.272 The germa-
nium stockpile is also being supplemented with a DOD program to
recycle the mineral, further alleviating constraints.273
There is currently no strategic stockpile of gallium, and the Unit-
ed States does not actively produce the mineral. Instead, the United
States has been forced to switch to alternative suppliers that are
still able to source the mineral from China.274 Canada, Germany,
and Japan have continued to receive some shipments of the miner-
al, but global supply is tight overall.275 In the first eight months of
2024, China cut exports by about one-fifth from its 2023 gallium and
germanium exports over the same time period.276 While prices for
germanium have risen, they have been overshadowed by gallium’s
prices, which have more than doubled since Beijing’s export con-
trols.277 If China further restricts exports of these minerals, it could
create downstream bottlenecks in global semiconductor production.
Notably, Taiwan chip companies, which are integral to semiconduc-
tor supply chains, mainly rely on refined gallium and germanium
products produced in Japan and Germany, and further controls on
these two countries’ access to Chinese raw materials could have a
cascading effect.278
Though the consequences of China’s impending controls on anti-
mony are not yet clear, the U.S. defense industry may be able to con-
tinue sourcing from other antimony-producing countries. Antimony
is used by the defense industry to produce armor-piercing ammu-
nition, night vision goggles, infrared sensors, bullets, and precision
optics, and by the electronics industry for semiconductors, cables,
and batteries.279 China does not dominate antimony production to
the same extent as some other critical minerals. China is the United
States’ largest supplier and accounts for 63 percent of U.S. antimo-
ny imports.280 In 2023, China accounted for 48 percent of global
production, but rising domestic demand meant most output went to
domestic users and the country only accounted for 17.4 percent of
global exports.281 The United States does not mine any antimony
domestically and is authorized to stockpile a limited 1,100 tons com-
pared to the 22,000 tons consumed in 2023.282 In the month follow-
ing China’s August 2024 announcement of the controls, the price of
antimony climbed by more than 5 percent to $25,000 per ton, more
* For more on China’s strategy to dominate critical minerals, see Chapter 3, “U.S.-China Com-
petition in Emerging Technologies.”
† China’s export restrictions took effect on September 15, 2024. Gracelin Baskaran and Mer-
edith Schwartz, “China’s Antimony Export Restrictions: The Impact on U.S. National Security,”
Center for Strategic and International Studies, August 20, 2024.
61
than double its $12,000 price at the end of last year.283 While a
loss of Chinese supply will raise prices, U.S. defense and electronics
manufacturers may be able to turn to several smaller producers—
such as Belgium, India, and Bolivia—to meet demand.284
Supply Chain Diversification from China Is Occurring, but
the Extent Remains Unclear
U.S. trade policy since 2017 has helped accelerate a shift in
global supply chains away from China. Starting in July 2018,
the United States implemented tariffs on roughly two-thirds of Chi-
nese imports following the completion of a Section 301 investigation
into Chinese policies related to technology transfer and intellectu-
al property theft.285 These duties raised the average U.S. tariff on
Chinese imports to 19.3 percent at the end of 2020, compared to
the 3 percent average for other countries.* 286 The U.S. Internation-
al Trade Commission estimates that the Section 301 trade action
caused U.S. imports to fall by 13 percent between 2018 and 2021 on
average in sectors impacted by the tariffs.287 Alongside other trade
actions, these duties contributed to a decline in China’s share of U.S.
imports, which fell to 13.1 percent of total U.S. imports in the year
through August 2024 from 20.9 percent in 2017.288 In May 2024,
the United States announced it would retain existing China Section
301 tariffs and expand them to cover key technology subsectors, in-
cluding 100 percent tariffs on EVs and 50 percent tariffs on solar
cells.289 (For more on the design and impact of U.S. trade policy
toward China, see Chapter 6, “Key Economic Strategies for Leveling
the U.S.-China Playing Field.”)
An increasing share of U.S. imports came from third coun-
tries. As analyzed in a number of recent studies, other foreign
suppliers stepped in to supply products where China’s share of the
U.S. import market declined rapidly.290 Mexico and Vietnam both
increased their shares of U.S. imports by roughly 2 percent—more
than any other economy.291 Between January and August 2024,
shipments from Mexico and Vietnam accounted for 15.7 percent
and 4 percent of all U.S. imports, respectively.292 Mexico ostensibly
overtook China as the largest supplier to the United States for the
first time in 20 years, although this gap may be overstated due to
the unaccounted data on U.S. de minimis imports from China.† 293
These shifts appear to be largely driven by U.S. trade measures.
Mexico and Vietnam ramped up exports to the United States of
products impacted by China Section 301 duties, while their exports
to the United States of other products not covered by those duties
remained steady (see Figure 5). By the end of 2023, Mexico and
Vietnam were the source of 21.8 percent of the United States’ to-
tal imports of products covered by Section 301 duties, up from 17.8
* When including anti-dumping duties imposed by the U.S. Commerce Department, the
trade-weighted average tariff rises to 26.7 percent at the end of 2020. Chad P. Bown, “U.S.-China
Trade War Tariffs: An Up-to-Date Chart,” Peterson Institute for International Economics, April 6,
2023; Chad P. Bown, “The U.S.-China Trade War and Phase One Agreement,” Journal of Policy
Modeling 43:4 (2021): 827.
† Between January and July 2024, Mexico exported $291 billion in goods through formal cus-
toms channels, compared to $239 billion in imports from China. U.S. Customs and Border Protec-
tion estimates that between October 2023 and June 2024, an additional $47.8 billion in imports
entered under de minimis from all source countries, the majority of which come from China.
U.S. Census Bureau, USA Trade Online, October 11, 2024; U.S. Customs and Border Protection,
E-Commerce, August 22, 2024.
62
percent at the end of 2017.294 The Office of the U.S. Trade Represen-
tative assesses that imports to the United States of products from
China subject to higher Section 301 duties saw more significant de-
clines overall, reflecting how tariffs played a key role in reshaping
U.S. trade patterns.295 However, as Figure 5 shows, over the past
two years, imports to the United States of products from China not
subject to additional duties have also begun to slow, indicating that
a broader diversification of trade away from China may be emerg-
ing.* 296
Figure 5: Mexico and Vietnam Take U.S. Import Share from China within
Products Subject to Section 301 Duties, 2017–2024
China Section 301 products Other products

U.S. import share (percent, 4 month moving average)
40
15
30
10
20
5 10
18
20
22
24
18
20
22
24
20
20
20
20
20
20
20
20
China Mexico Vietnam
Note: China Section 301 products refer to the group of products covered by China Section 301
tariff lines. A “China Section 301 product” from Mexico or Vietnam is one that would be subject
to a Section 301 duty if it came from China instead.
Source: Various.297
Though a portion of U.S.-China trade shifted to other sources,

the full reduction in U.S. dependence on Chinese production re-
mains unclear given the presence of Chinese inputs embedded
in manufacturing in these economies. Edmund Malesky, profes-
sor of political economy and director of the Duke Center for In-
ternational Development at Duke University, testified that the
shift toward Vietnam reflects three broad patterns: “1) the con-
tinuation of pre-tariff shifts in production caused by increasing
Chinese wages and growing Vietnamese productivity; 2) imme-
diate post-tariff increases in production by existing manufactur-
ers in Vietnam; and 3) post-tariff manufacturing investment and
exporting by multinational companies of multiple origins.” 298 A
group of economists found that countries that increased exports
* Consumer products make up the bulk of U.S. imports from China that are not subject to Sec-
tion 301 duties. For more on the risk to U.S. households from China’s role in consumer product
manufacturing, see Chapter 4, “Unsafe and Unregulated Chinese Consumer Products: Challenges
in Enforcing Import Regulations and Laws.”
63
to the United States after 2017 appeared to rely on inputs from

China to scale production.299 Another study found the increase
in Mexico’s exports to the United States since 2018 was main-
ly driven by companies with supply chains linked to China and
the rest of Asia.* 300 In quantitative terms, China’s share of val-
ue added embedded in third country exports has increased. In
the case of Vietnam’s manufacturing sector, intermediate inputs
sourced from China accounted for 18.5 percent of the value added
in its exports in 2020, up from 15.2 percent in 2017.301 China’s
value-added share in Mexico’s manufacturing exports rose from
8.1 percent to 9.5 percent over the same period.302 In addition,
some of China’s exports likely continue to enter the U.S. via ille-
gal transshipment through a third market. (For more on customs
fraud and other illegal trade activities, see Chapter 4, “Unsafe
and Unregulated Chinese Consumer Goods: Challenges in Enforc-
ing Import Regulations and Laws.”)
Foreign Multinational Companies Place Lower Priority on
Investment in China
New foreign direct investment (FDI) in China fell as
U.S. and other foreign companies slowed expansion inside
China. According to China’s Ministry of Commerce, new foreign
investment actually utilized in 2023 amounted to $151 billion
(RMB 1.1 trillion), down eight percent from the previous year.303
New FDI continued to slow in 2024, falling 31.5 percent year-
on-year in the first eight months of 2024.304 The sharp decline
is consistent with falling interest by U.S. companies. According
to an American Chamber of Commerce in China (AmCham Chi-
na) survey conducted at the end of 2023, just over half of U.S.
firms in China planned to expand their investments inside China.
Though this number increased slightly over the previous year’s
45 percent level, it remains the second-lowest surveyed result in
at least a decade (see Figure 6).305 Businesses cited uncertainties
in the U.S.-China economic relationship and concerns about an
uncertain Chinese policy environment as their top reasons for
avoiding investment expansions.306 Other foreign multinationals
also appeared to slow expansion inside China. According to 2023
survey data collected by the Japan External Trade Organization,
less than 30 percent of Japanese businesses are planning to ex-
pand inside China, the lowest level in the survey’s history.307
* These authors used companies’ involvement in the Mexican government’s maquiladora pro-
gram to identify participation in global value chains. Companies registered under the maquila-
dora program can import raw materials and equipment without paying taxes or duties, provided
the inputs are used in the production of exports.
64
Figure 6: Surveyed Investment Plans of U.S. Multinational Enterprises in
China, 2013–2023
100%
90%
Percent of surveyed companies
80%
70%
60%
50%
40%
30%
20%
10%
0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Companies not planning new investments or planning to decrease investment

Companies planning new investments
Note: Each year, AmCham China surveyed leaders of U.S. businesses operating in China about
their investment plans for the following year.
Source: American Chamber of Commerce in China, “2024 China Business Climate Survey Re-
port,” March 2024, 42; American Chamber of Commerce in China, “2020 China Business Climate
Survey Report,” March 2020, 33.
China’s high-profile efforts to boost inbound investment

largely failed to mitigate foreign businesses’ concerns about
operating in China. In 2023, China’s Ministry of Commerce orga-
nized a series of events to attract foreign businesses.308 In March
2024, General Secretary Xi hosted more than a dozen U.S. CEOs
for a meeting in Beijing.* 309 The meeting was widely publicized by
Chinese state media as China pushed a narrative that it is recep-
tive to foreign business.310 Xi conveyed to the group that China is
committed to reforming and opening up its economy. He called for
closer economic ties with the United States.311 In March 2024, Chi-
na’s State Council also released a 24-point “action plan” that prom-
ised various measures to facilitate investment, including a pledge to
remove restrictions on additional sectors currently closed to foreign
investment, easing restrictions on cross-border data flows, and eas-
ing visa requirements for travel.† 312 Many of these pledges reflect
previous commitments that China has repeatedly failed to fulfill.
For instance, the action plan includes pledges to eliminate discrimi-
nation against foreign businesses in government procurement, echo-
* Numerous analysts and media outlets observed that China carefully managed the delegation
and its members. Notably, the group of U.S. CEOs was entirely male. Laura He and Wayne
Chang, “China’s Xi Meets American CEOs to Boost Confidence in World’s Second Largest Econ-
omy,” CNN, March 27, 2024.
† The document pledges to extend the validity of some work visas to two years. China has
also eased visa requirements for visiting China as a tourist. Since China reopened its border to
tourism in early 2023, China has expanded its visa-free entry program, permitting more tourists
to travel to China without first applying for a visa with a Chinese embassy. Bloomberg, “China
Releases Action Plan to Attract Foreign Investment,” March 19, 2024; Deng Zhangyu, “Visa-Free 2
Transit Extended to More Visitors,” China Daily, November 18, 2023.
65
ing commitments made in China’s 2001 WTO accession agreement

that have yet to be fulfilled.* 313
However, these attempts to attract foreign investment seemed
incongruous with China’s “anti-espionage” actions and a crack-
down on foreign access to information Beijing views as state se-
crets but some argue is routine financial and economic data. In
2023, Chinese security officials raided the offices of the U.S. due
diligence firm Mintz Group and the U.S. corporate advisory Bain
& Co.314 The Mintz Group was accused of conducting “foreign-re-
lated statistical investigations” and subjected to a $1.5 million
fine by the Beijing Municipal Bureau of Statistics.315 In February
2024, the bureau increased the fine to roughly $2.2 million.† 316
According to Reuters, Mintz was engaged in due diligence work
that included assessing the supply chain presence of Xinjiang
forced labor prior to its March 2023 police raid, and Chinese au-
thorities had given due diligence firms warnings about conduct-
ing such investigations.‡ 317
U.S. corporate advisory firms have started to restrict their op-
erations inside China following the raids. In November 2023, the
U.S. polling and consulting group Gallup reportedly informed its
clients that it was closing its offices in China, which mainly pro-
vided corporate governance and marketing consulting to Chinese
companies.318 In June 2024, Bain & Co.’s global head Christophe
De Vusser announced that the company is refraining from ad-
vising certain industries in China.319 Speaking to the Financial
Times, he said, “There is a clear set of sensitive industries that
are at the heart of discussions from a geopolitical basis. So in
these industries we will indeed operate less frequently.” 320 Chi-
na’s opaque and unpredictable crackdown on corporate consult-
ing, due diligence, and data collection further narrows the quality
and quantity of business intelligence for foreign firms seeking to
operate within China’s economy. The crackdown not only creates
challenges for analyzing the risk associated with business trans-
actions but also increases the difficulty of ensuring that transac-
tions comply with U.S. regulations and laws, including sanctions
and export controls (see textbox).321
* On July 4, 2024, China released a separate document setting out a three-year action plan for
making government procurement fairer. However, details of how this plan will be implemented
and enforced remain vague, particularly at the local level. China’s Foreign Investment Law, which
was implemented in 2020, states that China will provide fair treatment in the procurement
process, but foreign businesses continue to report that Chinese businesses receive preference.
Given that the Party-state’s other priorities call for reducing dependence on foreign suppliers
in key technologies, it is unclear whether China will establish a procurement regime that is
genuinely fair in practice. Trivium Markets, “All Equal if Made in China,” July 5, 2024; American
Chamber of Commerce in China, “2024 American Business in China White Paper,” April 2024,
54–56, 68–92.
† The Beijing Municipal Bureau of Statistics stated in its notice of the initial fine that it had
been unable to deliver the ruling to Mintz’s legal representative. The Wall Street Journal notes
that it is unclear if Mintz had received either the initial notice or the February 2024 penalty.
Chun Han Wong, “China Raises Fines on Mintz Due-Diligence Firm,” Wall Street Journal, March
12, 2024.
‡ Though Reuters was unable to determine if these investigations were related to the crack-
down, an article published the subsequent month by Chinese state media highlighted another
supply chain risk consultancy in Guangdong as a “typical case” of espionage because it worked
with a foreign nongovernmental organization that was investigating forced labor in Xinjiang.
Xinhua, “On the Case | Beyond the National Borders, Behind the Network . . . These Activities
Endangering National Security Require Vigilance” (拍案｜“国门”之外、网络背后. . . . . .这些危害国
家安全的行为要警惕), April 14, 2023. Translation.
66
China Adds Significant Risks to Routine

Business Activities
Foreign businesses in China find themselves in a bind between
complying with U.S. and other applicable rules and avoiding
crossing ambiguously defined red lines under China’s expanding
set of rules and administrative measures. On September 24, 2024,
China’s Ministry of Commerce announced an investigation into
U.S. clothing company PVH Corp., whose brands include Tommy
Hilfiger and Calvin Klein, for violations of “principles of normal
market transactions” by “discriminating” against products pro-
duced in Xinjiang.322 PVH said in July 2020 that it would cease
sourcing from factories and mills in Xinjiang due to forced la-
bor concerns.* 323 Xinjiang was the source of 23 percent of the
global supply of cotton in 2020 and 2021.324 The Chinese govern-
ment’s investigation, which was still ongoing as of October 11,
2024, could result in PVH being added to its “unreliable entity”
list † and subjected to fines, restrictions, or other penalties.325
Though other multinational fashion companies have faced scru-
tiny in the past over their statements on Xinjiang—in 2021, the
Swedish fashion company H&M and several other brands faced
an ostensibly grassroots boycott in China after state media drew
attention to pledges by these companies to stop sourcing from
the region—the latest action against PVH marks an escalation in
the Party-state’s willingness to utilize its sanction authorities to
coerce foreign businesses.326
China’s National Security Law has also created new risks for
businesses. China has expanded the reach of its national security
apparatus over the past two years, increasing the risk that for-
eign businesses face investigations and prosecution for carrying
out normal business activities. (For more on legislative chang-
es to China’s Counterespionage Law and State Secrets Law, see
Chapter 7, “China’s New Measures for Control, Mobilization, and
Resilience.”) The potential for retaliation, coupled with expansive
restrictions on foreign access to data and information deemed
sensitive by the Party-state, have complicated U.S. business-
es’ ability to do basic corporate due diligence or to comply with
home-market regulations that implicate China.327 The worsening
information environment means U.S. businesses face greater diffi-
* PVH’s pledge mirrored moves by other multinational apparel companies to shift their supply
chains out of Xinjiang to mitigate the risk of supporting China’s forced labor practices as well
as to comply with the Uyghur Forced Labor Prevention Act, which took effect in June 2022 and
created a rebuttable presumption that products from Xinjiang are made with forced labor and
consequently denied entry to the United States. Keith Bradsher and Ana Swanson, “For Compa-
nies in China, Pulling Out of Xinjiang Poses ‘Messy Dilemma,’ ” New York Times, October 7, 2024;
Yasufumi Saito et al., “China Canceled H&M. Every Other Brand Needs to Understand Why,”
Bloomberg, March 14, 2022.
† China’s Ministry of Commerce promulgated the Provisions on the Unreliable Entity List
in 2020, creating a mechanism to investigate and penalize foreign companies for taking ac-
tions perceived as harmful to China’s interests. As of October 8, 2024, China has placed
five U.S. defense firms on the list for selling military equipment to Taiwan, halting these
companies’ imports and exports from China, prohibiting investments in China, and barring
their senior management from entering China. If added, PVH would be the first U.S. compa-
ny placed on the list because of its efforts to prevent forced labor in its supply chain. Lester
Ross and Kenneth Zhou, “China, the United States, and the Rivalry over the Imposition of
Unilateral Trade Sanctions,” WilmerHale, September 6, 2024; Cari Stinebower, Jacob Harding,
and Kai Zhan, “China Adds Additional Entities to the Unreliable Entity List,” Winston and
Strawn LLP, June 11, 2024.
67
China Adds Significant Risks to Routine

Business Activities—Continued
culty in meeting their obligations to ensure counterparties in Chi-
na are not subject to export controls, U.S. investment restrictions,
sanctions, the Uyghur Forced Labor Prevention Act, and other
requirements under U.S. and other applicable laws.328
A growing number of U.S. companies active in China are shifting

to sourcing from other countries. According to the AmCham survey,
23 percent of respondents indicated they had begun or were con-
sidering relocating manufacturing and/or sourcing out of China.329
According to the survey, the top three destinations for relocated ca-
pacity were other developing economies in Asia, the United States,
and Mexico/Canada.330 This trend was partially driven by increased
trade tensions, but geopolitical tensions, uncertainty about the di-
rection of China’s domestic policies, and rising manufacturing costs
inside China additionally drove importers to find alternatives to
China.331
Chinese Companies Face Barriers to Listing on U.S. Stock
Exchanges
Chinese regulators continue to constrain Chinese compa-
nies from listing overseas on U.S. stock exchanges. Just 23
Chinese issuers have listed on a major U.S. stock exchange in the
first three quarters of 2024, and the combined initial public offering
(IPO) proceeds totaled $1.1 billion.332 Over 40 percent of this total
was raised by one company, the Geely-affiliated EV maker Zeekr.
The 2024 deal volume amounts to just a fraction of the listing ac-
tivity in 2021, just before Chinese regulators clamped down on new
overseas listings and increased oversight over Chinese companies’
global fundraising activity.* In 2022, China implemented new rules
requiring that internet companies seeking to list overseas under-
go a cybersecurity review to assess the company’s compliance with
China’s regulations on cross-border data flows.† 333 In 2023, CSRC
established a revised approval process for companies going public
overseas.334 Under this new approval mechanism, all companies are
required to register their listing with the CSRC, enabling regulators
to block any proposed listing that violates China’s laws and regula-
tions or poses risks to national security and the CCP.‡ Although the
* In the first three quarters of 2021, 41 companies went public on major U.S. exchanges and
raised $13 billion in funding. This includes the $4.4 billion raised by ride-hailing app Didi Glob-
al in its blockbuster IPO. Didi reportedly proceeded with its IPO plans despite objections from
the Cybersecurity Administration of China, leading to Chinese regulators freezing all Chinese
overseas IPO activity for several months. Based on historical data from an internal version of
U.S.-China Economic and Security Review Commission, Chinese Companies Listed on Major U.S.
Stock Exchanges, January 8, 2024; Michael Hytha and Julia Fioretti, “Meihua Becomes China’s
First U.S. IPO since Didi Crackdown,” Bloomberg, February 16, 2022.
† In February 2022, the Cyberspace Administration of China introduced a data security review
mechanism for companies seeking to list overseas. The mechanism was made mandatory for
Chinese companies that collect personal information on more than one million users. Cyberspace
Administration of China, Cybersecurity Review Measures (网络安全审查办法), December 28, 2021.
Translation.
‡ Notably, this review requirement applied to companies listing overseas using variable interest
entity (VIE) structures—complex corporate structures that many Chinese issuers used to circum-
vent restrictions on foreign ownership by granting shareholders contractual claims to control in
lieu of actual ownership. Prior to 2023, Chinese companies that listed overseas using a VIE were
68
CSRC’s approval mechanism nominally established rules for compa-

nies that align with Beijing’s economic priorities to raise capital on
foreign markets, the mechanism instead created a regulatory logjam
for Chinese companies attempting to list overseas.335 It remains un-
clear if Beijing will accelerate approvals for overseas listings on U.S.
exchanges. In April 2024, the CSRC pledged to facilitate listings in
Hong Kong, likely reflecting a preference among Chinese policymak-
ers for companies to list on exchanges under the ultimate control of
Beijing.336
Delisted Chinese Issuers Continue to Trade on

Over-the-Counter Markets
After delisting their shares from a major U.S. exchange, a num-
ber of Chinese companies have continued to access global inves-
tors via the more loosely regulated U.S. over-the-counter (OTC)
markets. OTC markets have traditionally been available to com-
panies that do not meet the requirements for listing on a major
stock exchange.337 These markets operate through decentralized
dealer networks that facilitate private party-to-party exchanges,
and issuers face less stringent disclosure requirements compared
to a major stock exchange. In particular, the Pink Open Market,
an OTC market that is operated by the OTC Markets Group and
is the most speculative open market provided by the group, has
much looser financial standards or reporting requirements than
the major U.S. exchanges.338 Despite these limitations, some large
Chinese companies have moved their listings to OTC markets
after removing them from a major U.S. exchange. The biggest of
these is Chinese ride-hailing giant Didi Global, which exited the
New York Stock Exchange in 2022 under pressure from Chinese
regulators.* At the end of June 2024, Didi continued to trade on
OTC Pink with a market capitalization of $20 billion, making it
the largest company primarily traded off-exchange in the Unit-
ed States.339 Other companies traded on OTC markets include
Luckin Coffee, which was forcibly delisted by the Nasdaq in 2020
following an accounting scandal involving fabricated sales and
financial figures, as well as a number of Chinese SOEs that ap-
peared to remove their listings from the main U.S. bourses under
direction from China’s government in late 2022.340 Despite the
higher risk associated with stocks listed OTC, some U.S. investors
continue to trade these shares.341
Activity around Chinese stocks in the United States re-

mains muted as U.S. policymakers increase scrutiny of Chi-
nese listings. In November 2023, the Chinese fast-fashion compa-
not required to register their listings with the CSRC, as the VIE is not considered a Chinese
company under China’s law.
* Didi reportedly proceeded with its June 2021 IPO on the New York Stock Exchange (NYSE)
despite warnings from China’s government to delay the listing until it completed a cybersecurity
review. Subsequently, the Cybersecurity Administration of China prevented Didi from registering
new users, ordered the removal of Didi’s apps from Chinese stores, and launched a probe into
Didi’s alleged violation of China’s data laws. One year later, Didi shareholders approved the
company’s plan to delist from the NYSE. Didi stated that this delisting was a precondition set by
the Chinese government for allowing the company to resume user registrations. Cissy Zhou, “Didi
to Exit NYSE on June 10 amid Uncertainty about China Restart,” Nikkei Asia, June 9, 2022.
69
ny and e-commerce platform operator Shein * reportedly filed to go

public in the United States in what would have been the largest
U.S. IPO since Uber’s 2019 listing, with the company expected to be
valued at $66 billion.† 342 However, the planned listing subsequently
faced scrutiny from U.S. policymakers over the company’s report-
ed use of forced labor in its supply chains.343 A Bloomberg inves-
tigation published in November 2022 cross-referenced climate and
weather signatures on cotton fabrics used in clothing from Shein to
determine that they originated in Xinjiang, potentially in violation
of restrictions on imports from the region under the Uyghur Forced
Labor Prevention Act.‡ 344 Due to pressure from U.S. lawmakers and
regulators, Shein has reportedly shelved its plans to list in the Unit-
ed States, and is instead exploring a listing on the London Stock
Exchange.345 National security concerns have been raised about
U.S.-listed Chinese LiDAR company Hesai.§ DOD added Hesai to
its list of Chinese military companies in January 2024, although the
Financial Times reported in August 2024 that DOD had reversed its
determination and plans to remove the company from the list.¶ 346
At the same time, other Chinese companies have surged on U.S.
stock exchanges. Pinduoduo, a major Chinese e-commerce company
that operates its eponymous marketplace in China as well as the
Temu e-commerce platform outside of China, had seen its market
capitalization increase on the Nasdaq by more than 50 percent be-
tween January 2023 and June 2024.347 Despite Temu being subject
to U.S. congressional inquiry over links to forced labor, Pinduoduo
is one of the two largest Chinese stocks listed in the United States
by market capitalization, following Chinese e-platform giant Aliba-
ba.348 Combined, Alibaba and Pinduoduo accounted for 46 percent
of the total market capitalization of all Chinese companies listed on
major U.S. exchanges, with their valuations reaching $441 billion at
the end of September 2024.349
China’s External Economic Relations
In 2024, China sought to promote its alternative frame-
works for economic development and cooperation in the
* Shein was founded in China but moved its headquarters to Singapore in 2021. However, the
majority of its operations remain in China. Reuters, “How China’s Shein Became a Fast-Fashion
Giant,” November 27, 2023.
† Though Shein is formally headquartered in Singapore, it likely would still need approval from
Chinese regulators to list overseas given its extensive operations inside China. Shein reportedly
approached the Cyberspace Administration of China and CSRC for approval to list overseas fol-
lowing its IPO filing. Nonetheless, Shein has sought to portray itself as a non-Chinese company
as it seeks to proceed with its overseas IPO. James Kynge, Sun Yu, and Ryan McMorrow, “Shein
Tries to Suppress Chair’s Claim That Fashion Retailer Is ‘American,’ ” Financial Times, June
14, 2024; Eleanor Olcott et al., “Shein Seeks Chinese Regulators Tacit Approval for U.S. Public
Offering,” Financial Times, February 7, 2024.
‡ For more on the risks and challenges to U.S. regulations and laws posed by Chinese e-com-
merce firms, see Nicholas Kaufman, “Shein, Temu, and Chinese e-Commerce: Data Risks, Sourc-
ing Violations, and Trade Loopholes,” U.S.-China Economic and Security Review Commission,
April 14, 2023.
§ Lidar is a remote-sensing technology with emerging and wide-ranging applications, including
computer vision, autonomous driving, and satellite-based imaging. Hesai is the global market
leader in automotive lidar.
¶ DOD is mandated to produce the Chinese military companies list by Section 1260H of the
National Defense Authorization Act for FY 2021. Unlike entities on a sanctions list such as the
Specially Designated Nationals (SDNs) list, inclusion on the Section 1260H list does not prohibit
U.S. investment or many other activities, though Congress created new defense contracting re-
strictions for companies on the list at the end of 2023. Jingli Jiang et al., “DoD Updates Section
1260H List of Chinese Military Companies Operating Directly or Indirectly in the United States,”
Akin, February 5, 2024.
70
face of mounting tensions with trade partners wary of Bei-

jing’s damaging trade practices. The United States and the EU
have each announced tariffs on Chinese-made EVs and other im-
ports that threaten to undercut domestic producers in key indus-
tries.* In defiance of the U.S.-led sanctions regime, China continues
to offer material support to Russia, acting opportunistically to win
energy concessions and promote alternative payment systems. (For
further discussion of China’s support for Russia’s war of aggression
in Ukraine, see Chapter 2, “U.S.-China Security and Foreign Affairs
(Year in Review).”) Meanwhile, China has retooled its flagship Belt
and Road Initiative (BRI) to limit its exposure to risk of default. It
is again increasing lending throughout the developing world, though
this time mainly in the form of emergency rescue loans to bail out
indebted countries rather than fund new infrastructure projects.
China’s Economic Relations with Advanced Economies Come
under Strain
Business climate chills between European capitals and
Beijing as EU investigation brings about retaliatory tariffs
to stem Chinese export of overcapacity. Last year, goods trade
between the EU and China declined for the first time in over a de-
cade, down 13.8 percent year-over-year.350 China still constitutes the
largest origin for EU goods imports (20.5 percent of the total) and
the third-largest market for EU goods exports (8.8 percent).351 Yet
signs of a potential protracted decline in economic engagement be-
tween two of the world’s largest economies have emerged. The Euro-
pean Chamber of Commerce in China’s most recent annual business
confidence survey found only 42 percent of European companies are
considering expanding operations in China in 2024, the lowest level
on record.352 Companies cited China’s economic slowdown, overca-
pacity, and regulatory barriers among their top concerns, with 68
percent of those surveyed saying conducting business in China had
become more difficult, the highest level on record.353
China’s unfair trade practices have become a matter of acute
concern for European governments. In late 2023, the European
Commission launched an investigation into Chinese subsidies for
EVs.354 Despite the decline in total goods trade in 2023, automotive
imports from China grew sharply by 36.7 percent year-over-year.355
Preliminary findings released in June 2024 found EU carmakers
were being harmed by unfair Chinese subsidization of their domes-
tic EV value chain.356 In July, the EU imposed tariffs between 17.4
percent and 37.6 percent on select Chinese automotive makers † on
top of the existing 10 percent tariff on all vehicle imports.357 Beijing
has signaled the potential for retaliatory tariffs, which may further
* In August 2024, Canada also announced it would impose a 100 percent tariff on imports of
Chinese EVs and a 25 percent tariff on imported steel and aluminum from China, with the mea-
sures taking effect in October 2024. Prime Minister Justin Trudeau referenced China’s intention-
al, state-directed policy of overcapacity as the rationale for the tariffs. Lisa Xing, “Chinese-Made
EVs Are Now Subject to a 100% Tariff. What Does This Mean for Canadians?” CBC News, October
1, 2024; Promit Mukherjee and Akash Sriram, “Canada to Impose 100% Tariff on Chinese EVs,
including Teslas,” Reuters, August 27, 2024.
† Individual duties by parent company are 17.4 percent for BYD, 19.9 percent for Geely, and
37.6 percent for SAIC Group. For other companies that cooperated with the investigation, the rate
is 20.8 percent, and it is 37.6 percent for those that did not cooperate. European Commission,
Commission Imposes Provisional Countervailing Duties on Imports of Battery Electric Vehicles
from China while Discussions with China Continue, July 4, 2024.
71
exacerbate tensions alongside contributing factors like China’s ongo-

ing support for Russia and increasingly brazen attempts to silence
dissidents residing in European countries.358
Chinese EV companies have moved to offshore manufacturing in
a hedge against rising trade tensions. They have found a receptive
partner in Hungary, where Chinese battery maker Contemporary
Amperex Technology Co., Ltd (CATL) began building Europe’s larg-
est battery factory in 2022, and this year BYD announced plans to
build its first European EV production facility in the southern city
of Szeged.359 During his May visit to France, Serbia, and Hungary,
Xi said during a press event with Hungarian Prime Minister Vik-
tor Orbán that China and Hungary would embark down a “golden
path” together, reiterating China’s commitment to their comprehen-
sive strategic partnership.360 Xi’s trip and fervent support for Prime
Minister Orbán were widely seen as intended to sow division in the
EU bloc.* 361
Emerging Economies Become Increasingly Concerned with
Excess Chinese Exports
Chinese exports to emerging economies have drastically
grown, straining trade ties and causing certain governments
to launch trade investigations and impose tariffs on Chinese
imports. As advanced economies implement tariffs, China is shift-
ing exports of manufactured goods to emerging economies, enlarging
its bilateral trade surpluses across the developing world. Between
2019 and 2023, China’s manufacturing trade surplus with ASEAN
more than doubled, rising from $96 billion to $231 billion.362 Chi-
nese exports to Latin America and the Caribbean are increasing at
a rapid pace as well. For example, China’s trade surplus with Mexi-
co reached $68 billion in 2023, almost doubling from $35.1 billion in
2019.363 China is also increasingly offshoring production capacity by
building factories in “connector countries” at least in part to circum-
vent trade restrictions in overseas markets.364 (For further discus-
sion on issues pertaining to Chinese overseas manufacturing trends,
see the section “Chinese State Support for Overseas Manufacturing
Likely Perpetuates Economic Distortions” in Chapter 4, “Unsafe and
Unregulated Chinese Consumer Goods: Challenges in Enforcing Im-
port Regulations and Laws.”) An overreliance on Chinese exports
can harm both the local economy and U.S. interests. Emerging mar-
ket governments may be wary that Chinese companies’ local market
power could undercut their domestic industries and make certain
firms vulnerable to Chinese anticompetitive practices, such as with-
holding supply or colluding to raise prices.365 Chinese dominance of
supply chains also exposes emerging economies to market disrup-
tions such as pandemic-like external shocks and potential economic
coercion.366
Emerging market officials have begun to act to protect
specific industries through trade investigations and tariffs.
In the past year, emerging markets including Argentina, Brazil,
India, and Vietnam have launched anti-dumping and anti-subsidy
* For more on China-EU relations, see U.S.-China Economic and Security Review Commission,
Chapter 5, Section 1, “Europe-China Relations: Convergence and Divergence in Transatlantic
Cooperation,” in 2023 Annual Report to Congress, November 2023, 524–533.
72
investigations against China, and Indonesia, Mexico, South Africa,

and Turkey have all imposed tariffs on certain Chinese imports.367
However, rising Chinese imports can create dilemmas for emerging
economy officials whose economies are more dependent on China
and more vulnerable to potential retaliation than the United States
or the EU.368 To avoid broader disruptions to their trading relation-
ships with China, emerging economies may be forced to impose trade
restrictions and other localization policies that could be weaker than
required and insufficient to stem the flow of Chinese exports.369
China Enhances Economic Support for Russia
Record bilateral trade volumes support Russia’s wartime
economy, blunting the impact of international sanctions. To-
tal two-way trade between Russia and China reached $240.1 billion
in 2023, up 26.3 percent from $190 billion a year earlier and 60.4
percent from 2021 levels, the last full year of data before Russia’s in-
vasion of Ukraine.370 Given that Russia’s total trade with the world
declined 9.6 percent between 2021 and 2023 from $785.8 billion to
$710.2 billion, the Russian economy is increasingly reliant on trade
with China to stay afloat.371 Though Russian President Vladimir
Putin praised the level of cooperation and Xi pronounced a “new
era” in the “no limits” partnership between their countries during
his May visit to Beijing, Moscow may come to resent the asymmetry
in the relationship.372
China continues to increase purchases of Russian energy
exports hit by Western sanctions, leveraging its neighbor’s
limited options to obtain favorable long-term price conces-
sions. Chinese imports of Russian crude oil were up 17 percent
year-over-year through April and now comprise 21 percent of Chi-
na’s total crude imports.373 Russia surpassed Saudi Arabia as Chi-
na’s top foreign crude oil supplier in 2023.374 Coal and natural gas
exports from Russia to China have both doubled in the time since
Russia invaded Ukraine.375 A point of major interest for Moscow is
closing a deal with Beijing on the proposed Power of Siberia 2 pipe-
line that would carry eastward to China 50 billion cubic meters of
natural gas * per year, almost half the natural gas that previously
flowed westward from the Yamal Peninsula to European markets.376
However, Beijing continues to slow-walk the deal, a dynamic that
allows Chinese importers to negotiate favorable prices in contracts
not only with Russian suppliers but also with suppliers from other
countries trepid to lose market share.377 According to analysis from
Columbia University’s Center on Global Energy Policy, China would
be reliant on piped gas from Russia for 40 percent of its net imports
if Power of Siberia 2 came online. This scenario would diminish the
need for liquified natural gas shipped by sea from future potential
adversaries like the United States and Australia, who may cut off
supply and impose a naval blockade if a conflict broke out. On the
other hand, building the pipeline would put China’s gas imports
from Russia on par with the EU’s dependency on the eve of the war
in Ukraine, a situation of overreliance Beijing has long been reluc-
* Natural gas accounted for 7.8 percent of China’s total energy supply in 2022, compared to
61 percent from coal and 17.9 percent from oil. For more on China’s energy mix and reliance on
imports, see Chapter 7, “China’s New Measures for Control, Mobilization, and Resilience.” Inter-
national Energy Agency, “China.”
73
tant to abide.378 For the time being, Beijing is unlikely to feel the
need to finalize an agreement unless the price is too low to forgo.
Chinese exports and transshipment of dual-use technology
and goods have surged, aiding Russia’s war effort in Ukraine.
Since the invasion of Ukraine in February 2022, the Commerce De-
partment—in coordination with the EU, Japan, and the UK—has
maintained and periodically updated the Common High Priority
List (CHPL),* a tiered list of dual-use items Russia seeks to ac-
quire for its weapons programs subject to U.S.-led export controls.379
While no public evidence existed as of October 11, 2024 to show
China is providing lethal aid † to Russia, it has substantially in-
creased the sale of items included on the CHPL both directly to Rus-
sia and to countries suspected of reexporting to Russia.380 According
to analysis from the Atlantic Council, China’s monthly exports of
CHPL items increased steadily in the leadup to February 2022, then
fell off after the initial imposition of export controls before steadily
climbing from July 2022 to higher levels than pre-invasion.381 These
higher levels have been sustained since.382 In 2023, China exported
$4.5 billion of CHPL goods to Russia.383 In particular, the sale of
integrated circuits such as those used in precision-guided munitions
increased from a monthly average of $5.3 million in 2021 to $13.7
million in 2023.384 Even more stark is the rising supply of Comput-
er Numerically Controlled (CNC) machine tools and parts used to
manufacture a variety of industrial products including vehicles and
weapons, which rose from a monthly average of $7.4 million in 2021
to $66.6 million in 2023.385
Beijing Retools Lending as BRI Enters Second Decade
Chinese overseas lending has recovered steadily from pan-
demic-era lows as Beijing reshapes development financing
to mitigate its risk.386 Lending to foreign countries under China’s
flagship international development program, BRI, increased 18 per-
cent year-over-year in 2023 to $92.4 billion,‡ a level still well off the
annual peak of nearly $120 billion recorded in 2018.387 A combina-
tion of factors led China to pull back BRI lending starting in 2019,
among them uncertainty brought on by the COVID-19 pandemic,
* As of February 23, 2024, there are 50 items included on the Common High Priority List.
Tier 1 items of highest concern include a broad range of electronic integrated circuits used in
precision-guided weapons systems for which Russia has no domestic production capacity; Tier 2
items include electronic components Russia can produce but prefers to source from the United
States and partners and allies; Tier 3.A includes electronic components with a broad range of
suppliers; Tier 3.B includes mechanical and other components such as ball and roller bearings,
airplane and helicopter parts, optics, navigation equipment, etc.; Tier 4.A includes manufacturing
equipment for electronic components; and Tier 4.B includes Computer Numerically Controlled
(CNC) machines and components used in mechanical and metal manufacturing. U.S. Department
of Commerce, Bureau of Industry and Security, Common High Priority List, February 23, 2024.
† The Biden Administration has repeatedly claimed China is providing “nonlethal” support to
Russia but disagreed with a claim in March 2024 by the British Defense Secretary that China
was supplying lethal aid, saying Washington did not share the assessment. Reid Standish, “U.S.
Pushes Back on British Claim That China Sending Lethal Aid to Russia,” Radio Free Europe,
May 23, 2024.
‡ By comparison, the United States provided $63.5 billion in official development assistance
(ODA) in 2023 and $228.7 billion when combined with private flows of development assistance.
Development assistance from the United States often comprises a large grant portion and ad-
heres to high standards regarding transparency, accountability, and participation set forth in
international frameworks, in contrast to opaque BRI lending that typically has less favorable
terms for the borrower. Organisation for Economic Co-operation and Development, “OECD Data
Explorer–DAC1: Flows by Donor (ODA+OOF+Private)”; Kristen A. Cordell, “The Evolving Rela-
tionship between the International Development Architecture and China’s Belt and Road,” Brook-
ings Institution, October 2020.
74
slowing domestic growth, and fears of insolvency of borrower na-

tions struggling to service high levels of sovereign debt.388 However,
the composition of Chinese development lending has changed, with
investment deals * making up a greater portion of total lending than
construction projects for the first time in 2023.389 This change in
composition reflects both the scaling back of grandiose infrastruc-
ture projects that were common early on in BRI as well as a move
to provide capital to borrower economies. In his speech during the
third BRI Summit in October 2023, Xi painted a picture of moving
from large-scale projects to “fine brushstrokes,” metaphorically de-
scribing many smaller projects.390
China moves unilaterally to secure payment from debt-
strapped borrower nations, undermining international ef-
forts to alleviate debt burdens. China is now the world’s largest
official debt collector, with an estimated $1.1 trillion to $1.5 trillion
of debt outstanding from foreign borrowers.391 China has used BRI
lending as a strategy to exert leverage over less developed countries
and shore up access to key resources like critical minerals, with
Chinese SOEs taking up equity stakes in mining operations on five
continents.† 392 According to data from William & Mary research lab
AidData, 80 percent of China’s overseas lending portfolio is to coun-
tries in financial distress.393 Currently, 55 percent of BRI loans to
low- and middle-income countries are in their principal repayment
period, a figure expected to rise to 75 percent by 2030.394 Recog-
nizing that its risk management and due diligence practices were
lax in the early years of BRI, China has taken a number of steps
to mitigate its exposure to potential default on outstanding loans.
First, it has dialed up RMB-denominated emergency rescue lend-
ing ‡ to borrowers to ensure the cash reserves necessary to service
debt.395 The analysis from AidData runs through the end of 2021
and finds that by that time, China had provided 128 emergency res-
cue loans to 22 debtor countries worth a combined $240 billion.396
Emergency rescue loans jumped from less than 5 percent of China’s
overseas lending portfolio to low- and middle-income countries in
2010 to nearly 60 percent by 2022 (see Figure 7).397 Second, it has
aggressively sought to collateralize loans by requiring borrowers to
maintain escrow accounts from which China can draw funds in the
event of default.398 Last, it is increasing interest rates for late pay-
ment, now set at a maximum 8.7 percent.399
* BRI lending is typically broken out into two subcategories: construction and investment. Con-
struction consists of lending often financed by Chinese state banks to build infrastructure, with a
timeline for completion and no implied ownership of the assets. Investment deals are financed by
Chinese investors to take an equity stake in an asset, portending an indefinite Chinese presence
in the host country. Christoph Dedopil, “China Belt and Road Initiative (BRI) Investment Re-
port 2023,” Griffith University and Fudan University, February 2024, 2; Derek Scissors, “China’s
Overseas Investment Starts the Long Climb Back,” American Enterprise Institute, July 20, 2021.
† For more on China’s use of BRI as leverage, see U.S.-China Economic and Security Review
Commission, Chapter 3, Section 1, “Belt and Road Initiative,” in 2018 Annual Report to Congress,
November 2018, 259–303.
‡ Emergency rescue loans typically are provided as balance of payment support by the PBOC
to the central banks of debtor countries as a component of debt restructuring. However, there
has been a rise in emergency lending from Chinese state banks working with foreign banks to
service BRI debt in borrower nations. Keith Bradsher, “China Is Lending Billions to Countries
in Financial Trouble,” New York Times, November 6, 2023; Alex Wooley, “Belt and Road Bailout
Lending Reaches Record Levels, Raising Questions about the Future of China’s Flagship Global
Infrastructure Program,” AidData, March 27, 2023.
75
Figure 7: China’s Lending to Low- and Middle-Income Economies by
Financial Instrument, 2000–2021
$120
$100
$80
US$ billions
$60
$40
$20
$0
Emergency lending Infrastructure project lending
Note: Infrastructure project lending is defined by AidData as loans linked to specific investment
projects involving construction and other work on physical infrastructure in its database of Chi-
nese overseas lending. Emergency lending includes loans AidData identified as rescue loans, or
loans that allowed a sovereign debtor to service its debt, finance general budgetary expenditures,
or shore up foreign exchange reserves.
Source: AidData, “Global Chinese Development Finance Dataset, Version 3.0,” November 6,
2023.
China’s unilateral lending practices undermine interna-

tional efforts to reduce the debt burden of low- and mid-
dle-income countries. An argument has been made that Beijing’s
efforts to ensure repayment undermine international efforts to alle-
viate debt burdens of low-income countries, such as the G20 Com-
mon Framework for Debt Treatments, in which China agreed to be
a participant in 2020.400 Members of the Paris Club, a group of
international countries dedicated to resolving sovereign debt issues
in a sustainable manner, are edged out by guaranteed repayment
plans that China coerces borrowers to accept, all the while increas-
ing the debt obligation under increasingly burdensome terms.401
For its part, the United States has stepped up development assis-
tance in recent years and worked with partners and allies to pro-
vide alternative options for much-needed infrastructure investment
in low- and middle-income countries with transparent terms, such
as the U.S. International Development Finance Corporation (DFC)
and more recent G7 initiative Partnership for Global Infrastructure
and Investment (PGII).402 From 2014 to 2017, China’s development
financing was triple that of the United States, and by 2021 it ex-
ceeded the United States by only 30 percent.403
7
76
ENDNOTES FOR CHAPTER 1
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77
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60. UBS, “China’s Three Red Lines: Opportunities in China Real Estate,” January
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61. People’s Bank of China and the China Banking and Insurance Regulatory Com-
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Regulatory Commission of Establishing Rules for the Management of Concentration of
Real Estate Loans of Banking Financial Institutions, December 28, 2020.
63. Jeremy Mark and Michael Schuman, “China’s Faltering ‘Zero COVID’ Policy:
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64. International Monetary Fund, “China Monitor,” May 5, 2022.
65. China’s National Bureau of Statistics, “CN: Real Estate Investment,” via CEIC
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66. China’s National Bureau of Statistics, “CN: Floor Space Started: ytd: Commodi-
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67. Christian Shepherd and Lyric Li, “Housing, Once the Ticket to Wealth in Chi-
na, Is Now Draining Fortunes,” Washington Post, July 16, 2024.
68. Christian Shepherd and Lyric Li, “Housing, Once the Ticket to Wealth in Chi-
na, Is Now Draining Fortunes,” Washington Post, July 16, 2024.
69. Claire Fu and Daisuke Wakabayashi, “How China’s Property Crisis Blew Up
Bets That Couldn’t Lose,” New York Times, December 28, 2023.
70. Claire Fu and Daisuke Wakabayashi, “How China’s Property Crisis Blew Up
Bets That Couldn’t Lose,” New York Times, December 28, 2023.
71. Reuters, “China’s Property Investment Falls 10.2% Y/y in January-July,’ ” Au-
gust 14, 2024.
72. Evelyn Cheng, “China’s Unfinished Property Projects Are 20 Times the Size of
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73. Bloomberg, “Chinese Mega Cities Loosen Homebuying Rules as Aid Spreads,”
May 28, 2024; Ziyi Tang, Liangping Gao, and Clare Jim, “Chinese Cities Ease Mort-
gage Rules in Bid to Revive Property Sector,” Reuters, August 30, 2023.
74. Clare Jim and Xie Yu, “China’s Property ‘Whitelist’ Lifeline Stutters amid Sec-
tor Gloom,” Reuters, May 14, 2024.
75. Clare Jim and Xie Yu, “China’s Property ‘Whitelist’ Lifeline Stutters amid Sec-
tor Gloom,” Reuters, May 14, 2024.
76. Bloomberg, “China Attempts to End Property Crisis with Broad Rescue Pack-
age,” May 17, 2024.
77. Jeremy Mark, “There’s Less to China’s Housing Bailout than Meets the Eye,”
Atlantic Council, May 22, 2024.
78. Lulu Yilun Chen and Tom Hancock, “China’s Private Builders Face $553 Billion
Gap to Complete Homes,” Bloomberg, April 14, 2024.
79. Bloomberg, “China Home Prices Fall at Faster Pace despite Revival Efforts,”
May 16, 2024.
80. Liangping Gao and Clare Jim, “China Unveils ‘Historic’ Steps to Stabilise Cri-
sis-Hit Property Sector,” Reuters, May 17, 2024.
81. Logan Wright et al., “No Quick Fixes: China’s Long-Term Consumption
Growth,” Rhodium Group, July 18, 2024.
83. Bloomberg, “China’s Bet on Manufacturing Ups Risks from Trade Battle with
US,” May 16, 2024.
84. China’s National Bureau of Statistics, “Residential Prices by City,” via CEIC
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85. Zhitong Gao, Jihong Pang, and Hongyong Zhou, “The Economics of Marriage:
Evidence from China,” Nature, October 31, 2022.
86. Ding Yemin et al., “Do High Housing Prices Crowd Out Young Professionals?–
Micro-Evidence from China,” November 14, 2022.
87. Kenneth Rogoff and Yuanchen Yang, “A Tale of Tier 3 Cities,” International
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79
88. Kenneth Rogoff and Yuanchen Yang, “A Tale of Tier 3 Cities,” International
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89. Henry Hoyle and Sonali Jain-Chandra, “China’s Real Estate Sector: Managing
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Developer. Now, It Has Been Ordered to Liquidate,” Wall Street Journal, January 29,
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90. Atlantic Council GeoEconomics Center and Rhodium Group, “Running out of
Road. China Pathfinder Annual Scorecard,” October 2023.
91. Donald Low, “To Restore Consumer Confidence, China Must Save the Property
Sector,” South China Morning Post, August 27, 2024; Tianlei Huang, “China’s Proper-
ty Downturn Continues to Drag down Government Spending,” Peterson Institute for
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92. Chongjing Li, Charlotte Yang, and Tao Zhang, “China’s Housing Crash Could
Set Back Millions of Promising Careers,” Bloomberg, May 16, 2024.
93. Tianlei Huang, “Chinese Local Governments’ Reliance on Land Revenue Drops
as the Property Downturn Drags On,” Peterson Institute for International Economics,
July 5, 2024.
96. Qing Na, “China’s Cash-strapped Local Governments Struggle to Revive Land
Sales,” Nikkei Asia, January 6, 2024.
97. Fitch Ratings, “Central Transfers Ease China’s Local Government Fiscal
Strains,” March 28, 2022.
98. Bloomberg, “China’s Provinces Are Increasingly Reliant on Beijing for Money,”
March 13, 2023.
99. Chu Yang, “Local Issues, Local Solutions?” CKGSB Knowledge, December 20,
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100. International Monetary Fund, “Local Government Finances after Covid and
the Real Estate Slump,” February 9, 2024.
101. Alex Zhou and Annisa Lee, “Local Government Financing Vehicles: A Growing
Risk for China’s Economy?” Pimco, September 1, 2023.
102. Rebecca Feng and Cao Li, “China’s Colossal Hidden-Debt Problem Is Coming
to a Head,” Wall Street Journal, December 5, 2023.
103. Bloomberg, “China’s LGFVs Must Repay a Record $651 Billion of Bonds in
2024,” January 3, 2024.
104. Bloomberg, “China to Shift $139 Billion of ‘Hidden’ Local Debt to Provinces,”
August 10, 2023.
105. Cheng Siwei et al., “In Depth: Local Governments Struggle to Tackle Moun-
tain of Hidden Debt,” Caixin Global, March 20, 2024.
106. Bloomberg, “China’s LGFV Borrowing Costs Drop to Record Low as Investors
Bet on Bailout,” April 22, 2024; Cheng Siwei et al., “In Depth: Local Governments
Struggle to Tackle Mountain of Hidden Debt,” Caixin Global, March 20, 2024.
107. Laura C. Li, Wenyin Huang, and Ryan Tsang, “Credit FAQ: Is It Working?
China’s LGFV Debt De-Risk Program One Year On,” S&P Global, July 25, 2024;
Tianlei Huang, “Why China’s Housing Policies Have Failed,” Peterson Institute for
International Economics, June 2023, 28–29.
108. Bloomberg, “Chinese Provinces Expand Options for Fixing LGFV Debt
109. Laura C. Li and Wenyin Huang, “Same Game, Different Name: China LGFV
Issues to Repay the Debt Of A Peer,” S&P Global, February 29, 2024.
110. Bloomberg, “Chinese Provinces Expand Options for Fixing LGFV Debt
111. Bloomberg, “China’s LGFV Borrowing Costs Drop to Record Low as Investors
Bet on Bailout,” April 22, 2024.
112. China’s Ministry of Finance, Interim Provisions on Accounting Treatment
of Enterprise Data Resources (企业数据资源相关会计处理暂行规定), August 1, 2023.
Translation.
113. Shanghai Industrial Transformation and Development Research Institute,
“ ‘Data Assetization’ Is Taking Shape, with a Promising Future” (‘数据资产化’开始落
地,未来可期!), June 5, 2024. Translation; Amanda Lee, “China’s Local Governments
Swap Debt for Data as Pressure Builds to Relieve Burdens,” South China Morning
Post, May 9, 2024.
114. Du Zhihang and Han Wei, “In Depth: China’s Efforts to Unlock the Value of
Data as an Asset,” Caixin Global, February 29, 2024.
80
115. Wall Street Journal, “Chinese Cities Eye Data Assets as Fiscal Woes Bite,”
May 30, 2024; Amanda Lee, “China’s Local Governments Swap Debt for Data as
Pressure Builds to Relieve Burdens,” South China Morning Post, May 9, 2024.
116. Moody’s Ratings, “Moody’s Affirms China’s A1 Rating, Changes Outlook to
Negative from Stable,” December 5, 2024.
117. Moody’s Ratings, “Moody’s Ratings Announces Completion of a Periodic Re-
view of Ratings of China, Government of,” May 23, 2024.
118. Trivium China, “Getting Ahead of the Curve,” December 6, 2023; Keith Brad-
sher, “China’s Rising Debt Spurs Moody’s to Lower Credit Outlook,” New York Times,
December 5, 2023.
119. Xinhua, “Reinvestigation: Why Do Major U.S. Ratings Agencies Manipulate
Global South’s Sovereign Credit Ratings?” May 1, 2024.
120. Xinhua, “Reinvestigation: Why Do Major U.S. Ratings Agencies Manipulate
Global South’s Sovereign Credit Ratings?” May 1, 2024.
121. Sun Yu, “Moody’s Advised Staff to Work from Home ahead of China Outlook
Cut,” Financial Times, December 7, 2023.
122. Alice Huang and Wei Zhou, “China Ratings Startup Challenges System Where
Even AAAs Default,” Bloomberg, September 26, 2022.
123. Economist, “How Economists Have Underestimated Chinese Consumption,”
October 10, 2023.
124. Economist, “How Economists Have Underestimated Chinese Consumption,”
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129. Nicholas R. Lardy, “Skeptics of China’s GDP Growth Have Not Made Their
Case,” Peterson Institute for International Economics, August 14, 2015.
130. Zixuan Huang and Nicholas P. Lardy, “Retail Sales Numbers Are Not a Re-
liable Indicator for Consumption Expenditure,” Peterson Institute for International
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131. Shehzad H. Qazi, “The Great Chinese Rebound? Not So Fast,” Barron’s, Jan-
uary 26, 2021.
132. Shehzad H. Qazi, “The Great Chinese Rebound? Not So Fast,” Barron’s, Jan-
uary 26, 2021.
133. Logan Wright et al., “March/Q1 2023 Macro Data Recap,” Rhodium Group,
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134. Amit Kumar, “The Hidden Dangers in China’s GDP Numbers,” Foreign Policy,
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135. Keith Bradsher, “China Is Trying to Make Its Gloomy Consumers Spend
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136. China’s National Bureau of Statistics, “Retail Sales of Consumer Goods, total,
YoY [2019–2024],” via CEIC database, June 16, 2024.
137. China’s National Bureau of Statistics, “CN: Consumption Contribution to GDP
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138. Stewart Paterson, “Why China Is in a Massive Consumption Slump,” Hinrich
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139. China’s National Bureau of Statistics, “CN: Consumer Confidence Index
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140. Casey Hall, “China’s Retail Outlook Dims after Mid-Year Shopping Festival
Flop,” Reuters, June 24, 2024.
141. Laura He and Marc Stewart, “China Reports ‘Record’ Holiday Travel Data.
But Consumer Spending Isn’t Roaring Back Just Yet,” CNN, February 19, 2024.
142. Sophie Yu and Anne Marie Roantree, “Sports and Music Lessons for China’s
Kids in Sharp Decline as Purse Strings Tighten,” Reuters, March 12, 2024.
143. Joe Leahy, “Why Xi Jinping Is Afraid to Unleash China’s Consumers,” Finan-
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144. Katrina Northrop, “The Chinese Economy Is Faltering–and That Means More
Trade Tensions,” Washington Post, September 20, 2024; Logan Wright et al., “No
81
Quick Fixes: China’s Long-Term Consumption Growth,” Rhodium Group, July 18,
2024; Joe Leahy, “Why Xi Jinping Is Afraid to Unleash China’s Consumers,” Finan-
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China: A Struggle for All, but Heavier for Lower-Income Families,” August 31, 2023.
145. Tao Wang, “The Tools Exist to Rescue China’s Economy and It’s Time to Use
Them,” Financial Times, February 29, 2024.
146. Jonathan Cheng, “Chinese Consumer Prices Edge Higher, Breaking a Four-
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148. Lingling Wei and Stella Yifan Xie, “Communist Party Priorities Complicate
Plans to Revive China’s Economy,” Wall Street Journal, August 27, 2023.
149. Bloomberg, “Nomura’s Koo on Fixing China’s ‘Balance Sheet Recession,’ ” May
27, 2024; Keith Bradsher, “China Is Trying to Make Its Gloomy Consumers Spend
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151. China’s National Bureau of Statistics, “CN: Surveyed Unemployment Rate:
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152. Benn Steil and Elisabeth Harding, “The Root of China’s Growing Youth Un-
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153. Robyn Dixon, “Chinese Millennials Are Rejecting Dull Factory Jobs–and
Transforming the Economy,” Los Angeles Times, May 12, 2019.
154. Goldman Sachs, “Why Has Youth Unemployment Risen So Much in China?”
May 31, 2023; Joe Cash and Engen Tham, “China’s Services Sector Eyes Recovery
after Reopening, but Challenges Loom,” Reuters, December 29, 2022; S. Feng and N.
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155. China’s National Bureau of Statistics, “CN: Surveyed Unemployment Rate: Ur-
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156. Meaghan Tobin, “China’s Solution to Record Youth Unemployment Is to Stop
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157. Zen Soo, “China Starts Publishing Youth Jobless Data Again, with a New
Method and a Lower Number,” Associated Press, January 17, 2024.
158. Zen Soo, “China Starts Publishing Youth Jobless Data Again, with a New
Method and a Lower Number,” Associated Press, January 17, 2024.
159. Ryan Woo and Ethan Wang, “China’s Rising Youth Unemployment Breeds
New Working Class: ‘Rotten-tail Kids,’ ” Reuters, August 20, 2024.
160. Kohei Fujimura, “China’s Aging Migrant Workforce Puts Manufacturers in
Labor Crunch,” Nikkei Asia, May 7, 2024; Tom Hancock, “China Bets $1.8 Trillion of
Construction Will Boost Economy,” Bloomberg, April 10, 2023; Benn Steil and Benja-
min Della Rocca, “As China Buckles under ‘Zero Covid,’ Xi Bets Big on Bloat,” Council
on Foreign Relations, July 7, 2021.
161. Benn Steil and Elisabeth Harding, “The Root of China’s Growing Youth Un-
employment Crisis,” Council on Foreign Relations, September 18, 2023.
162. Kohei Fujimura, “China’s Aging Migrant Workforce Puts Manufacturers in
Labor Crunch,” Nikkei Asia, May 7, 2024.
163. Craig Hale, “Thousands of Employees Are Quitting China’s Big Tech Giants
and Going Their Own Way,” Tech Radar, May 6, 2024.
164. Shin Watanabe, “China’s Tutoring Crackdown Puts Over 3 Million Jobs at
Risk,” Nikkei Asia, November 3, 2021.
165. Tianlei Huang and Mary E. Lovely, “Half a Year into China’s Reopening after
COVID, Private Economic Activity Remains Weak,” Peterson Institute for Internation-
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166. Edward Cunningham, “What Is the Future of China’s Private Sector?” Har-
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167. Mia Nulimaimaiti, “China’s College Graduates to Hit Record High 11.79 Mil-
lion in 2024, Adding to Job Market Pressure,” South China Morning Post, December
7, 2023; Shuaizhang Feng, “A Closer Look at Causes of Youth Unemployment in the
People’s Republic of China,” Asian Development Bank, June 2023, 4–5.
168. Ilaria Mazzocco and Scott Kennedy, “Is It Me or the Economic System? Chang-
ing Evaluations of Inequality in China,” Big Data China, July 9, 2024.
169. Ilaria Mazzocco and Scott Kennedy, “Is It Me or the Economic System? Chang-
ing Evaluations of Inequality in China,” Big Data China, July 9, 2024.
82
170. Luo Yahan and Tian Xinlu, “In China, Competition for Civil Service Jobs
Keeps Getting Fiercer,” Sixth Tone, November 3, 2023; Claire Fu, “China’s Young
Elite Clamor for Government Jobs. Some Come to Regret It,” New York Times, August
3, 2023.
171. Keyu Jin, “China’s Economy Is Leaving behind Its Educated Young People,”
Wall Street Journal, May 11, 2023.
172. Tingshu Wang et al., “In Rapidly Ageing China, Millions of Migrant Workers
Can’t Afford to Retire,” Reuters, May 8, 2024.
173. Farah Master, “China Approves Plan to Raise Retirement Age from January
2025,” Reuters, September 13, 2024; Zhou Xinda et al., “China Moves to Raise Re-
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5, 2024.
174. Keith Bradsher, “How China’s Property Crisis Is Testing Its Too-Big-to-Fail
Banks,” New York Times, September 30, 2023.
175. Ming Tan et al., “China Banks Brace for Tide of Bad Property Loans,” S&P
Global, April 15, 2024.
176. Bloomberg, “China Credit Shrinks for First Time, Loan Growth Disappoints,”
May 11, 2024.
177. Bloomberg, “China Credit Shrinks for First Time, Loan Growth Disappoints,”
May 11, 2024.
178. Bloomberg, “China Credit Engine Goes into Reverse, Piles Pressure on Bei-
jing,” May 12, 2024.
179. Bloomberg, “China Credit Engine Goes into Reverse, Piles Pressure on Bei-
jing,” May 12, 2024.
180. Chan Ka Sing, “China Stimulus Starts with a Bond, not a Bang,” Reuters,
May 17, 2024; Cheng Leng, “China Fires Starting Gun on $140bn Debt Sale to Boost
Economy,” Financial Times, May 13, 2024.
181. Henny Sender, “Why China’s Smaller Businesses Are Struggling to Access
Credit,” Financial Times, April 28, 2020.
182. Keith Bradsher, “How China’s Property Crisis Is Testing Its Too-Big-to-Fail
Banks,” New York Times, September 30, 2023.
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Enterprises Contribute to China’s GDP and Employment?” World Bank Group, July
15, 2019.
184. Diana Choyleva, “Signs of More Stress among China’s Smaller Companies,”
Financial Times, February 26, 2024.
185. Sylvia Ma, “China Pledges US$69 Billion in Credit Backing for Tech after
Resurrecting Dormant Financial Tools,” South China Morning Post, April 9, 2024.
186. Reuters, “China Adds New Incentives for Banks to Lend to Small Businesses,”
December 15, 2021; Frank Tang, “Coronavirus: China Grants Banks Extra Funding
to Spur Loans to Hard Hit Small Businesses,” South China Morning Post, February
26, 2020; Orange Wang, “Brother Can You Spare a Dime: China’s Small Firms Can’t
Get Loans Even with the Government’s Push,” South China Morning Post, August
29, 2018.
187. François Chimits, written testimony for U.S.-China Economic and Security
Review Commission, Hearing on Consumer Products from China: Safety, Regulations,
and Supply Chains, March 1, 2024, 6; Henny Sender, “Why China’s Smaller Business-
es Are Struggling to Access Credit,” Financial Times, April 28, 2020.
188. Clare Jim and Xie Yu, “China’s Property ‘Whitelist’ Lifeline Stutters amid
Sector Gloom,” Reuters, May 14, 2024.
191. Reuters, “Chinese Companies Axe IPO Plans amid Listing Scrutiny,” February
26, 2024.
192. Hudson Lockett, “Beijing’s ‘Broker Butcher’ Sparks State-Driven Stock Ral-
ly,” Financial Times, March 8, 2024; Craig Mellow, “China: The ‘Broker Butcher’ Re-
turns,” Global Finance, March 2, 2024.
193. Weilun Soon, “How Do You Turn Around a Bear Market? China Has One
Answer,” Wall Street Journal, February 2, 2024.
194. Bloomberg, “China Enacts Rules to Tighten Scrutiny of Programmed Trad-
ing,” May 16, 2024; Bloomberg, “China Tells Brokers to Limit Exposure to ‘Snowball’
Derivatives,” April 24, 2024; Reuters, “China Regulator Announces More Curbs on
Short-Selling,” February 6, 2024.
83
195. Bloomberg, “China’s Quant Clampdown Risks Damaging Fragile Markets for
Years,” February 25, 2024.
196. People’s Daily, “Anchoring the Goal of Building a Strong Financial Nation
and Solidly Promoting High-Quality Financial Development (Study Deeply the Im-
plementation of Xi Jinping Thought on Socialism with Chinese Characteristics for a
New Era)” (锚定建设金融强国目标扎实推动金融高质量发展(深入学习贯彻习近平新时代
中国特色社会主义思想)), February 20, 2024. Translation.
197. Bill Bishop, “Crackdown on Quants and Shorts; Private Sector Promotion;
Hacking; Cranes,” Sinocism, February 22, 2024; Joe Cash, “Top Watchdogs Tell Chi-
na’s Finance Sector to Follow Communist Party Values,” Reuters, February 20, 2024;
People’s Daily, “Righteous Profits, not Profit for its Own Sake (People’s Opinion)” (以
义取利，不唯利是图(人民观点)), February 19, 2024.
198. Samuel Shen, Selena Li, and Julie Zhu, “Exclusive: Big Chinese Fund Manag-
ers Cap Pay, Claw Back Excess in ‘Common Prosperity’ Push, Sources Say,” Reuters,
July 23, 2024; Frank Chen, “China’s New Rules for Finance Pull the Brakes on Gravy
Train, Bringing ‘Greed Is Good’ Era to a Halt,” South China Morning Post, March
30, 2024; Bloomberg, “Xi Crackdown on ‘Hedonistic’ Bankers Fuels Industry Brain
Drain,” February 26, 2024.
199. Tianlei Huang and Nicolas Véron, “China’s Private Sector Has Lost Ground
as State Sector Has Gained Share among Top Corporations since 2021,” Peterson
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203. Trivium China, “State Council Issues Blueprint for Building Trust in Capital
Markets,” April 18, 2024; Chinese State Council, Opinion on Strengthening Super-
vision, Preventing Risks, and Promoting High-Quality Development of the Capital
Market (国务院关于加强监管防范风险, 推动资本市场高质量发展的若干意见), April 4,
2024. Translation.
204. Trivium China, “State Council Issues Blueprint for Building Trust in Capital
Markets,” April 18, 2024; Chinese State Council, Opinion on Strengthening Super-
vision, Preventing Risks, and Promoting High-Quality Development of the Capital
Market (国务院关于加强监管防范风险, 推动资本市场高质量发展的若干意见), April 4,
2024. Translation.
205. Christian Shepherd and Anna Fifield, “China Moves to Boost Ailing Economy
with Property, Stimulus Measures,” Washington Post, September 24, 2024.
206. Yahoo! Finance, “CSI 300 Index.”
207. Christian Shepherd and Anna Fifield, “China Moves to Boost Ailing Economy
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208. Brad W. Setser, “China’s New Currency Playbook,” Council on Foreign Rela-
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209. Bloomberg, “Chinese Banks Hold Lending Rates Following PBOC’s Caution,”
June 19, 2024; Trading Economics, “China Loan Prime Rate.”
210. Rae Wee and Vidya Ranganathan, “As Yuan Skids, Markets Bet More Depre-
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211. Iris Ouyang, “China Allows Yuan to Drop as Outflows, Dollar Test PBOC’s
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212. Bloomberg, “Xi Wants Strong Yuan in Push to Make China a ‘Financial Pow-
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213. Chris Anstey, “The Promise and Peril of China’s Strong Yuan Policy,”
Bloomberg, February 3, 2024.
214. Iris Ouyang and Tania Chen, “China Warns Traders on Yuan Speculation,
Fueling Sharp Rebound,” Bloomberg, September 10, 2023; International Monetary
Fund, “People’s Republic of China: 2024 Article IV Consultation-Press Release; Staff
84
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215. Brad Setser, “China’s New Currency Playbook,” Council on Foreign Relations,
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216. Brad Setser, “China’s New Currency Playbook,” Council on Foreign Relations,
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217. Reuters, “How China Talked Markets Out of a Run on the Yuan,” January 1,
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218. U.S. Census Bureau, Trade in Goods with China, October 11, 2024.
222. Pablo D. Fajgelbaum and Amit Khandelwal, “The Value of De Minimis Im-
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223. China’s General Administration of Customs, Customs Statistics, October 11,
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224. U.S. Census Bureau, USA Trade Online, October 11, 2024.
226. Mark Niquette, “U.S. Trade Deficit Widens to Largest since 2022 on Weaker
Exports,” Bloomberg, July 3, 2024; Daniel Neligh, “U.S. Retail Sales Barely Increase
in Sign of Consumer Strain,” Bloomberg, June 18, 2024; Lucia Mutikani, “U.S. Import
Prices Fall, Consumer Sentiment Slides,” Reuters, June 14, 2024; U.S. Congressional
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2024, 27.
227. World Bank, “China Economic Update June 2024—Growing beyond Property:
Cyclical Lifts and Structural Challenges,” June 15, 2024, 9; Lucia Mutikani, “U.S.
Import Prices Fall, Consumer Sentiment Slides,” Reuters, June 14, 2024.
228. U.S. Bureau of Labor Statistics, “Import/Export Price Indexes,” October 11,
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229. Tatiana Orlova, “The Latest Export from China Is . . . Deflation,” Oxford Eco-
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230. U.S. Census Bureau, USA Trade Online, October 11, 2024; U.S. Bureau of
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231. World Bank, “China Economic Update June 2024—Growing beyond Property:
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232. U.S. Census Bureau, Trade in Goods with China, October 11, 2024; Mia Nu-
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December Uptick as Recovery Lags, De-Risking Continues,” South China Morning
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235. U.S. Census, “ATP Data—Imports and Exports—ATP Group by Country,” Oc-
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236. U.S. Department of Agriculture, Economic Research Service, U.S. Agricultural
Trade Data Update; Genevieve Donnellon-May, “Why Food Security Is a Top Priority
for China,” Asia Society Policy Institute, December 29, 2023; Dominique Patton, “Food
Security Drives China to Cut Soymeal Use in Animal Feed,” Reuters, April 14, 2023.
239. Reuters, “Intel to Launch Two AI Chips for China with Reduced Capabilities,”
April 16, 2024; Ben Jiang, “Intel Sees Massive Demand for AI Chips Designed for
China amid LLM Boom and U.S. Export Curbs, Report Says,” South China Morning
Post, September 21, 2023.
240. Paul Triolo and Kendra Schaefer, “China’s Generative AI Ecosystem in 2024,”
NBR, June 27, 2024.
241. David Shepardson and Stephen Nellis, “Intel, Qualcomm Say Exports to Chi-
na Blocked as Beijing Objects,” Reuters, May 8, 2024.
244. Civil Aviation Administration of China, “CN: Air: Passenger Traffic,” via CEIC
database.
245. Henry Canaday, “Part Suppliers Face Challenges in China’s Rapidly-Recover-
ing Aviation Market,” Aviation Week, August 3, 2023.
246. Chen Shanshan, “Orders for Domestically Produced C919 Are Exploding. How
Long until Commercial Mass Production?” (国产C919飞机订单爆发, 大规模商用还有多
远), Yicai, April 28, 2024. Translation.
85
247. Nathaniel Sher, “Comac’s Homegrown Aircraft Goes Global,” Jamestown Foun-
dation, May 10, 2024; Max J. Zenglein and Gregor Sebastian, “The Sky Is the Limit:
China’s Rise as a Transportation Superpower Challenges the EU,” Mercator Institute
for China Studies, October 26, 2023; Center for Strategic and International Studies,
“China’s Stalled Aircraft Dreams,” Video, 0:25–0:45, December 7, 2020.
248. Max J. Zenglein and Gregor Sebastian, “The Sky Is the Limit: China’s Rise
as a Transportation Superpower Challenges the EU,” Mercator Institute for China
Studies, October 26, 2023; China’s State-Owned Assets Supervision and Adminis-
tration Commission of the State Council, May 23, 2014: Xi Jinping Inspects the CO-
MAC Design and R&D Center (2014年5月23日, 习近平在中国商飞设计研发中心考察),
August 1, 2022. Translation; China’s Central Committee and State Council, Outline
for Building a Powerful Transportation Country (交通强国建设纲要), September 19,
2019. Translation.
249. Ralph Jennings, “Here Are China’s 4 Commercial Jets, from the ARJ21 and
C919 to the Jumbo C929 and C939,” South China Morning Post, July 30, 2024; Na-
thaniel Sher, “Comac’s Homegrown Aircraft Goes Global,” Jamestown Foundation,
May 10, 2024; Amanda Lee, “How Monumental Is China’s Challenge to Build Its Own
Jet Engine for the C919 As It Seeks Aviation Self-Reliance?” South China Morning
Post, February 11, 2024; Abraham Mahshie, “Dependence on Russian Aircraft En-
gines Could Prompt China to ‘Fix Their . . . Problem,’ ” Air and Space Forces Magazine,
May 19, 2022; Chad J.R. Ohlandt et al., “Chinese Investment in U.S. Aviation,” RAND
Corporation (prepared for the U.S.-China Economic and Security Review Commis-
sion), March 29, 2017, 78.
250. Ralph Jennings, “China’s Home-Grown C919 Reaches New Heights with
Flight to ‘Roof of the World,’ ” South China Morning Post, September 25, 2024; Ralph
Jennings, “Here Are China’s 4 Commercial Jets, from the ARJ21 and C919 to the
Jumbo C929 and C939,” South China Morning Post, July 30, 2024.
251. Amanda Lee, “How Monumental Is China’s Challenge to Build Its Own Jet
Engine for the C919 As It Seeks Aviation Self-Reliance?” South China Morning Post,
February 11, 2024; Max J. Zenglein and Gregor Sebastian, “The Sky Is the Limit:
China’s Rise as a Transportation Superpower Challenges the EU,” Mercator Institute
for China Studies, October 26, 2023.
Studies, October 26, 2023.
253. Richard Aboulafia, “If China Arms Russia, the U.S. Should Kill China’s Air-
craft Industry,” Foreign Policy, March 20, 2023.
Studies, October 26, 2023; Kinling Lo, “China’s C919 Debut Could Inspire Aviation
Supply Chain to Take Off, but Self-Sufficiency ‘Difficult,’ ” South China Morning Post,
June 1, 2023; Anurag Rao, “Partly Made in China,” Reuters, September 21, 2022;
Scott Kennedy, “China’s COMAC: An Aerospace Minor Leaguer,” Center for Strategic
and International Studies, December 7, 2020; Center for Strategic and International
Studies, “The C919 Major Suppliers,” December 2, 2020.
255. Laura Zhou, “China’s C919 Passenger Jet Completes First Commercial Flight
from Shanghai to Beijing,” South China Morning Post, June 1, 2023; Richard Abou-
lafia, “If China Arms Russia, the U.S. Should Kill China’s Aircraft Industry,” Foreign
Policy, March 20, 2023; Reuters, “U.S. Extends Ban on Securities Investments in Com-
panies Linked to China Military,” November 9, 2021; Stella Qiu et al., “U.S. Export
Tightening Slows Advance of Chinese C919 Jet—Sources,” Reuters, September 27,
2021; U.S. Department of Defense, DOD Releases List of Additional Companies, in
Accordance with Section 1237 of FY99 NDAA, January 14, 2021.
256. Sophie Yu and Valerie Insinna, “Boeing Delivers First Dreamliner to China
since 2019 -Flight Data,” Reuters, December 21, 2023.
257. Rytis Beresnevičius, “Boeing Is Delivering 737 MAX Planes to China Again,”
Simple Flying, July 24, 2024; Ryan Beene and Danny Lee, “Boeing Resumes China
737 Max Deliveries after Two-Month Halt,” Bloomberg, July 23, 2024; Dominik Sip-
inski, “China Halts Boeing Deliveries over New CVR Inspection,” CH-Aviation, May
26, 2024.
258. Micah McCartney, “China Sanctions Boeing over Taiwan ‘Arms Sales,’ ” News-
Week, May 22, 2024; Associated Press, “China Sanctions Boeing, Two U.S. Defense
Contractors for Taiwan Arms Sales,” May 19, 2024.
259. U.S. Department of Agriculture, Foreign Agriculture Service, Global Agricul-
ture Trade System, October 11, 2024.
86
260. U.S. Department of Agriculture, Foreign Agriculture Service, Global Agricul-
ture Trade System, October 11, 2024; Sarah Zimmerman, “USDA Predicts Lower Crop
Prices for Key Commodities in 2024,” Agriculture Dive, April 16, 2024.
261. Stephen Morgan, U.S. Department of Agriculture, Economic Research Service,
“Retaliatory Tariffs Reduced U.S. States’ Exports of Agricultural Commodities,” Am-
ber Waves, March 7, 2022.
262. United Nations Statistics Division, “UN Comtrade Database.”
265. China’s General Administration of Customs, Customs Statistics, October 11,
2024.
266. Matthew Blackwood and Catherine DeFilippo, “Germanium and Gallium: U.S.
Trade and Chinese Export Controls,” U.S. International Trade Commission, March
2024.
267. Edward White, “China Bans Export of Rare Earth Processing Technologies,”
Financial Times, December 21, 2023.
2024; Gracelin Baskaran, “What China’s Ban on Rare Earths Processing Technology
Exports Means,” Center for Strategic and International Studies, January 8, 2024.
269. Gracelin Baskaran and Meredith Schwartz, “China’s Antimony Export Re-
strictions: The Impact on U.S. National Security,” Center for Strategic and Interna-
tional Studies, August 20, 2024.
2024.
271. Natalie Liu, “Tennessee Refinery Could Break Chinese Chokehold on Two
Critical Minerals,” Voice of America, August 15, 2023.
2024.
2024.
274. Reuters, “What Are Gallium and Germanium and Which Countries Are Pro-
ducers?” July 7, 2023.
275. Bloomberg, “Gallium Has More than Doubled in Price on China Export
Curbs,” April 3, 2024.
276. China General Administration of Customs, Customs Statistics, October 11,
2024.
277. Louise Lucas, “Overcoming China’s Dominance in Gallium Will Not Be Easy,”
Financial Times, August 31, 2024; Reuters, “Price of China’s Strategic Germanium
Hits Record High on Possible State Buying,” July 18, 2024; Bloomberg, “Gallium Has
More Than Doubled in Price on China Export Curbs,” April 3, 2024.
278. Elaine Huang, “Why Is Taiwan Unaffected by China’s Metal Export Restric-
tions?” CommonWealth Magazine, July 16, 2023.
279. David Blackmon, “Antimony: The Most Important Mineral You Never Heard
Of,” Forbes, May 6, 2021.
280. U.S. Geological Survey, Mineral Commodity Summaries 2024, January 31,
2024, 34–35.
281. Andy Home, “China Fires Latest Warning Signal with Antimony Controls,”
Reuters, August 28, 2024; Gracelin Baskaran and Meredith Schwartz, “China’s Anti-
mony Export Restrictions: The Impact on U.S. National Security,” Center for Strategic
and International Studies, August 20, 2024; United Nations Statistics Division, “UN
Comtrade Database”; U.S. Geological Survey, Mineral Commodity Summaries 2024,
January 31, 2024, 34–35.
282. U.S. Geological Survey, Mineral Commodity Summaries 2024, January 31,
2024, 34–35.
283. Shugo Yamada, “Antimony, Gallium Prices Soar as China Widens Rare-Metal
Export Curbs,” Nikkei Asia, August 30, 2024.
284. Gracelin Baskaran and Meredith Schwartz, “China’s Antimony Export Re-
strictions: The Impact on U.S. National Security,” Center for Strategic and Interna-
tional Studies, August 20, 2024.
285. Chad P. Bown, “The U.S.-China Trade War and Phase One Agreement,” Jour-
nal of Policy Modeling 43:4 (2021): 812–816.
286. Chad P. Bown, “US-China Trade War Tariffs: An Up-to-Date Chart,” Peterson
Institute for International Economics, April 6, 2023.
87
287. U.S. International Trade Commission, Economic Impact of Section 232 and
301 Tariffs on U.S. Industries, May 2023, 22–23.
289. Office of the U.S. Trade Representative, U.S. Trade Representative Katherine
Tai to Take Further Action on China Tariffs after Releasing Statutory Four-Year Re-
view, May 14, 2024.
290. Pablo Fajgelbaum et al., “The U.S.-China Trade War and Global Realloca-
tions,” NBER Working Paper, December 2023; Caroline Freund et al., “Is U.S. Trade
Policy Reshaping Global Supply Chains?” World Bank Policy Research Working Pa-
per, October 2023, 6–12; Laura Alfaro and Davin Chor, “Global Supply Chains: The
Looming ‘Great Reallocation,’ ” (paper prepared for the Jackson Hole Symposium),
August 30, 2023, 18.
291. Davin Chor, written testimony for U.S.-China Economic and Security Review
Commission, Hearing on Key Economic Strategies for Leveling the U.S.-China Playing
Field: Trade, Investment, and Technology, May 23, 2024, 2.
292. U.S. Census Bureau, USA Trade Online, July 3, 2024.
293. Marrian Zhou, “Mexico Replaces China as Top Exporter to U.S. in 2023,” Nik-
kei Asia, February 8, 2024.
294. U.S. import data from U.S. Census Bureau, “Monthly U.S. Imports by Harmo-
nized System (HS) Code,” October 11, 2024; tariff line HTS codes for 2017–2022 from
Chad P. Bown, “Four Years into the Trade War, Are the U.S. and China Decoupling?”
Peterson Institute for International Economics, October 20, 2022; tariff line HTS codes
for 2023–2024 from U.S. International Trade Commission, China Tariffs, January 1,
2023.
295. Office of the U.S. Trade Representative, Four-Year Review of Actions Taken in
the Section 301 Investigation: China’s Acts, Policies, and Practices Related to Technol-
ogy Transfer, Intellectual Property, and Innovation, May 14, 2024, 54–55.
296. U.S. Census Bureau, “Annual Country by 5-Digit End-Use Code, Annual Totals
[2014–2023].”
297. U.S. import data from U.S. Census Bureau, Monthly U.S. Imports by Harmo-
nized System (HS) Code, October 11, 2024; tariff line HTS codes for 2017–2022 from
Chad P. Bown, “Four Years into the Trade War, Are the U.S. and China Decoupling?”
Peterson Institute for International Economics, October 20, 2022; tariff line HTS codes
for 2023–2024 from U.S. International Trade Commission, China Tariffs, January 1,
2023.
298. Edmund Malesky, written testimony for U.S.-China Economic and Security
and Supply Chains, March 1, 2024, 1.
299. Caroline Freund et al., “Is U.S. Trade Policy Reshaping Global Supply Chains?”
World Bank Policy Research Working Paper, October 2023.
300. Utar Hale, Alfonso Cebreros, and Luis Torres, “Shifting Sands in Cross-Border
Supply Chains: How Mexico Emerged as a Key Player in the U.S.-China Trade War,”
CEPR VoxEU, December 9, 2023.
301. Organisation for Economic Co-operation and Development, “TiVA 2023 Edi-
tion.”
302. Organisation for Economic Co-operation and Development, “TiVA 2023 Edi-
tion.”
303. Bloomberg, “New Foreign Investment into China Drops to Three-Year Low,”
January 19, 2024.
304. China’s Ministry of Commerce, CN: FDI: RMB: Utilized: ytd (annual data
included all finance), via CEIC database, September 2024.
305. American Chamber of Commerce in China, “2024 China Business Climate
Survey Report,” February 2024, 43.
307. Japan External Trade Organization, “FY2023 JETRO Survey on Business
Conditions for Japanese-Affiliated Companies Overseas (Global Edition),” December
28, 2023.
308. Evelyn Cheng and Daisy Cherry, “China Is Rolling out the Red Carpet to
Attract Foreign Executives,” CNBC, March 2, 2023.
309. China’s Ministry of Foreign Affairs, “President Xi Jinping Meets Representa-
tives of U.S. Business, Strategic and Academic Communities,” March 27, 2024.
310. Orange Wang, “China-U.S. Relations: State Media Commentaries Back Presi-
dent Xi Jinping’s Call to Develop Ties for a ‘Brighter Future,’ ” South China Morning
Post, April 1, 2024.
311. Associated Press, “Chinese Leader Xi Issues a Positive Message at a Meeting
with U.S. Business Leaders as Ties Improve,” March 27, 2024.
88
312. Daniel H. Rosen et al., “China Pathfinder: Q1 2024 Update,” Atlantic Council’s
GeoEconomics Center and Rhodium Group, May 16, 2024; Bloomberg, “China Releas-
es Action Plan to Attract Foreign Investment,” March 19, 2024.
313. China’s State Council, Action Plan for Solidly Advancing High-Level Open-
ing-Up and Making Greater Efforts to Attract and Utilize Foreign Investment, Feb-
ruary 28, 2024; Office of the U.S. Trade Representative, 2023 Report to Congress on
China’s WTO Compliance, February 2024, 66–67.
314. Bloomberg, “China Fines US Due Diligence Firm for Illegal Data Collection,”
August 21, 2023.
315. Chun Han Wong, “China Punishes U.S. Due-Diligence Firm Mintz over Statis-
tical Work,” Wall Street Journal, August 21, 2023.
316. Chun Han Wong, “China Raises Fines on Mintz Due-Diligence Firm,” Wall
Street Journal, March 12, 2024.
317. James Pomfret and Engen Tham, “U.S. Consultancy Mintz’s Executives Leave
Hong Kong after China Raid,” Reuters, May 19, 2023.
318. Sun Yu and Ryan McMorrow, “U.S. Consultancy Gallup Withdraws from Chi-
na,” Financial Times, November 4, 2023.
319. Simon Foy and Stephen Foley, “Bain’s New Boss Says Consultancy Pulling
Back from Work in China,” Financial Times, June 30, 2023.
320. Simon Foy and Stephen Foley, “Bain’s New Boss Says Consultancy Pulling
Back from Work in China,” Financial Times, June 30, 2023.
321. James Palmer, “China’s Latest Data Restrictions Could Scare Off Investors,”
Foreign Policy, May 2, 2023.
322. China’s Ministry of Commerce, Announcement of the Unreliable Entity List
Working Mechanism on Initiating an Investigation into the U.S. PVH Group Regard-
ing the Unreliable Entity List (不可靠实体清单工作机制关于对美国PVH集团启动不可靠实
体清单调查的公告), September 24, 2024. Translation.
323. Keith Bradsher, “China to Investigate U.S. Retailer, Sending a Message over
Xinjiang,” New York Times, September 24, 2024.
324. Arriana McLymore, “Banned Chinese Cotton Found in 19% of U.S. and Global
Retailers’ Merchandise, Study Shows,” Reuters, May 7, 2024.
325. Joe Leahy, “China Threatens Calvin Klein Owner with Blacklist over Xinjiang
Cotton,” Financial Times, September 24, 2024.
326. Yasufumi Saito et al., “China Canceled H&M. Every Other Brand Needs to
Understand Why,” Bloomberg, March 14, 2022; Angeli Datt, “The CCP Hand behind
China’s Xinjiang Cotton Backlash,” Diplomat, April 29, 2021.
327. Bruno Mortier, “China Due Diligence in Crisis,” Commercial Dispute Reso-
lution, September 4, 2024; Jim Wormington, written testimony for the Congressio-
nal-Executive Commission on China, Hearing on Factories and Fraud in the PRC:
How Human Rights Violations Make Reliable Audits Impossible, April 30, 2024.
328. Bruno Mortier, “China Due Diligence in Crisis,” Commercial Dispute Resolu-
tion, September 4, 2024; Martin Purbrick, “Chinese National Security Laws Hinder
Foreign Companies’ Operations in China,” Jamestown Foundation, October 20, 2023.
332. Based on an internal version of U.S.-China Economic and Security Review
Commission, “Chinese Companies Listed on Major U.S. Stock Exchanges,” January 8,
2024, updated September 30, 2024.
333. Arjun Kharpal, “China to Make Some Firms Undergo a Data Security Review
before Listing Overseas,” CNBC, January 4, 2022.
334. Zhang Yukun and Yue Yue, “China’s First U.S. IPO under New Listing Rules
Moves a Step Closer,” Caixin Global, July 28, 2024.
335. Kane Wu et al., “Red Tape Clogs China’s Offshore IPO Pipeline Even as Mar-
kets Recover,” Reuters, June 2, 2024.
336. Mia Castagnone, “Hong Kong’s IPO Proceeds Plunge to 2-Decade Low, Pushing
City Down the Global Rankings,” South China Morning Post, June 28, 2024; Evelyn
Yu, “China Vows to Support Hong Kong IPOs to Bolster Hub Position,” Bloomberg,
April 19, 2024.
337. Michael J. Kramer, “Over-the-Counter Markets: What They Are and How They
Work,” Investopedia, June 13, 2024.
338. James Chen, “OTC Pink: Definition, Company Types, Investment Risks,” In-
vestopedia, November 30, 2023; Michael Best, “OTC Markets Guide,” 2.
89
339. Yahoo! Finance, “Didi Global Inc. (DIDIY),” October 8, 2024; Yiqin Shen, Hen-
ry Ren, and Filipe Pacheco, “Chinese Ride-Hailing Giant Didi Boasts $14 Billion Val-
ue, One Year after NYSE Delisting,” Bloomberg, June 14, 2023.
340. Echo Wong, “U.S. Investors Still Have Appetite for Delisted China Stocks,”
Nikkei Asia, July 31, 2023; Michelle Chan, “Last Two Chinese State-Owned Compa-
nies to Delist from NYSE,” Wall Street Journal, January 13, 2023.
341. Yiqin Shen, Henry Ren, and Filipe Pacheco, “Chinese Ride-Hailing Giant Didi
Boasts $14 Billion Value, One Year after NYSE Delisting,” Bloomberg, June 14, 2023.
342. Eleanor Olcott et al., “Shein Seeks Chinese Regulators’ Tacit Approval for
U.S. Public Offering,” Financial Times, February 7, 2024; Gabrielle Fonrouge, “Shein
Files for U.S. IPO, as Fast-Fashion Giant Looks to Resolve Forced Labor, Climate
Concerns,” CNBC, November 27, 2023.
343. Gabrielle Fonrouge, “Lawmakers Ramp Up Scrutiny of Shein, Call for Proof
It Doesn’t Use Forced Labor after Retailer Files for IPO,” CNBC, December 5, 2023.
344. Sheridan Prasso, “Shein’s Cotton Tied to Chinese Region Accused of Forced
Labor,” Bloomberg, November 20, 2022.
345. Ece Yildirim, “Experts Say Shein’s U.S. IPO Is All but Dead,” CNBC, June
21, 2024.
346. Demetri Sevastopulo and Edward White, “China’s Hesai to Be Removed from
U.S. Defense Department Blacklist,” Financial Times, August 13, 2024; U.S. Depart-
ment of Defense, DOD Releases List of People’s Republic of China (PRC) Military
Companies in Accordance with Section 1260H of the National Defense Authorization
Act for Fiscal Year 2021, January 31, 2024.
347. Yahoo! Finance, “PDD Holdings Inc. (PDD): Statistics,” October 7, 2024; Yahoo!
Finance, “PDD Holdings Inc. (PDD): Statistics,” June 21, 2023. https://web.archive.
org/web/20230621120747/https://finance.yahoo.com/quote/PDD/key-statistics.
348. U.S. House of Representatives Select Committee on the Strategic Competi-
tion between the United States and the Chinese Communist Party, Select Committee
Releases Interim Findings from Shein & Temu Forced Labor Investigation, June 22,
2023.
349. Yahoo! Finance, “PDD Holdings Inc. (PDD): Statistics,” October 7, 2024; Yahoo!
Finance, “Alibaba Group Holding Limited (BABA): Statistics,” October 7, 2024.
350. Eurostat, “Data Browser—EU Trade since 1999 by SITC,” July 9, 2024.
351. Eurostat, “EU Trade in Goods with China: Less Deficit in 2023,” March 4,
2024.
352. European Union Chamber of Commerce in China, “European Chamber Calls
for Action to Restore Business Confidence,” May 10, 2024.
353. European Union Chamber of Commerce in China, “European Chamber Calls
for Action to Restore Business Confidence,” May 10, 2024.
354. European Commission, Commission Investigation Provisionally Concludes
That Electric Vehicle Value Chains in China Benefit from Unfair Subsidies, June 12,
2024.
355. Eurostat, “EU Trade in Goods with China: Less Deficit in 2023,” March 4,
2024.
356. European Commission, Commission Investigation Provisionally Concludes
That Electric Vehicle Value Chains in China Benefit from Unfair Subsidies, June 12,
2024.
357. Philip Blenkinsop and Charlotte Van Campenhout, “China-Built EVs Hit with
Duties in Biggest EU Trade Case Yet,” Reuters, July 4, 2024.
358. Philip Blenkinsop and Charlotte Van Campenhout, “China-Built EVs Hit
with Duties in Biggest EU Trade Case Yet,” Reuters, July 4, 2024; Jacques Follorou,
“France Asks Two Chinese Spies to Leave after Attempt to Forcibly Repatriate Man,”
Le Monde, July 3, 2024; Mared Gwyn Jones, “Chinese Students in the EU Targeted
amid Beijing’s Transnational Crackdown—Report,” Euronews, May 13, 2024.
359. Justin Spike, “China’s BYD to Build Its First European Electric Vehicle Fac-
tory in Hungary,” Associated Press, December 22, 2023; Reuters, “China’s CATL to
Build $7.6 bln Hungary Battery Plant to Supply Mercedes, BMW,” August 12, 2022.
360. Marton Dunai and James Kynge, “Xi Jinping Upgrades China’s Ties with
Hungary to ‘All-Weather’ Partnership,” Financial Times, May 9, 2024.
361. Zoltan Feher, “Xi Jinping Visited Europe to Divide it. What Happens Next
Could Determine if He Succeeds,” Atlantic Council, June 1, 2024; Klaus Larres et
al., “Divisions on Display as President Xi Jinping visits Europe,” Wilson Center, May
13, 2024.
90
364. David Shepardson, “U.S. Senator Proposes Barring Chinese Firms Using
Third Countries to Evade Tariffs,” Reuters, September 19, 2024; Jim Pollard, “Chi-
nese Firms Seen Shifting Production Abroad to Avoid U.S. Tariffs,” Asia Financial,
May 15, 2024; Hung Tran, “ ‘Connector Economies’ and the Fractured State of Foreign
Direct Investment,” Atlantic Council, February 22, 2024; Enda Curran et al., “These
Five Countries Are Key Economic ‘Connectors’ in a Fragmenting World,” Bloomberg,
November 2, 2023.
365. Fundación Andrés Bello, “Brazilian Government Launches Investigation into
Unfair Chinese Steel Competition,” March 4, 2024.
366. Shay Wester, “Balancing Act: Assessing China’s Growing Economic Influence
in ASEAN,” Asia Society Policy Institute, November 8, 2023.
367. Mrugank Bhusari, “Why the Next Trade War with China May Look Very Dif-
ferent from the Last One,” Atlantic Council, August 22, 2024.
370. Reuters, “China-Russia 2023 Trade Value Hits Record High of $240 BLN -
Chinese Customs,” January 12, 2024.
371. World Integrated Trade Solutions, “Trade Summary for Russia”; Reuters,
“Russia’s Dependence on Exports to Asia Rises as Business with Europe Falls,” Feb-
ruary 12, 2024.
372. Bernard Orr, Guy Faulconbridge, and Andrew Osborn, “Putin and Xi Pledge a
New Era and Condemn the United States,” Reuters, May 16, 2024.
373. Chen Aizhu and Colleen Howe, “Russia Is China’s Top Oil Supplier for a 12th
Month in April,” Reuters, May 20, 2024; Laura He, “China’s Largest Oil Supplier in
2023 Was Russia,” CNN, January 22, 2024.
374. Chen Aizhu and Colleen Howe, “Russia Is China’s Top Oil Supplier for a 12th
Month in April,” Reuters, May 20, 2024; Laura He, “China’s Largest Oil Supplier in
2023 Was Russia,” CNN, January 22, 2024.
375. Erica Downs, Akos Losz, and Tatiana Mitrova, “The Future of the Power of
Siberia 2 Pipeline,” Center on Global Energy Policy at Columbia SIPA, May 15, 2024.
Siberia 2 Pipeline,” Center on Global Energy Policy at Columbia SIPA, May 15, 2024;
Anastasia Stognei, Joe Leahy, and Yuan Yang, “Power of Siberia: China Keeps Putin
Waiting on Gas Pipeline,” Financial Times, May 25, 2023.
379. U.S. Commerce Department Bureau of Industry and Security, Common High
Priority List, February 23, 2024.
380. Joseph Webster, “Indirect China-Russia Trade Is Bolstering Moscow’s Invasion
of Ukraine,” Atlantic Council, June 18, 2024; John Paul Rathbone and Max Seddon,
“US Questions UK Claims That China Is Providing ‘Lethal Aid’ to Russia,” Financial
Times, May 22, 2024.
381. Joseph Webster, “Indirect China-Russia Trade Is Bolstering Moscow’s Invasion
of Ukraine,” Atlantic Council, June 18, 2024; John Paul Rathbone and Max Seddon,
“US Questions UK Claims That China Is Providing ‘Lethal Aid’ to Russia,” Financial
382. Joseph Webster, “Indirect China-Russia Trade Is Bolstering Moscow’s Inva-
sion of Ukraine,” Atlantic Council, June 18, 2024.
383. Clarence Leong and Liza Lin, “Russia’s Backdoor for Battlefield Goods from
China: Central Asia,” Wall Street Journal, March 4, 2024.
386. Bradley C. Parks et al., “Belt and Road Reboot: Beijing’s Bid to De-Risk its
Global Infrastructure Initiative,” AidData, November 2023, 1.
387. Christoph Nedopil Wang, “China Belt and Road Initiative (BRI) Investment
Report 2023,” Green Finance and Development Center, February 5, 2024.
388. Mark A. Green, “Debt Distress on the Road to “Belt and Road,’ ” Wilson Center,
January 16, 2024.
389. Christoph Nedopil Wang, “China Belt and Road Initiative (BRI) Investment
Report 2023,” Green Finance and Development Center, February 5, 2024.
91
390. Junhua Zhang, “What Is the Future of China’s Belt and Road Initiative?” GIS,
February 19, 2024.
391. Bradley C. Parks et al., “Belt and Road Reboot: Beijing’s Bid to De-Risk its
392. Edward A. Burrier and Thomas P. Sheehy, “Challenging China’s Grip on Crit-
ical Minerals Can Be a Boon for Africa’s Future,” United States Institute of Peace,
June 7, 2023; Agnes Chang and Keith Bradsher, “Can the World Make an Electric
Car Battery Without China?” New York Times, May 16, 2023.
393. Bradley C. Parks et al., “Belt and Road Reboot: Beijing’s Bid to De-Risk Its
Global Infrastructure Initiative,” AidData, November 2023, 1–2.
Global Infrastructure Initiative,” AidData, November 2023, 3, 70.
396. Alex Wooley, “Belt and Road Bailout Lending Reaches Record Levels, Raising
Questions about the Future of China’s Flagship Global Infrastructure Program,” Aid-
Data, March 27, 2023.
402. Katherine Walla, “How the US Is Pitching a Development Finance ‘Alterna-
tive’ to China’s Initiatives, According to Scott Nathan,” Atlantic Council, April 25,
2024; Michael Lipin, “US Boosts Funds for Infrastructure Program for Developing
Nations above $30 Billion,” Voice of America, October 17, 2023.
403. Keith Bradsher, “China Is Lending Billions to Countries in Financial Trouble,”
New York Times, November 6, 2023.
CHAPTER 2: U.S.-CHINA SECURITY AND
FOREIGN AFFAIRS (YEAR IN REVIEW)
Abstract
In 2024, China sought to mitigate internal and external risks
by continuing to tighten political control at home and exercising a
combination of coercive and persuasive strategies abroad. To combat
persistent problems of corruption and fears of political disloyalty,
General Secretary of the Chinese Communist Party (CCP) Xi Jin-
ping and a small circle of top leaders tightened their grip on the
Party rank and file while continuing to unseat and in some cases
disappear high-ranking figures across the government and military.
Internationally, China attempted to promote itself as the world lead-
er best positioned to solve and prevent conflicts, represent low- and
middle-income countries, and promote economic growth while also
making it clear that it opposed U.S. policies and alliance relation-
ships. In its diplomacy with the United States, China sought to use
the promise of bilateral dialogues on narrow areas of common in-
terest to derail what it perceives as the United States’ policy of
strategic competition. It sought to tighten ties with Europe and
encourage divisions within the transatlantic alliance but continued
to undermine its own credibility through its intensifying economic,
military, diplomatic, and political support for Russia. At the same
time, China is increasingly providing support and resources to coun-
tries involved in military operations against Western allies. China
also turned a blind eye as Iran and North Korea act in ways that
undermine global stability, and it has demonstrated willingness to
exploit tensions in the Middle East for geopolitical gain. Overall,
China reacted to other countries’ efforts to protect their economic
and physical security by portraying them as hostile, exclusionary,
and destabilizing. In the case of the South China Sea, China re-
sorted to more dangerous, violent actions. Despite the willingness
of some governments to deepen cooperation with Beijing in various
domains, many other countries remained deeply skeptical of China’s
intentions and proposals.
Key Findings
• As part of its efforts to solidify its control across the Party, state,
and military, in 2024 the CCP leadership introduced new mea-
sures on political discipline and anticorruption, targeting every-
one from low-ranking Party members to senior military officers.
From the top of the system, General Secretary Xi delivered dire
messages to Party and military audiences on the severity of
remaining problems, revived some Maoist concepts and slogans,
and emphasized the importance of political loyalty and endur-
ing hardship. China’s leaders viewed enhanced domestic control
(92)
93
as a key factor in China’s ability to accomplish its domestic and

international objectives.
• China continues to assert that the United States poses inten-
sifying strategic risk. Despite a bilateral agreement reached in
late 2023 to pursue limited cooperation on military communi-
cation, climate change, countering fentanyl and other drugs,
artificial intelligence (AI), and people-to-people ties, China has
continued its efforts to counter or weaken U.S. policies without
changing its own behavior. Fundamental divergences on issues
such as Taiwan and access to markets, capital, and technology
remain.
• In 2024, China accelerated efforts to build international support
from as many countries as possible—with a focus on the devel-
oping nations of what it calls the “Global South”—for China’s
claims to global leadership, its continuing efforts to isolate and
subjugate Taiwan, and its desired forms of economic coopera-
tion. At the same time, Beijing sought to portray actions taken
by the United States and many of its allies and partners to
protect their own interests and established global norms as un-
dermining the prospects for peace, stability, and prosperity and
the future of collective international progress led by China. (For
information on China’s activities in the Middle East in 2024,
see Chapter 5, “China and the Middle East.”)
• China and Russia committed to further deepening their joint
efforts against the United States. China has sustained its eco-
nomic, diplomatic, political, and material support for Russia’s
war effort in Ukraine. China also provided satellite imagery and
dual-use materials that Russia is using for the reconstitution
of its defense industry—such as weapons components, machine
tools, and microelectronics—all while claiming to play a leading
role in advancing a political solution to the conflict. In exchange
for such support, Moscow has reportedly provided submarine,
aeronautic, and missile technologies to Beijing as defense coop-
eration between the two countries continues to strengthen.
• China sought to counteract a deteriorating strategic relation-
ship in Europe, using mainly positive rhetoric and promises of
deepened cooperation to persuade the EU and individual Euro-
pean countries to distance themselves from the United States
and abandon their efforts to de-risk relations with China. Xi
tried to reframe Europe’s economic dependencies on China as
the byproducts of a beneficial symbiosis, to downplay political
differences, and to emphasize supposed shared interests in the
creation of a more equal international system.
• China’s destabilizing behavior in the Indo-Pacific region contin-
ued. China’s naval and coast guard presence around the Japa-
nese-administered Senkaku Islands and flights near Japanese
airspace in the East China Sea represented a significant es-
calation from previous activity. In the South China Sea, Chi-
na’s aggressive behavior escalated to new levels in 2024 as the
China Coast Guard (CCG) took increasingly aggressive, unsafe,
and even violent measures to attempt to block the Philippines,
94
a U.S. treaty ally, from exercising its lawful rights in its exclu-
sive economic zone (EEZ). China’s officials continued to leverage
lawfare tactics to attempt to normalize their efforts to impose
their will upon other countries in the region through coercive
and illegal actions, superior force, and numbers.
Introduction
This chapter assesses key developments in China’s domestic and
foreign affairs in 2024. It begins by examining the CCP’s domestic
measures to enhance control across the Party-state bureaucracy and
the military. Next, it describes developments in China-U.S. relations.
The chapter concludes with a survey of China’s approach to foreign
affairs around the world in 2024. The chapter’s findings are based
on open source research and analysis, Commission hearings, and
discussions with outside experts.
Xi Jinping Strengthens Party Control and Oversight
In 2024, General Secretary Xi Jinping continued to tighten his
control over the Party, state, society, and military, broadly framing
these efforts as essential to improve China’s ability to accomplish
its most important domestic and international objectives. Xi em-
phasized the importance of strengthening political discipline and
fighting disloyalty while also making use of his signature anticor-
ruption campaign to purge civilian and defense officials alike. He
also oversaw further restructuring of the People’s Liberation Army
(PLA) to bring additional domains of warfare under direct control of
the political leadership.
Implications of Xi’s Power for Succession and Stability

Xi’s tight hold on power and apparent disinterest in succession
planning creates risk for China’s political system. At the CCP’s
19th Party Congress in 2017 and again at its 20th in 2022, Xi di-
verged from what had been previous political practice by not indi-
cating an intended successor as top leader of the Party.1 Experts
have assessed that although Xi’s choices to extend his own rule *
without selecting a successor may increase his own power in the
short term, over the long term they increase the risk that the
regime will experience instability.2 In the continued absence of a
clear succession plan,† Xi’s unexpected demise or incapacitation
* Xi’s positions as CCP general secretary and chairman of the CCP’s Central Military Commis-
sion (CMC) do not have term limits. His third top position as the head of state of the People’s
Republic of China (PRC) was previously limited to two terms, but under Xi’s leadership this term
limit was removed in 2018, paving the way for him to hold all three positions indefinitely. Richard
McGregor and Jude Blanchette, “After Xi: Future Scenarios for Leadership Succession in Post-Xi
Jinping Era,” Center for Strategic and International Studies, April 21, 2021, 7.
† Although there are rules on paper about the selection process for each of Xi’s top three posi-
tions, experts assess that the process of carrying out this selection would nevertheless be highly
complex and uncertain. If Xi were to pass away, the CCP Charter suggests the CCP Central
Committee would meet to select a new general secretary from the current Politburo Standing
Committee and to select a new CMC chairman, although these two leaders need not necessarily
be the same person. According to the PRC Constitution, the role of head of state would pass to
the sitting vice president of China—who currently is not a member of the Politburo Standing
Committee and thus not a candidate for the other two top positions. Informal consultation and
bargaining by Party elites would likely play an important role in determining who is ultimately
selected, a process that could be particularly fraught or prone to infighting in the event of a
sudden power vacuum. China Daily, “Brief Introduction of Han Zheng—Chinese Vice President,”
March 11, 2023; Wanyuan Song and Tessa Wong, “Politburo Standing Committee: Who are the
95
Implications of Xi’s Power for Succession and Stability—

Continued
could lead to a disorderly succession.3 The delay in designating a
successor also requires any individuals seeking to be considered a
candidate in the future to continue demonstrating their loyalty to
Xi in the meantime, which may contribute to escalating political
tension.4
CCP Promotes Greater Societal Alignment with Xi’s Vision of

National Security
This year marked the ten-year anniversary of Xi’s introduction
of the Comprehensive National Security Concept, which the CCP
sought to leverage to attune China’s population to internal and
external threats and the importance of rallying around the Party
to counter them.5 The concept, which when introduced in 2014
heralded a dramatic broadening and elevation of conceptions of
national security within China’s policy framework, emphasizes
that threats to China and to the CCP may originate from any
direction, that international and domestic threats can interact
with one another, and that coordinated, proactive efforts are thus
required to manage them.* (For more on Xi’s Comprehensive Na-
tional Security Concept and the CCP’s efforts to prepare China
for extreme scenarios, see Chapter 7, “China’s News Measures for
Control, Mobilization, and Resilience.”) The CCP highlighted the
anniversary of the concept’s introduction during its annual obser-
vation of “National Security Education Day” † to further promote
it to the general public, attempting to use it to drum up support
for the Party’s absolute leadership over all domains.‡ 6 Some of
the Party’s efforts also appeared deliberately targeted at increas-
ing the population’s resistance to foreign narratives. For exam-
ple, an article circulated in Party media by the director of the
Political Department of China’s Ministry of State Security (MSS)
Men Who Rule China Now?” BBC, October 23, 2022; Neil Thomas, written testimony for U.S.-Chi-
na Economic and Security Review Commission, Hearing on CCP Decision-Making and the 20th
Party Congress, January 27, 2022, 15; Richard McGregor and Jude Blanchette, “After Xi: Future
Scenarios for Leadership Succession in Post-Xi Jinping Era,” Center for Strategic and Interna-
tional Studies, April 21, 2021, 16–17.
* For more on Xi’s efforts to incorporate national security and the Comprehensive National
Security Concept into decision-making across all policy domains, see U.S.-China Economic and
Security Review Commission, Chapter 1, “CCP Decision-Making and Xi Jinping’s Centralization
of Authority,” in 2022 Annual Report to Congress, November 2022.
† National Security Education Day is an annual event mandated by China’s National Security
Law of 2015. Aaran Hope, “Learning from National Security Education Day,” Jamestown Foun-
dation, April 26, 2024.
‡ China Central Television circulated a large propaganda graphic over 12 pages in length,
which presented a timeline of key developments in the implementation of Xi’s concept, summa-
rized the wide range of domestic and international areas the concept applies to, and then prom-
inently emphasized the importance of “Upholding the Party’s Absolute Leadership of National
Security Work.” The graphic was circulated in China Daily under a title claiming “It Concerns
You and Me!” The Party’s official mouthpiece, the People’s Daily, released a promotional video
purporting to show that the Party’s faithfulness to this concept over the past ten years had
had a profound, positive impact on every domain of people’s lives and every element of China’s
domestic and international success. Alongside the video, it released an 18-line poem painting a
positive image of the Party’s national security practice as entirely for the people’s benefit. China
Daily, “It Concerns You and Me! One Graphic Completely Explains the Comprehensive National
Security Concept” (事关你我！一图全解总体国家安全观), April 15, 2024. Translation; People’s Daily,
“Comprehensive National Security Concept 10 Year Anniversary Promotional Video | These Ten
Years” (总体国家安全观10周年宣传片｜这十年), April 15, 2024. Translation.
96
recommended that CCP cadres organize “public opinion struggles

against the deliberate provocation of hype and smear attacks by
some foreign media,” arguing that this type of educational event
would help the public learn that “the world is not peaceful” and
strengthen their resistance to foreign messaging.7
Amended State Council Organic Law Formalizes CCP
Executive Control over the State
The year saw a further consolidation of the Communist Party’s
control over the state bureaucracy and a continued concentration
of power within the Party into the hands of Xi Jinping. On March
11, China’s National People’s Congress (NPC) passed an amend-
ment to the Organic Law of the State Council, the highest organ
of executive power within China’s government, formally enshrining
CCP executive control over the body.8 Specifically, the revised law
included new provisions to clarify that the State Council adheres to
Xi’s guiding ideology and “resolutely implements the decisions and
arrangements of the CCP Central Committee.” 9 This represents an
additional step in Xi’s more than decade-long effort to strengthen
the Party’s control over government institutions and his personal
control over the Party.* 10 The addition of these provisions codifies a
Party-state relationship that already exists in practice due to pre-
vious political and institutional changes under Xi; † nevertheless,
according to an explanation by the vice chairman of the NPC ahead
of the meeting, clarifying these points was “the most important po-
litical requirement” behind the amendment.‡ 11
CCP Emphasizes Party Loyalty and Control through
Anticorruption Campaign and Intensified Party Discipline
China’s leadership undertook new efforts over the last year to
enhance Party control through strengthened measures. Unlike in
a rule of law system, combatting corruption under the CCP’s rule
by law system can often be concerned as much with ensuring Party
loyalty and political control as with traditional notions of prevent-
ing malfeasance of public trust and resources. While corruption is a
concern in China, and the Party does view corruption as a threat to
its legitimacy under some circumstances, Xi’s large-scale and highly
institutionalized anticorruption campaign continues to function as
an all-purpose governing tool whose purpose is to strengthen his
control over the Party and the Party’s control over Chinese society.12
* For more on Xi’s organizational changes to strengthen both the CCP’s leading role in China’s
decision-making and his own control within the Party, see U.S.-China Economic and Security
Review Commission, Chapter 1, “CCP Decision-Making and Xi Jinping’s Centralization of Au-
thority,” in 2022 Annual Report to Congress, November 2022.
† Some observers note that the addition of an article entrenching CCP leadership can be un-
derstood as the implementation of a 2018 constitutional provision that the Party’s leadership be
regarded as “the defining feature of Socialism with Chinese Characteristics” and of a 2019 order
by the CCP Central Committee requiring “the Party’s comprehensive leadership” to be written
into the organic laws of China’s state institutions. Changhao Wei, “NPC 2024: Annotated Trans-
lation of the Revised State Council Organic Law,” NPC Observer, March 11, 2024.
‡ The amendment also made other changes to codify the functions of various State Council
meetings, specify the duties of vice premiers and state councilors, and formalize other practices
that had developed since the law’s introduction in 1982, such as the inclusion of the governor of
the People’s Bank of China as a member of the State Council. Cui Fandi, “Revised Organic Law of
the State Council Passed,” Global Times, March 11, 2024; NPC Observer, “NPC 2024: Annotated
Translation of the Revised State Council Organic Law,” March 11, 2024; People’s Daily, “Explana-
tion of ‘Organic Law of the State Council of the People’s Republic of China (Draft Revision)’ ” (关
于《中华人民共和国国务院组织法(修订草案)》), March 5, 2024. Translation.
97
Revised CCP Discipline Regulations Raise Demands on Party Rank

and File
The CCP continued to tighten political control over cadres and Par-
ty members to maintain its power and enhance its responsiveness.*
In December 2023, the CCP issued a revised version of the Regula-
tions on Disciplinary Actions of the Chinese Communist Party, which
came into effect in January 2024.13 First, the revision increased the
regulations’ emphasis on “political discipline” as the most funda-
mental element of Party discipline while simultaneously expanding
the concept to include several infractions previously considered less
serious.† 14 Second, the revision increased the regulations’ emphasis
on the “strictness” of discipline across the board.15 Another note-
worthy adjustment added disciplinary provisions including potential
removal from internal Party positions for “grave” cases of “privately
reading, browsing, and listening to newspapers, books, audio-visual
products, electronic reading materials, and online materials with se-
rious political problems.” 16 The CCP additionally launched a formal
education campaign, running from April to July, for Party members
at all levels to study the revised regulations.17 The campaign notice
emphasized that the Party should combat false loyalty to the Party
Central Committee.18
Xi Warns Party and Military Leadership to Strengthen Political
Loyalty while Invoking Anticorruption
Xi called upon China’s civilian leadership to adhere to the de-
mands of his politically motivated anticorruption campaign.‡ In
January 2024, Xi gave a speech to the CCP’s Central Commission
for Discipline Inspection (CCDI) on what he called Party “self-revo-
lution,” a term he has promoted since at least 2016 to describe the
CCP’s responsibility to self-govern, self-regulate, and adapt itself to
the demands of the times.19 According to Arran Hope, editor of the
Jamestown Foundation China Brief, the phrase is one Xi has “re-
suscitated from the Mao era,” representing “spiritually puritanical
self-discipline [that] must perpetually underpin the conduct of all
cadres.” 20 Xi’s speech and the other CCP materials that expounded
upon the term made clear that it would include expanded anticor-
ruption measures while simultaneously emphasizing political loy-
alty, political discipline, and adherence to Xi’s directives.21 These
materials indicated that “power-concentrated, capital-intensive, and
* As of December 2023, there were approximately 99 million Party members in China, repre-
senting about 7 percent of China’s population. Xinhua, “Chinese Communist Party Statistical
Bulletin” (中国共产党党内统计公报), People’s Government of the People’s Republic of China, June
30, 2024. Translation; Statista, “Chinese Communist Party—Statistics and Facts.”
† The CCP’s discipline regulations differentiate between “political discipline,” “organizational
discipline,” “integrity discipline,” “mass discipline,” “work discipline,” and “life discipline,” which
they list in this order. Chinese Communist Party, “Regulations on Disciplinary Actions of the
Chinese Communist Party (Approved by the CCP Central Committee Politburo on December 23,
2003, Issued by the CCP Central Committee on December 31, 2003, Revised for the Third Time
by the CCP Central Committee Politburo on December 8, 2023, and Issued by the CCP Central
Committee on December 19, 2023)” (中国共产党纪律处分条例 (2003年12月23日中共中央政治局会议
审议批准 2003年12月31日中共中央发布 2023年12月8日中共中央政治局会议第三次修订 2023年12月
19日中共中央发布)), China Military Online, December 19, 2023. Translation.
‡ In March 2024, Xi made a proactive attempt to influence the political mindset of young
officials, warning in a speech at the CCP’s Central Party School that young officials must be
prepared to bear particularly “heavy responsibilities” in practicing political loyalty and Party
discipline. Xinhua, “Xi Urges Young Officials to Take on Historical Task on New Journey,” State
Council of the People’s Republic of China, March 1, 2024.
98
resource-rich fields” such as finance, state-owned enterprises (SOEs),

energy, medicine, and infrastructure would be particular targets in
upcoming purges.22
Xi delivered similar messages to the top military leadership in
June 2024. Between June 17 and 19, 2024, Xi hosted a military
political work conference for leaders from the Central Military
Commission (CMC) in Yan’an, a city celebrated as the birthplace
of the CCP revolution, where—according to reports of his speech—
he emphasized that military power must always remain “in the
hands of those who are loyal and dependable to the Party.” 23 Xi
contextualized his remarks by warning that China’s military “is
facing intricate and complex tests in politics” that will have bear-
ing on its performance in a time of great change for the military,
the Party, the country, and the world at large.24 He claimed the
continued existence of “deep-seated contradictions and problems”
in the areas of “politics, ideology, organization, style, [and] disci-
pline” and argued that their “roots lie in ideals and beliefs, Par-
ty spirit cultivation, official ethics, and character.” 25 Raising the
specter of his anticorruption campaign, Xi also reportedly warned
that “there are no hiding places for any corrupt elements in the
military” and repeated similar messages as those covered in his
speech to the civilian CCP Central Discipline Inspection Commis-
sion in January 2024.26
Military and Civilian Leaders Fall to Xi’s Anticorruption Campaign
The CCP continued to intensify ongoing purges of military and
defense leaders, especially those with influence over the country’s
nuclear and missile arsenals and other advanced equipment. Follow-
ing the removal of several PLA Rocket Force leaders purged during
the summer and fall of 2023,* similar events continued to rock
the PLA leadership through late 2023 and the first half of 2024.27
In December 2023, the NPC Standing Committee announced the
expulsion of nine military representatives from their positions on
the NPC.28 Four of these nine leaders were affiliated with the PLA
Rocket Force, two with the CMC Equipment Development Depart-
ment, and one each from the CMC Joint Staff Department, the PLA
Air Force, and the PLA Navy.29 Although no explanation was pro-
vided for the dismissals at the time, the body stated in mid-Janu-
ary 2024 that they were attributable to “serious violations of law
and discipline.” 30 Also in December 2023, China’s People’s Political
Consultative Conference removed three leaders from top defense
industry firms, including the chairman of the China Aerospace Sci-
ence and Technology Corporation, which oversees the development
of China’s spacecraft and missile programs; the chairman of Norinco
Group, a leading military equipment manufacturer; and the depu-
ty manager of state-owned China Aerospace Science and Industry
Corporation.31 On June 27, 2024, the Politburo announced that Chi-
na’s previous two ministers of national defense, Li Shangfu and Wei
Fenghe, had both been investigated for corruption, found guilty of
several serious violations related to corruption and Party discipline,
* For more on the PLA Rocket Force leadership removed in the summer and fall of 2023, see
U.S.-China Economic and Security Review Commission, Chapter 1, Section 2, “U.S.-China Securi-
ty and Foreign Affairs,” in 2023 Annual Report to Congress, November 2023.
99
and expelled from the Party.* 32 The revolving door of leadership

created by Xi’s purges could potentially impact PLA readiness, and
the heavy representation of the PLA Rocket Force—which manages
China’s missile arsenal, including nuclear missiles—and the CMC
Equipment Development Department among purged officials makes
this risk particularly salient for China’s strategic nuclear and mis-
sile forces.33
A wide range of civilian officials were also investigated and dis-
ciplined throughout 2024, including central and local officials and
leaders from the sectors Xi identified in his January 2024 speech
to the CCDI. For example, a large number of state regulators,
bankers, and senior financial executives were detained in the first
five months of 2024 for ostensibly corruption-related charges.34
In July and August 2024, several local officials, an official from
China’s Ministry of Emergency Management, and at least three
officials from transportation SOEs were placed under disciplinary
investigation.35 In other cases, officials who had previously been
expelled from the Party were later indicted, tried, or sentenced to
life in prison for bribery or embezzlement.36 (For additional de-
tails on anticorruption and discipline inspection cases involving
civilian officials, see Chapter 7, “China’s New Measures for Con-
trol, Mobilization, and Resilience.”) Also in July 2024, the CCP
Central Committee announced that it had accepted the “resigna-
tion” of Qin Gang, a high-ranking official and then Central Com-
mittee member who had been stripped of his government posts in
2023 amid reports that he had engaged in an extramarital affair
in the United States.† 37
China Elevates New Warfighting Domains under the CMC
In April 2024, the PLA announced a major reorganization that
elevated the importance of space, cyber, and information capabilities
and placed all three under the more direct control of the top leader-
ship. The announcement came as a surprise to PLA experts outside
of China and could have been undertaken for a variety of operation-
al or political reasons.38 The reorganization included disbanding the
PLA Strategic Support Force—which had previously held responsi-
bility for space, cyber, and information domains—and restructuring
* Former Minister Li, who had spent decades of his career in the equipment department that
overseas military procurement, was criticized for “seriously pollut[ing] the political ecology of the
military equipment field and the atmosphere of the industrial domain” through his corruption,
while former Minister Wei was accused of seriously polluting the force in general. The announce-
ments also included discussion of political loyalty, with Li accused of having “lost his Party spirit
and principles” and a statement that Wei’s “faith [had] collapsed and his loyalty was lost.” Both
leaders were criticized for having “caused great damage to the Party’s cause, national defense
and military construction, as well as the image of senior leaders” through their actions. Jun Mai
and Liu Zhen, “In a First, China Accuses Former Defense Ministers Li Shangfu and Wei Fenghe
of Corruption,” South China Morning Post, June 27, 2024; Xinhua Daily Telegraph, “Li Shangfu,
Wei Fenghe Receive Punishment of Expulsion from the Party” (李尚福,魏凤和受到开除党籍处分),
June 28, 2024. Translation.
† Qin Gang disappeared from public view in June 2023, and China’s Ministry of Foreign Affairs
originally claimed that his absence was for “health reasons.” He was removed from his position
of Minister of Foreign Affairs in July 2023 and from his position of State Councilor in October
2023. According to reporting by the Wall Street Journal in July 2023, senior Chinese officials
were reportedly informed that he had engaged in an extramarital affair leading to the birth of
a child in the United States. Sylvie Zhuang, “China’s Ex-Foreign Minister Qin Gang Stripped of
Last Remaining State Title,” South China Morning Post, October 24, 2023; Lingling Wei, “China’s
Former Foreign Minister Ousted after Alleged Affair, Senior Officials Told,” Wall Street Journal,
September 19, 2023; Lingling Wei, “China Tries to Reassure U.S. amid Speculation around Miss-
ing Foreign Minister,” Wall Street Journal, July 19, 2023.
100
it into three separate forces: the Military Aerospace Force, the Cy-
berspace Force, and the Information Support Force.39 Prior to the
reorganization, the Strategic Support Force was commanded at the
theater grade level * directly under the CMC, while its component
parts responsible for space, cyber, and information operations were
commanded at lower levels.40 As a result of the reorganization, the
three new forces are now each directly subordinate to the CMC and
are commanded at the deputy theater grade level,† similar to the
PLA Joint Logistics Support Force.41 The change also established
a new distinction between four PLA “services”—the PLA Army,
Navy, Air Force, and Rocket Force—which are organized mainly
around the traditional domains of land, sea, and air—and four PLA
“arms”—the PLA Military Aerospace Force, Cyberspace Force, In-
formation Support Force, and Joint Logistics Support Force—whose
operations support military activities across traditional domains.42
Joel Wuthnow, senior research fellow at the U.S. National Defense
University, assesses that the new structure would “help break down
silos in the PLA and improve the functioning of the joint opera-
tions systems” because theater commanders would now be able to
more easily tap into the support forces’ assets without the complica-
tion of dealing with higher headquarters (which was the case when
such assets were consolidated under the co-equal Strategic Support
Force).43 (For an overview of the structural changes, see Figure 1
below.) The Information Support Force is likely to handle network
information system, communications support, and network defense
tasks.‡ 44 (For more on the PLA’s views on the importance of infor-
mation in warfare, see Chapter 8, “China’s Evolving Counter-Inter-
vention Capabilities and the Role of Indo-Pacific Allies.”)
* Officers at the theater command grade typically hold the rank of general or lieutenant gener-
al. A Theater Command leader’s rank is a three-star flag officer equivalent to a U.S. four-star flag
officer. Ken Allen, Independent Consultant, China Military Analyst, interview with Commission
staff, August 28, 2024; Joel Wuthnow and Phillip C. Saunders, “A New Step Forward in PLA
Professionalization,” Jamestown Foundation, March 15, 2021.
† Officers at the deputy theater command grade typically hold the rank of lieutenant general
or major general. A Deputy Theater Command Leader’s rank is a two-star or one-star flag officer
equivalent to a U.S. three-star or two-star flag officer respectively. Ken Allen, Independent Con-
sultant, China Military Analyst, interview with Commission staff, August 28, 2024; Joel Wuthnow
and Phillip C. Saunders, “A New Step Forward in PLA Professionalization,” Jamestown Founda-
tion, March 15, 2021.
‡ In a speech at the ceremony establishing the Information Support Force, Xi said the new arm
that would strengthen the PLA has an “important position and heavy responsibility” in promoting
the development of the PLA and supporting the PLA’s efforts to “wi[n] modern wars.” An April
commentary published in the PLA Daily claimed the Information Support Force would “improve
[China’s] army’s joint combat capabilities and all-domain combat capabilities,” help achieve the
PLA’s centenary goal, and facilitate its transformation into a world-class military. According to J.
Michael Dahm, senior resident fellow for Aerospace and China Studies at the Mitchell Institute
for Aerospace Studies, “Empowering the new deputy theater-grade Information Support Force to
strengthen and harden information network capabilities may be the PLA’s response to similar
U.S. DOD efforts to consolidate and align US military information networks under the umbrella
of Joint All-Domain Command and Control (JADC2).” Xinhua, “Founding Ceremony of the Chi-
nese People’s Liberation Army Information Support Force Held in Beijing. Xi Jinping Awards
Military Flag to the Information Support Force and Delivers a Speech” (中国人民解放军信息支援
部队成立大会在京举行习近平向信息支援部队授予军旗并致训词), People’s Government of the People’s
Republic of China, April 19, 2024. Translation; J. Michael Dahm, “A Disturbance in the Force:
The Reorganization of People’s Liberation Army Command and Elimination of China’s Strategic
Support Force,” Jamestown Foundation, April 26, 2024; PLA Daily, “PLA Daily Commentator:
Strive to Build a Strong Modern Information Support Force” (解放军报评论员: 努力建设一支强大的
现代化信息支援部队), April 20, 2024. Translation; People’s Government of the People’s Republic of
China, Xi Jinping Awards Military Flag to the Information Support Force and Delivers a Speech
(中国人民解放军信息支援部队成立大会在京举行习近平向信息支援部队授予军旗并致训词), April 19,
2024. Translation; Brian Hart, Bonnie S. Glaser, and Matthew P. Funaiole, “China’s 2027 Goal
Marks the PLA’s Centennial, Not an Expedited Military Modernization,” Jamestown Foundation,
March 26, 2021.
101
Figure 1: PLA Organizational Structure before and after April 2024
Reorganization
BEFORE REORGANIZATION
Central Military Commission

CMC
Grade
Five Theater PLA Army PLA Navy PLA PLA Rocket Strategic
Commands Air Force Force Support Theater
Force Command
Leader
Grade
Space Network Joint Theater

Support Systems Logistics Command
Dept. Dept. Support
Force Deputy
Leader
Grade
Information
Communications Corps
Base Leader
Grade
AFTER REORGANIZATION
Central Military Commission

CMC
Grade
X
Five Theater PLA Army PLA Navy PLA PLA Rocket Strategic
Commands Air Force Force Support Theater
Force Command
Leader
Grade
{
“Four Services” Military Cyberspace Information Joint Theater

Aerospace Force Support Logistics Command
Force Force Support
Force Deputy
Leader
Grade
{
“Four Arms”
Note: Elements in light gray represent the now-defunct Strategic Support Force, its component
parts, and their successor organizations post-reorganization. The PLA’s five Theater Commands
are the Eastern Theater Command, Southern Theater Command, Western Theater Command,
Northern Theater Command, and Central Theater Command. CMC members typically hold the
rank of general; Theater Command-grade officers typically hold the rank of general or lieutenant
general; Deputy Theater Command-grade officers typically hold the rank of lieutenant general or
major general; Corps-grade officers typically hold the rank of lieutenant general or major gener-
al.45 Theater Command commanders are joint commanders.46
Source: Adapted from Frank Miller, Tung Ho, and Kenneth Allen, eds., “People’s Liberation
Army Strategic Support Force: A Post-Mortem Analysis,” in The People’s Liberation Army as Or-
ganization, vol. 3, Exovera LLC, forthcoming; J. Michael Dahm, “A Disturbance in the Force:
The Reorganization of People’s Liberation Army Command and Elimination of China’s Strategic
Support Force,” Jamestown Foundation, April 26, 2024.
102
China Seeks One-Sided Adjustments in Its Relations

with the United States
Relatively civil language and modest promises at the beginning of
this year reflected a shared desire by the governments of the United
States and China to mitigate the recent deterioration in relations
through increased dialogue and cooperation. Nevertheless, while
the United States sought incrementalism to improve communica-
tion and strengthen cooperation in areas of mutual interest amid
the continued reality of strategic competition, China called for the
United States to cease viewing it as a competitor and refused to
take responsibility for the harmful impacts of its own actions. By
mid-2024, China’s statements and actions with respect to the Philip-
pines in the South China Sea, Taiwan, and Japan, for example, also
showed that Beijing remains willing to pursue dangerous levels of
escalation on certain policy issues.
Differing Positions Challenge U.S.-China High-Level Dialogue
and Narrow Cooperation Initiatives
In 2024, the United States and China increased high-level dip-
lomatic engagements and pursued certain narrow cooperation ob-
jectives, but differing views and underlying objectives continued to
surface. In a bilateral summit meeting in November 2023, President
Joe Biden and General Secretary Xi discussed a range of issues and
agreed to limited cooperation amid ongoing strategic competition.47
These areas included military communication, countering fentanyl
and other drugs, AI, climate change, and people-to-people exchang-
es.* 48 Xi and Biden held a follow-up conversation by phone in April,
2024.49 Additional meetings between high-level leaders at the secre-
tary and minister level aimed to continue the dialogue and push for
progress in these and other areas, with U.S. Secretary of the Trea-
sury Janet L. Yellen and U.S. Secretary of State Antony J. Blinken
meeting counterparts in China in April 2024 and U.S. Secretary of
Defense Lloyd Austin meeting China’s Minister of National Defense
Admiral Dong Jun on the sidelines of the Shangri-La Dialogue in
Singapore in May 2024.50 In addition, U.S. Secretary of Commerce
Gina Raimondo held a call with China’s Minister of Commerce
Wang Wentao in January 2024 to press for the inaugural meeting
of the U.S.-China Commercial Issues Working Group.51 On April 4,
2024, the U.S. Under Secretary of Commerce for International Trade
Marisa Lago and China’s Vice Minister of Commerce Wang Shouw-
en held the first meeting of the Commercial Issues Working Group,
where the U.S. side addressed concern for cross-border data flows,
regulatory transparency, and the growing overcapacity in a range of
Chinese industrial sectors.52 Nevertheless, visible progress in these
areas remains limited and in some areas progress continues to be
challenged by countervailing trends:
* In addition to these agreements, the two leaders agreed their teams would follow up on their
discussions in San Francisco with continued high-level diplomacy and interactions, including
visits in both directions and ongoing working-level consultations in key areas, including on com-
mercial, economic, financial, Asia Pacific, arms control and nonproliferation, maritime, export
control enforcement, policy planning, agriculture, and disability issues. White House, Readout
of President Joe Biden’s Meeting with President Xi Jinping of the People’s Republic of China,
November 15, 2023.
103
• Military communication: In November 2023, President Biden

and General Secretary Xi agreed to the resumption of high-lev-
el military-to-military communication as well as the U.S.-Chi-
na Defense Policy Coordination Talks, the U.S.-China Military
Maritime Consultative Agreement meetings, and telephone
conversations between theater commanders.* 53 The subsequent
meeting between Secretary Austin and Minister Dong on the
sidelines of the Shangri-La Dialogue in May 2024, although
limited in scope, did mark a contrast with the previous year
in which China’s then Minister of National Defense Li Shang-
fu had refused a U.S. offer to speak and reportedly dismissed
even the offer of a handshake.† 54 After years of China ignor-
ing requests to open channels of communication between com-
manders, on September 9, 2024, U.S. Indo-Pacific Commander
Admiral Samuel Paparo held a video teleconference with the
PLA’s Southern Theater Commander General Wu Yanan.55 In
the meeting Admiral Paparo urged the PLA to reconsider its
“dangerous, coercive, and potentially escalatory tactics” in the
South China Sea and expressed interest in continued dialogue
with other PLA theater commands.‡ 56 Between September 14
and 15, 2024, U.S. Deputy Assistant Secretary of Defense for
China, Taiwan, and Mongolia Michael Chase met with Deputy
Director of the CMC Office for International Military Coopera-
tion Major General Ye Jiang in Beijing for the 18th U.S.-China
Defense Policy Coordination Talks.57 Dr. Chase raised concerns
with China’s support for Russia’s defense industrial base and
underscored U.S. commitment to its allies and partners in the
Indo-Pacific in light of China’s destabilizing actions against law-
ful Philippine operations.58
• Countering fentanyl and other drugs: China is one of the ma-
jor sources of the precursor chemicals used to produce fentan-
yl, which took the lives of over 74,000 Americans in 2023.59
In November 2023, President Biden and General Secretary Xi
agreed to the resumption of bilateral cooperation to combat the
global illicit drug trade, including fentanyl, and to the estab-
lishment of a working group for ongoing communication and
law enforcement coordination on issues related to countering
* China suspended high-level military-to-military communications in August 2022 in response
to then-Speaker of the House Nancy Pelosi’s visit to Taiwan. Reuters, “China Halts High-Level
Military Dialogue with U.S., Suspends Other Cooperation,” August 5, 2022.
† Nevertheless, in response to a question about the potential upcoming meeting the day before
the event, China’s Ministry of National Defense spokesperson stated that although China felt
increased communication was important, it also viewed the U.S. side as “the fundamental reason
for the ups and downs in the relationship between the two militaries” and accused the United
States of “artificially creat[ing] risks of confrontation.” These claims ignore the longstanding U.S.
efforts to establish better communications with the PLA and the PLA’s own tactic of restricting
communication access in order to punish the United States for actions it disagrees with. Chi-
na’s Ministry of National Defense, Transcript of May 2024 Ministry of National Defense Regular
Press Conference (2024年5月国防部例行记者会文字实录), May 30, 2024. Translation; Reuters, “Chi-
na Halts High-Level Military Dialogue with U.S., Suspends Other Cooperation,” August 5, 2022;
U.S. Taiwan Business Council and the Project 2049 Institute, “Chinese Reactions to Taiwan Arms
Sales,” March 2012, 24–25.
‡ This was the first call or video meeting between the U.S. Indo-Pacific Command and a PLA
Theater Commander in years. Admiral Paparo’s predecessor Admiral John Aquilino tried for three
years and said in March 2023 that China had not responded to his requests to establish com-
munication. Eleanor Watson, “U.S. and Chinese Military Commanders Hold Rare Phone Call to
Avoid Miscalculation,” CBS News, September 10, 2024; Dzirhan Mahadzir, “INDOPACOM: China
Has Not Responded to U.S. Attempts to Establish Communication,” USNI News, March 16, 2023.
104
fentanyl and other drugs.60 Also in November 2023, the United

States removed sanctions on China’s Ministry of Public Securi-
ty’s Institute of Forensic Science,* likely in a bid to elicit further
cooperation from Beijing to stem the flow of fentanyl precursor
chemicals.61 On January 30, 2024, the United States and Chi-
na launched the Counternarcotics Working Group under which
Deputy Assistant to the President and Deputy Homeland Se-
curity Advisor Jen Daskal led a U.S. interagency delegation to
Beijing to coordinate efforts to counter the global manufacturing
of illicit synthetic drugs, including fentanyl.62 During Secretary
Yellen’s visit to China in April 2024, the two sides launched an
exchange to increase cooperation in combating money launder-
ing associated with drug trafficking.63 In August 2024, China’s
Ministry of Public Security announced stricter oversight over
the production and sale of three chemicals commonly used to
make fentanyl, ostensibly as a result of the U.S. decision to re-
move sanctions in November 2023 and progress made in subse-
quent working groups.† 64 Serious concerns nevertheless remain
that progress on reducing the flow of fentanyl precursors into
the United States from China so far has been limited.65
• Artificial intelligence: In November 2023, President Biden and
General Secretary Xi affirmed the need to address the risks of
advanced AI systems and improve AI safety through U.S.-China
government talks.66 On May 14, 2024, interagency delegations
from the United States and China met in Geneva, Switzerland,
to discuss AI risk and safety.67 The meeting included discussion
of issues of common concern but also highlighted areas of re-
maining difference, including on matters related to the use of
AI by China’s government.68 (For more on China’s development
and use of AI technologies, see Chapter 3, “U.S.-China Competi-
tion in Emerging Technologies.”)
• People-to-people exchanges: In November 2023, President Biden
and General Secretary Xi committed to work toward a further
increase in scheduled passenger flights in 2024—in parallel
with actions to restore full implementation of the U.S.-China
air transportation agreement—to support exchanges between
the two countries.69 They also encouraged the expansion of
* On May 22, 2020, the U.S. Department of Commerce placed China’s Ministry of Public Se-
curity’s Institute of Forensic Science, as well as eight other Chinese entities, on the Entity List
for being “complicit in human rights violations and abuses committed in China’s campaign of
repression, mass arbitrary detention, forced labor and high-technology surveillance against Ui-
ghurs, ethnic Kazakhs, and other members of Muslim minority groups in the Xinjiang Uighur
Autonomous Region (XUAR).” U.S. Department of Commerce, Commerce Department to Add Nine
Chinese Entities Related to Human Rights Abuses in the Xinjiang Uighur Autonomous Region to
the Entity List, May 22, 2020.
† The United States and China are only now beginning to resume the dialogue on this critical
issue that China’s leadership suspended in retaliation after then Speaker Pelosi’s visit to Taiwan
in 2022. China first agreed to cooperate with the United States on tackling the spread of fentanyl
in 2019. Chinese officials claim the responsibility for the fentanyl crisis stems from U.S. failures
to prevent and treat drug addiction, rather than Chinese precursor regulations. Brian Spegele,
“China Is Finally Starting to Do Something about the U.S. Fentanyl Crisis,” Wall Street Journal,
July 4, 2024; Sharp China, “A Conversation with Rep. Raja Krishnamoorthi on TikTok, Tech In-
vestment, and Competition between the U.S. and China,” June 26, 2024; Ricardo Barrios, Susan V.
Lawrence, and Liana W. Rosen, “China Primer: Illicit Fentanyl and China’s Role,” Congressional
Research Service, IF10890, February 20, 2024; Reuters, “China, US to Cooperate on Fentanyl,
Beijing Hopes for ‘Positive Energy,’ ” January 30, 2024; Reuters, “China Halts High-Level Military
Dialogue with U.S., Suspends Other Cooperation,” August 5, 2022; U.S. Drug Enforcement Admin-
istration, DEA Intelligence Report: Fentanyl Flow to the United States, January 2020.
105
educational, student, youth, cultural, sports, and business ex-

changes.70 In the first half of 2024, China’s Party-state media
and speeches by China’s diplomatic officials to U.S. audiences
portrayed deepening people-to-people exchanges as a necessary
component of “stable development of U.S.-China relations” and
an area of overwhelming opportunity for both sides.71 Never-
theless, evidence suggests that even during that time, China’s
government was pursuing a more one-sided set of exchanges
by restricting access to its own society. In June 2024, U.S. Am-
bassador to China Nicholas Burns stated in an interview that
China’s government has been actively working to undermine
people-to-people ties within China by interrogating and intimi-
dating citizens who attended or sought to attend U.S.-organized
events in China * and by increasing restrictions on the U.S. Em-
bassy’s social media posts.72 As he stated in his remarks, “They
say they’re in favor of reconnecting our two populations, but
they’re taking dramatic steps to make it impossible.” 73 Rather
than addressing the allegations, a spokesperson from China’s
Ministry of Foreign Affairs rejected them outright and insisted
that Ambassador Burns’ remarks “deviate from the important
consensus reached by the two leaders” and “are not in line with
the proper way for China and the U.S. to coexist.” 74
Strategic Disputes Continue to Shape U.S.-China Relations
Despite efforts to enhance dialogue and explore possibilities for
cooperation, deep strategic disputes continued to play a dominant
role in defining the tenor of U.S.-China interactions. This trend was
apparent from the time of the November 2023 summit itself. Chi-
na’s Ministry of Foreign Affairs readout stated the summit “should
be a new starting point for stabilizing China-U.S. relations” while
also including language strongly suggesting a belief that the United
States was predisposed to “cling to the zero-sum mentality, provoke
rivalry and confrontation, and drive the world toward turmoil and
division.” 75 After the summit, China’s official media continued to
portray the meeting as a stabilizer of an otherwise plummeting rela-
tionship while placing all of the blame for its necessity on the Unit-
ed States.76 In the two leaders’ April 2024 phone call, Xi stated that
although the relationship was “beginning to stabilize,” “negative fac-
tors” had also been “growing,” and he criticized the United States
for not changing its longstanding policy positions on key issues.77
Throughout 2024, China’s leaders, diplomats, and Party-state media
used the language of the November 2023 meeting to criticize sig-
nificant U.S. policy positions and encourage or demand alternative
policies that would benefit China:
• Strategic Perceptions: China’s leadership insisted that the Unit-
ed States should change its strategic assessment of China and
cease treating it as a competitor. The readout of the November
2023 meeting from China’s Ministry of Foreign Affairs listed
“five pillars” China wishes the U.S.-China relationship to re-
* At the time of the interview, Ambassador Burns reported that since the previous November he
had counted 61 public events for which China’s Ministry of State Security or other government
bodies had pressured Chinese citizens not to attend or had attempted to intimidate those who
attended. Jonathan Cheng, “In Rare Rebuke, U.S. Ambassador Accuses China of Undermining
Diplomacy,” Wall Street Journal, June 25, 2024.
106
flect, with the first being “developing a right perception.” 78 In

his remarks at a dinner in San Francisco during this same trip,
Xi elaborated on this position by insisting that “to regard Chi-
na, which insists on peaceful development, as a threat and to
engage in zero-sum game . . . is to go in the wrong direction.” 79
In November 2023 and January 2024, respectively, both Xi and
Liu Jianchao, head of the CCP’s International Liaison Depart-
ment, claimed that China “has no intention” of “challenging”
or “replacing” the United States, with the latter adding that
China also “does not seek to change the current international
order.” 80 Some Party-state media commentaries adopted a less
diplomatic approach, arguing forcefully that the United States’
“wrong” perception of China inspires it to pursue containment
and will bring only a negative future for the relationship.* 81
China’s approach ignores the differing interests and values un-
derpinning U.S. policy and China’s own longstanding pursuit of
strategic competition with the United States.82 It also ignores
Xi’s detailed efforts to reshape the international order to better
suit China’s interests.83
• Taiwan: Efforts to increase dialogue did not result in any change
to China and the United States’ differing positions on Taiwan.
According to China’s readout of the November 2023 meeting, Xi
called Taiwan “the most important and most sensitive issue in
China-U.S. relations” and stated that the United States should
support unification between the two sides, meaning on Beijing’s
terms.84 Chinese state media summaries discussing the impact
of the November 2023 summit on U.S.-China relations also con-
tinued to invoke Taiwan as a serious issue that remained un-
addressed from Beijing’s perspective.85 In his April 2024 phone
call with President Biden, General Secretary Xi labeled Taiwan
as “the first red line that must not be crossed in China-U.S.
relations” and warned that “China is not going to sit on its
hands” if the United States continued what it argued amount-
ed to supporting Taiwan independence.86 Secretary Austin met
with Minister Dong on May 31, 2024, following the inaugura-
tion of Taiwan’s President Lai Tsing-te, where Minister Dong
intensified China’s rhetoric regarding U.S.-Taiwan relations and
called on the United States to “correct its errors” and to refrain
from “aiding independence by force.” 87 In a demonstration of
its resolve not to compromise, on July 17, 2024, China declared
* For example, a China Daily editorial in January 2024 accused the United States of trying
“every means to contain China’s rise and development” because it holds a “wrong perception of
China,” classifying China as a “major competitor” and even viewing China as a “threat.” For the
sake of building a “stable and sustainable” relationship, it then exhorted the United States to “es-
tablish a correct perception of China [and] avoid misjudgments.” A Xinhua commentary in March
attributed strained relations in recent years primarily to an incorrect “strategic perception” of
China by some in the United States and argued that correcting these strategic perceptions must
be the issue of first importance between them. More explicitly, it described the elimination of the
United States’ “seriously erroneous perception of China” as a “prerequisite” for the two countries’
positive mutual coexistence, and it warned that continuing to view China as a competitor would
lead to increased “confrontation” and even a “new Cold War.” China Daily, “He Pingli: Strengthen
Communication Prevent Misjudgments, Promote Positive Development of China-U.S. Relations”
(和评理 | 加强交流避免误判推动中美关系向好发展), January 12, 2024. Translation; Xinhua, “Xin-
hua Commentary | Establish a Correct Strategic Perception—One of a Series of Commentaries
on Promoting the Sustained, Stable, and Healthy Development of China-U.S. Relations” (新华时评
丨树立正确战略认知——推动中美关系持续稳定健康向前发展系列评论之一), March 28, 2024. Trans-
lation.
107
the suspension of arms control and nonproliferation talks with

the United States over U.S. weapons sales to Taiwan, claim-
ing that “responsibility for this situation lies entirely with the
U.S.” 88 (For more on China’s actions related to Taiwan in 2024,
see Chapter 9, “Taiwan.”)
• Trade, science, and technology: In November 2023, Xi framed
U.S. export controls, investment screening, and sanctions as a
key concern for China and an effort to “deprive the Chinese
people of their right to development,” completely ignoring ex-
pressed concerns about China’s unfair economic practices, pu-
nitive actions against U.S. firms, and the use of U.S. technolo-
gies to endanger U.S. national security.89 China’s readout of the
leaders’ April 2024 phone call repeated this framing, accused
the United States of “creating risks,” and declared that “China
is not going to sit back and watch.” 90 China’s state-backed me-
dia and diplomats speaking to audiences in the United States
also pressed for the reversal of U.S. trade, science, and technol-
ogy restrictions on China—especially the “small yard and high
fence” concept and efforts to counteract negative impacts of
China’s overcapacity—framing them as “strategic containment”
and “overstretching the concept of national security” without ac-
knowledging the role of China’s own behavior in bringing them
about or China’s own increasingly broad concept of national se-
curity.91 (For more on science and technology, see Chapter 3,
“U.S. China Competition in Emerging Technologies.” For more
on economic competition, see Chapter 6, “Key Economic Strat-
egies for Leveling the U.S.-China Playing Field.” For more on
the wide range of policy issues Xi advocates as being included
in “national security,” see Chapter 7, “China’s New Measures for
Control, Mobilization, and Resilience.”)
• South China Sea: China’s longstanding and aggressive behavior
in the South China Sea became an increasingly salient issue
throughout the year as China took escalatory actions that con-
travened international law and threatened the security of a U.S.
treaty ally. Although disagreements over the South China Sea
were not mentioned as a key issue in the November 2023 sum-
mit meeting, they did feature as negative examples in China’s
state media summaries of U.S-China relations in January and
February 2024.92 Xi also reportedly raised China’s position on
the South China Sea in the phone call between the two leaders
in April 2024.93 China continuously escalated its actions against
Philippine vessels throughout the spring and early summer, re-
peatedly threatening their security and personnel and edging
dangerously close to a threshold of violence that could trigger
U.S. defense commitments to the Philippines under the allies’
mutual defense treaty.* (For more on China’s harassment of
and violence toward the Philippines in the South China Sea,
* In their mutual defense treaty, the United States and the Philippines commit to act to meet
common dangers in the event of an armed attack against either party in the Pacific, which in-
cludes an attack on either state’s public vessels, aircraft, or armed forces (including coast guards)
anywhere in the South China Sea. U.S. Department of Defense, FACT SHEET: U.S.-Philippines
Bilateral Defense Guidelines, May 3, 2023; Avalon Project at the Yale Law School, “Mutual De-
fense Treaty between the United States and the Republic of the Philippines; August 30, 1951”;
U.S. Department of State, U.S. Collective Defense Arrangements.
108
see “China’s Violence toward the Philippines Escalates” later in

this chapter.) During this time, China’s Ministry of Foreign Af-
fairs nevertheless denied any wrongdoing and falsely accused
the United States of providing backing for other countries to
infringe upon China’s sovereignty.94
Risks to U.S. Critical Infrastructure from China

The United States and allied countries increased their atten-
tion to countering China’s threats to critical infrastructure.* In
February 2024, the U.S. Cybersecurity and Infrastructure Se-
curity Agency (CISA) released a joint risk advisory with three
other U.S. government agencies and the national cybersecurity
centers of Australia, Canada, New Zealand, and the United King-
dom (UK), providing new information about the 2023 cyberattack
on U.S. critical infrastructure by the Chinese state-sponsored
cyber group Volt Typhoon.† 95 In March 2024, the U.S. Depart-
ment of the Treasury announced the imposition of sanctions on
a China-based Ministry of State Security front company that has
served as cover for multiple malicious cyber operations against
U.S. critical infrastructure.96 Speaking at the Vanderbilt Sum-
mit on Modern Conflict and Emerging Threats in Nashville, Ten-
nessee, on April 18, 2024, Director of the U.S. Federal Bureau
of Investigation Christopher Wray raised concerns about China’s
targeting of U.S. critical infrastructure, which he described as
“both broad and unrelenting.” 97 He placed a particular emphasis
on China’s use of cyberattacks to “pre-position” capabilities that
could be exploited in a conflict scenario.98 On April 30, 2024, the
U.S. government released a National Security Memorandum from
the leadership of a wide range of executive branch agencies, which
acknowledged that the United States “faces an era of strategic
competition with nation-state actors who target American critical
infrastructure and tolerate or enable malicious actions conduct-
ed by non-state actors.” 99 The memorandum reflected an inter-
departmental effort to define policy principles and objectives for
protecting U.S. critical infrastructure, assign associated roles and
responsibilities within the U.S. Federal Government, and develop
a common risk assessment framework.‡ 100 On June 20, 2024, the
* Critical infrastructure comprises the physical and virtual assets and systems so vital to the
nation that their incapacity or destruction would have a debilitating impact on national security,
national economic security, or national public health or safety. China has become a global leader
in using technologies and applications to improve infrastructure and government services under
“smart cities” initiatives, designed to combine “embedded sensors, metering devices, cameras, and
other monitoring technologies with big data processing and artificial intelligence (AI) analyses”
to manage city infrastructure and public spaces. White House, National Security Memorandum
on Critical Infrastructure Security and Resilience, April 30, 2024; Katherine Atha, et al., “China’s
Smart Cities Development,” SOS International (prepared for the U.S.-China Economic and Secu-
rity Review Commission), April 29, 2020, 1.
† In 2023, Microsoft Threat Intelligence released additional information on Volt Typhoon’s cam-
paign to develop capabilities that could disrupt critical communications infrastructure between
the United States and the Indo-Pacific region during future crises. Volt Typhoon has been active
since mid-2021 and targeted critical infrastructure organizations in Guam and the United States,
affecting organizations across the communications, manufacturing, utility, transportation, infor-
mation technology, maritime, construction, government, and education sectors. Microsoft Threat
Intelligence, “Volt Typhoon Targets US Critical Infrastructure with Living-Off-The-Land Tech-
niques,” May 24, 2023.
‡ It also formally identified 16 sectors as critical infrastructure sectors, including chemical;
commercial facilities; communications; critical manufacturing; dams; defense industrial base;
emergency services; energy; financial services; food and agriculture; government services and
109
Risks to U.S. Critical Infrastructure from China—

Continued
Secretary of Homeland Security outlined new strategic guidance
for critical infrastructure security and resilience efforts by federal
agencies, critical infrastructure owners and operators, and other
government and private stakeholders, listing “addressing cyber
and other threats” from China as a priority.101 In July 2024, the
Australian Signals Directorate, along with U.S. government agen-
cies and national cybersecurity centers and intelligence service
from the UK, Canada, New Zealand, Germany, the Republic of
Korea, and Japan,* released additional details of malicious cyber
operations conducted by APT-40 on behalf of China’s Ministry of
State Security that pose threats to government and private sector
networks in the Indo-Pacific region.† 102
China’s Foreign Policy Aims to Temper Risk and

Expand Opportunities
In 2024, China stepped up its ongoing efforts to build interna-
tional support for its own leadership and to prevent other countries
from pursuing policies harmful to its interests. With a particular
emphasis on the low- and middle-income countries of what China
now calls the “Global South,” officials from across the Party-state’s
foreign policy apparatus—from Ministry of Foreign Affairs diplo-
mats and CCP International Liaison Department officials ‡ to PLA
representatives conducting military diplomacy §—promoted China’s
supposedly beneficial global leadership in opposition to what it por-
trayed as the harmful international actions of the United States
and its allies. In its diplomatic engagements, China highlighted
self-declared contributions to solving global challenges, even in ar-
eas where its interlocutors did not share the same view of China’s
actions. China’s overtures appeared to find willing cooperation from
facilities; healthcare and public health; information technology; nuclear reactors, materials, and
waste; transportation systems; and water and wastewater systems. White House, National Secu-
rity Memorandum on Critical Infrastructure Security and Resilience, April 30, 2024.
* The advisory was authored by Australian Signals Directorate’s Australian Cyber Securi-
ty Centre (ASD’s ACSC), the United States Cybersecurity and Infrastructure Security Agency
(CISA), the United States National Security Agency (NSA), the United States Federal Bureau
of Investigation (FBI), the United Kingdom National Cyber Security Centre (NCSC-UK), the
Canadian Centre for Cyber Security (CCCS), the New Zealand National Cyber Security Centre
(NCSC-NZ), the German Federal Intelligence Service (BND) and Federal Office for the Protection
of the Constitution (BfV), the Republic of Korea’s National Intelligence Service (NIS) and NIS’
National Cyber Security Center, and Japan’s National Center of Incident Readiness and Strategy
for Cybersecurity (NISC) and National Police Agency (NPA). It outlined a People’s Republic of
China (PRC) state-sponsored cyber group and their current threat to Australian networks. U.S.
Cybersecurity and Infrastructure Security Agency, People’s Republic of China (PRC) Ministry of
State Security APT40 Tradecraft in Action, July 8, 2024.
† The Chinese state-sponsored actor is alleged to utilize tradecraft that compromises devices,
including small-office/home-office devices, as a launching point to attack or further exploit vul-
nerabilities on broader government and private sector networks. U.S. Cybersecurity and Infra-
structure Security Agency, People’s Republic of China (PRC) Ministry of State Security APT40
Tradecraft in Action, July 8, 2024.
‡ For more on the CCP’s International Liaison Department and its role in overseas influence
operations, see U.S.-China Economic and Security Review Commission, Chapter 2, Section 2,
“Battling for Overseas Hearts and Minds: China’s United Front and Propaganda Work,” in 2023
Annual Report to Congress, November 2023.
§ For more on how the PLA uses military diplomacy to pursue foreign policy objectives, see
U.S.-China Economic and Security Review Commission, Chapter 4, Section 1, “China’s Relations
with Foreign Militaries,” in 2023 Annual Report to Congress, November 2023.
110
the governments of some countries such as Cambodia and certain

Pacific Island states, while others continued to view China’s policies
as self-serving.
China’s Diplomacy Adopts the Term “Global South”

China has long pursued ties with low- and middle-income coun-
tries in Africa, Latin America and the Caribbean, the Middle
East, and parts of Asia to advance its political agenda, secure eco-
nomic benefits, push for greater influence in global governance,
and counter the strength of U.S. alliances and diplomatic partner-
ships.103 China has pursued these ties through bilateral agree-
ments, multilateral groupings such as the intergovernmental
organization BRICS (Brazil, Russia, India, China, South Africa),
and China-led regional fora such as the Forum for China-Africa
Cooperation (FOCAC), China-Community of Latin American and
Caribbean States (China-CELAC) Cooperation, and China-Arab
States Cooperation Forum (CASCF).104 Expanding such ties has
served as a focus of China’s global foreign policy campaigns such
as the Belt and Road Initiative (BRI) and Xi’s three global initia-
tives—the Global Development Initiative, Global Security Initia-
tive, and Global Civilization Initiative.105
China’s leadership has recently embraced the term “Global
South” * as a rhetorical tool in its longstanding diplomatic efforts
to further these relationships and use them in strategic competi-
tion against the United States. In the latter half of 2023 and in
2024, Chinese official † and academic sources increasingly began
to replace or supplement the term “developing countries” with the
term “Global South” in discussions of China’s diplomacy with the
relevant countries.106 By 2024, China’s officials and Party-state
media had thoroughly incorporated the term into pre-existing
discourse about its foreign policy, attempting to use this affilia-
tion to convince other countries to side with it against the Unit-
ed States.107 For example, China’s longstanding assertion that
it—unlike the United States—shares the values and objectives of
“developing countries” because it itself is a “developing country” ‡
are now supplemented or replaced with assertions that it does so
because it is a “member” of the “Global South.” § 108
* The term “Global South” is thought to have emerged in academic analysis in 1969 as a rough
equivalent to the concept of the “Third World.” It gained prominence in 1980 through the report
of a commission established by the president of the World Bank to make recommendations on
reducing international economic disparities. Steward Patrick and Alexandra Huggins, “The Term
‘Global South’ Is Surging. It Should Be Retired,” Carnegie Endowment for International Peace,
August 15, 2023; Sarwar Hossain, “ ‘Third World’ of ‘Global South’? It’s Time to Redefine,” South
Asia Monitor, December 26, 2022; World Bank Group, “Brandt Commission Releases Report.”;
Centre for Global Negotiations, “The Brandt Equation: 21st Century Blueprint for the New Glob-
al Economy.”
† High-level Chinese officials, including, Xi began to use the term “Global South” in the latter
half of 2023. Kawashima Shin, “How China Defines the ‘Global South,’ ” Diplomat, January 11,
2024; Economist, “China Wants to Be the Leader of the Global South,” September 21, 2023; Ted
Anthony, “China, at UN, Presents Itself as a Member of the Global South as Alternative to a
Western Model,” AP News, September 21, 2023; Xinhua, “Xinhua Commentary: The Global South
Shares a Common Destiny” (新华时评: “全球南方”同呼吸共命运), August 23, 2023. Translation.
‡ China’s self-designated status as a developing country was also useful in the context of WTO
rules that provide special benefits and reduced obligations for developing country members. Mark
A. Green, “China Still Gets ‘Developing Nation’ Preferential Treatment,” Wilson Center, June 20,
2023; World Trade Organization, “Who Are the Developing Countries in the WTO?”
§ Some Chinese academics—including an author affiliated with a research institution under
China’s Ministry of State Security—argued in late 2023 that the United States sought to deny
111
China’s Diplomacy Adopts the Term “Global South”—

Continued
Although China’s government has not explicitly stated its mo-
tivation for adopting the term “Global South,” there are multiple
reasons why doing so may serve China’s interests. First, the term
is increasingly used by international organizations and groups
(such as the UN, the World Bank, BRICS, and the Group of 77),
by think tanks, media, and academia, and by national leaders,
and China’s leadership may see adopting it as a way to facilitate
promotion of its priorities internationally.109 Second, the grow-
ing popularity of the term resonates with some audiences * as
an expression of post-colonial and developing country solidarity
and further elevating the voices of low- and middle-income coun-
tries in global governance—both themes that China has sought
to leverage as justification for its international leadership and to
undercut the image of the United States.110 Third, despite the
Chinese government’s insistence that China “will always belong
among developing countries,” the World Bank has classified China
as an upper middle economy since 2011 and the UN Development
Program also classifies China as an upper middle income coun-
try.111 China’s leadership likely views the term “Global South” as
a tool to reframe and preserve its international status despite the
increasing difficulty of justifying its entitlement to special eco-
nomic treatment as a “developing country.” † 112
China Frames Its Diplomacy in Opposition to U.S. and Allied

Objectives
China’s diplomacy in 2024 reflected CCP objectives to leverage
its perceived international influence against the United States and
its allies and partners. These objectives were laid out at the CCP’s
December 2023 Central Foreign Affairs Work Conference,‡ which as-
China membership in the “Global South” in order to disrupt its relations with developing coun-
tries as part of strategic competition against China. Li Yan, “Where Did the Term ‘Global South’
Originate?” China-US Focus, September 21, 2023; Zhao Minghao, “The Global South, the Global
East, and U.S.-China Rivalry,” China-US Focus, August 22, 2023.
* Critics of the term “Global South” and its recent resurgence argue that the term geographi-
cally is inaccurate or that it risks reinforcing stereotypes by grouping together countries with a
wide range of economic and political conditions and differing interests. The practice of classifying
countries as “developing” versus “developed” has also been critiqued for implying a linear stan-
dard of technological progress with a Western standard as its endpoint, with the World Bank
announcing in 2015 that it would begin to phase out use of this terminology. Erica Hogan and
Stewart Patrick, “A Closer Look at the Global South,” Carnegie Endowment for International
Peace, May 20, 2024; Danile Gerszon Mahler, Alaka Holla, and Umar Serajuddin, “Time to Stop
Referring to the “Developing World,” World Bank Blogs, January 23, 2024; David Rising, “Every-
one’s Talking about the Global South. But What Is It? AP News, September 7, 2023; Steward
Patrick and Alexandra Huggins, “The Term ‘Global South’ Is Surging. It Should Be Retired,”
Carnegie Endowment, August 15, 2023.
† Although the report that popularized the term categorized developing countries as being lo-
cated largely in the southern hemisphere and developed countries as being located largely in
the northern hemisphere, it included China within the remit of the “Global South.” The report
included a visual depiction of the north-south divide in per-capita gross domestic product (GDP)
in what became known as the “Brandt Line,” which ran across northern border of Mexico, Africa,
the Middle East, India, and China and encompasses most of East Asia while avoiding Japan,
Australia, and New Zealand. David Rising, “Everyone’s Talking about the Global South. But What
Is It? AP News, September 7, 2023; Steward Patrick and Alexandra Huggins, “The Term ‘Global
South’ Is Surging. It Should Be Retired,” Carnegie Endowment for International Peace, August 15,
2023; Share the World’s Resources, “The Brandt Report: A Summary,” January 31, 2006.
‡ A CCP Central Foreign Affairs Work Conference is a major periodic meeting that serves as a
strategic guide for the conduct and coordination of China’s foreign affairs. This was the third such
112
sessed that China has new strategic opportunities in part because

it has strengthened its “strategic autonomy and initiative” over the
past decade and increased its international influence.113 At the same
time, official summaries revealed concern about the policy adjust-
ments countries around the world are making to mitigate China’s
challenges to their own economic and security interests. The readout
of the conference in People’s Daily argues that China must “resolute-
ly oppose” forces it labeled “anti-globalization,” “pan-securitization,”
“unilateralism,” and “protectionism,” most likely referring to mea-
sures such as trade restrictions, export controls, and international
sanctions by countries including the United States and many Euro-
pean states.114 Top Party diplomat Wang Yi, who also serves as Chi-
na’s Minister of Foreign Affairs, echoed these concerns on January
9, 2024, when he repackaged the conclusions of the CCP conference
into a Ministry of Foreign Affairs presentation on China’s diplomatic
goals for 2024, pledging “to firmly oppose all forms of unilateralism,
protectionism and anti-globalization” and to “maintain the stability
and smoothness of global industrial chains and supply chains.” 115
He also stated that China opposes “small circles that seek geopo-
litical purposes and small blocs that undermine stability,” referring
to closer coordination between the United States and its allies in
Europe and Asia to address risks from China as well as the U.S.
alliance system more generally.116
The Central Foreign Affairs Work Conference presaged an even
stronger focus on influencing other countries to align their policy
choices with China’s preferences, especially through attempted
persuasion and narrative control. Reinforcing the idea that the
CCP’s objectives are both global and competitive with those of
the United States and its partners, official descriptions of the
conference argued that China has an imperative to “unite the
majority of the international community” and “unite to win the
majority of the world.” 117 In support of this goal, the Central
Foreign Affairs Work Conference sought to codify an equivalence
between China’s interests and the interests and challenges of the
world, especially those of low- and middle-income countries. It
anointed Xi’s concept of a “community of common human des-
tiny” as the “main line” of China’s diplomacy in the future and
promoted it as reflecting not only China’s objectives but also the
interests and desires of all of humanity.118 The conference also
put forward two phrases—“equal and orderly multipolarization”
and “beneficial and inclusive economic globalization”—as pro-
posed solutions to the “major issues and challenges facing the
world.” 119 Although designed to present a positive framing, these
meeting since General Secretary Xi took power in 2012. The meeting codified both a retrospec-
tive assessment of the major achievements the CCP claims to have made in its diplomacy under
Xi’s tenure as well as forward-looking principles for the conduct of China’s foreign affairs in the
future. Neil Thomas, “Xi Signals Firm Strategy but Flexible Tactics at China’s Central Foreign
Affairs Work Conference,” Asia Society Policy Institute, April 16, 2024; People’s Daily, “Central
Foreign Affairs Work Conference Held in Beijing: Xi Jinping Delivered an Important Speech.
Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang, Li Xi and Han Zheng Attended the Meeting” (
中央外事工作会议在北京举行: 习近平发表重要讲话李强主持赵乐际王沪宁蔡奇丁薛祥李希韩正出席会
议), December 29, 2023. Translation; Xinhua, “Xi Jinping: Strive to Create a New Situation in
China’s Major Power Diplomacy with Chinese Characteristics” (习近平: 努力开创中国特色大国外
交新局面), June 23, 2018. Translation; Xinhua, “Xi Jinping Attends the Central Foreign Affairs
Work Conference and Delivers an Important Speech” (习近平出席中央外事工作会议并发表重要讲
话), November 29, 2014. Translation.
113
concepts are monikers for the reversal of actions taken by the

United States and its allies to protect their interests in compe-
tition with China. As Minister Wang clarified in an elaboration
on the conclusions of the conference in the Party journal Qiushi
in January 2024, “equal and orderly multipolarization” was con-
ceived in opposition to what the CCP calls “hegemony and power
politics,” while “beneficial and inclusive economic globalization”
stands in opposition to so-called “protectionism,” “unilateralism,”
and “anti-globalization.” 120
Throughout 2024, China’s political, diplomatic, and military rep-
resentatives used multilateral meetings as platforms to sell messag-
es from the Central Foreign Affairs Work Conference. At the Boao
Forum for Asia in March 2024, Politburo Member Zhao Leji argued
that the international community must choose between China’s pos-
itive approach—represented by Xi’s concept of a “community of com-
mon human destiny” and its vision of an “equal and orderly multipo-
lar world”—and a negative approach featuring economic restrictions
and outdated “bloc confrontation.” 121 At the Shanghai Cooperation
Organization (SCO) Minister’s Council in May 2024, Minister Wang
argued that China would work with the SCO to promote “equal and
orderly world multipolarization and inclusive economic globaliza-
tion,” and he criticized “a few countries” for promoting “small circles”
and advocating “decoupl[ing].” 122 Without offering any evidence, he
even claimed that these countries are working to “fuel the ‘three
evil forces’ ”—terrorism, separatism, and extremism.123 In remarks
at the Shangri-La Dialogue in June 2024, Minister of National De-
fense Admiral Dong Jun presented China as a constructive force for
the world and stated that Xi’s community of common human desti-
ny and three global initiatives constituted China’s “Global Security
Concept.” 124 Minister Dong also stated China’s opposition to what
he called other countries’ “attempts at decoupling, cutting supply
chains, or building a small yard with high fences” and attempts to
“create conflict and chaos” in the Asia-Pacific region, and China’s
state media later openly confirmed that the latter comment was
targeted at the United States and its allies.125 At an internation-
al conference China hosted to mark the 70th anniversary of the
Five Principles of Peaceful Coexistence in June 2024, Xi declared his
“vision” of a community of common human destiny as the modern
embodiment of those principles and rigorously promoted his three
major global initiatives.126
In a continuation and intensification of China’s longstanding ef-
forts to use low- and middle- income countries as a counterbalance
for the United States, China’s leaders in 2024 sought to generate
diplomatic support by claiming that China’s foreign policy reflects
the wishes and interests of the “Global South.” In a Qiushi article
in March 2024, Head of the International Liaison Department Liu
Jianchao, argued that the “Global South” was “an important force”
and “strong support” for these two concepts of “equal and orderly
multipolarization” and “beneficial and inclusive economic globaliza-
tion” introduced at the Central Foreign Affairs Work Conference.127
He claimed the “Global South” did not support “small yards high
fences,” “decoupling and breaking chains,” “confrontation between
camps,” “unilateralism,” or “protectionism.” 128 He also promoted
114
Xi’s global initiatives as solutions for the development challenges

facing these countries.” * 129 In his own speech marking the 70th an-
niversary of the Five Principles of Peaceful Coexistence in late June
2024, Xi stated that the “Global South” should “take the lead” in
building a community of common human destiny and implementing
his global initiatives.130 He announced the establishment of a “Glob-
al South research center” to provide 1,000 scholarships and 100,000
training opportunities for “Global South” countries over the next five
years, the establishment of a “Global South youth leaders program,”
and a stated interest in concluding new free trade agreements with
“Global South” countries.131
China Advances Strategic Relations and Support for Russia
while Presenting Itself as an Advocate of Peace in
Ukraine
In the face of mounting criticism from Western governments,
China continued to deepen its strategic partnership with Russia
as both countries agreed to develop greater cooperation and coor-
dination to counter U.S. and allied policies, including efforts in the
Indo-Pacific region and support for Russia’s war of aggression in
Ukraine. During Russian President Vladimir Putin’s state visit to
Beijing in May 2024, the two countries signed a Joint Statement
that expressed an alignment between Russia and China on shared
grievances against the United States and its allies and other areas
of convergence, including the following: 132
• Both countries agreed to strengthen their coordination and co-
operation in response to U.S. and allied military activities in the
Asia Pacific, which China and Russia regard as hostile policies
of “dual containment.” 133
• China and Russia expressed shared concern on threats to their
security, such as the United States’ missile defense capabilities
and its plans to deploy land-based intermediate range missile
systems in the Asia Pacific.134 The Joint Statement further
blamed the United States Indo-Pacific Strategy and NATO ac-
tivities for negatively impacting peace and stability in the re-
gion.135
• Russia also joined China in expressing serious concern about
the Australia, UK, and U.S. (AUKUS) partnership, and both
countries raised opposition to the “intervention of external forc-
es in the South China Sea.” 136
• Both countries criticized the United States and its allies’ poli-
cies toward North Korea, calling on them to “abandon [policies
of] intimidation, sanctions and suppression” without holding
North Korea accountable for continued missile tests.137
• China and Russia agreed to expand bilateral trade and invest-
ment and to jointly secure their respective industrial supply
chain.138
* Many of these countries are nevertheless heavily indebted to China. Daniel F. Runde, Rafael
Romeu, and Austin Hardman, “Reintroducing Concessional Loans into the Development Toolbox,”
Center for Strategic and International Studies, August 20, 2024; Michael Schuman, “Why China
Won’t Win the Global South,” Atlantic Council, October 16, 2023; Bernard Condon, “China’s Loans
Pushing World’s Poorest Countries to Brink of Collapse,” AP News, May 18, 2023.
115
• China and Russia agreed to deepen military cooperation by

expanding the scale of joint exercises and training, organizing
more regular joint maritime and air patrols, and continuing to
improve their ability to respond jointly to risks and challeng-
es.139 In 2024, China and Russia have continued to conduct
joint exercises. In July, China and Russia’s navies participated
in a bilateral joint exercise titled Joint Sea-2024, which began
at China’s southern military port in Zhanjiang and included an-
ti-missile exercises, sea strikes, and air defense drills.140 In the
second week of September 2024, China and Russia coordinat-
ed on a large-scale naval exercise called Ocean-2024 reportedly
spanning Pacific and Arctic waters, the Mediterranean Sea, the
Caspian Sea, and the Baltic Sea.141 Later in September 2024,
the two militaries launched a joint naval and air exercise in the
Seas of Japan and Okhotsk that reportedly included anti-air-
craft and anti-submarine weapons.142
• On Taiwan, Russia stated its adherence to the One China prin-
ciple, recognized Taiwan as “an inseparable part of the People’s
Republic of China,” and “firmly” supported China’s measures to
pursue unification.143
Nonetheless, there are areas of potential friction in the China-Rus-
sia relationship.144 The power asymmetry between Russia and Chi-
na has increasingly shifted in China’s favor since Russia’s annex-
ation of Crimea in 2014, resulting in an uncomfortable reality for
Russia whereby Moscow is now viewed as the “junior partner” in the
bilateral relationship.145 China has attempted to influence Moscow’s
decision making. In July 2023, the Financial Times reported that
General Secretary Xi personally warned Russian President Putin
against using nuclear weapons in Ukraine, and Chinese officials pri-
vately took credit for convincing Russia to back down from Putin’s
veiled threats.146 Zhao Tong, senior fellow at the Carnegie Endow-
ment for International Peace, assesses that while “China supports
the goal of undermining Western influence, it does not agree with
some of Russia’s tactics [in Ukraine], including the threat of using
nuclear weapons.” 147 While Russia is focused on its war in Ukraine,
China also has an opportunity to expand its influence in areas where
interests have historically overlapped, such as in Central Asia and
the Artic region.148 Another point of potential friction is the terms
of a deal on a Russia-China gas pipeline called the Power of Siberia
2, which is owned by Russia’s state gas export monopoly Gazprom
and is intended to link the Chinese market through Mongolia to gas
fields in western Russia that previously supplied Europe.149 Accord-
ing to the Financial Times, Beijing is asking to pay close to Russia’s
subsidized domestic prices and is only committing to buy a small
fraction of the pipeline’s annual capacity—demands Moscow views
as unreasonable.150 A mutually acceptable deal on the pipeline was
reportedly one of three requests President Putin made to Xi when
the two leaders met in May 2024.* 151 Russia’s continued failure
to obtain terms it views as acceptable displays the leverage China
* According to the Financial Times, Putin’s other two requests were more Chinese bank activity
in Russia and for China to snub the peace conference that was organized by Ukraine and held
in Switzerland in June 2024. Max Seddon et al., “Russia-China Gas Pipeline Deal Stalls over
Beijing’s Price Demands,” Financial Times, June 2, 2024.
116
holds over Russia, and this dynamic of dependency is likely to deep-

en in the future.152
China’s diplomatic and economic support to Russia has been a
decisive enabler of Russia’s war of aggression against Ukraine.153 In
expanding its trade with Russia, China has helped rebuild Russia’s
defense industrial base and mitigate the effects of Western sanc-
tions and export controls.154 In testimony to the U.S. Senate Com-
mittee on Armed Services on May 2, 2024, U.S. Director of National
Intelligence Avril Haines said that while China has not provided
lethal support to Russia in the form of a “fully constructed gun or
weapon system,” China has provided dual-use materials that have
been vital for the “reconstitution of Russia’s military strength.” 155
During comments made to reporters in Brussels in September 2024,
U.S. Deputy Secretary of State Kurt Campbell assessed China has
made substantial efforts to “sustain, build, and diversify” Russia’s
war machine.156 He stated that the component pieces China has
provided “are not dual-use capabilities,” rather they directly help
Russia’s military.157 He further stated that in exchange for China’s
support, Moscow has been helping Beijing develop submarine, aero-
nautic, and missile technologies.158 Despite overwhelming evidence,
China’s Ministry of Foreign Affairs has continued to reject claims
that its activities support Russia’s war effort, stating on June 19,
2024 that, “China does not provide weapons to the parties to the
conflict and strictly controls the export of dual-use articles.” 159 Oth-
er new developments in 2024 include:
• An April 2024 report by the Financial Times cited senior U.S.
officials saying “China had also supplied 90 percent of chips
imported by Russia last year which were being used to make
tanks, missiles, and aircraft.” 160 The U.S. officials note that
several Chinese companies such as Wuhan Global Sensor Tech-
nology, Wuhan Tongsheng Technology, and Hikvision provided
optical components in Russian tanks and armored vehicles.161
• On May 1, 2024, the U.S. Department of State designated sev-
eral Chinese entities that were found responsible for developing
and supplying dual-use aerospace, manufacturing, and technol-
ogy equipment to entities based in Russia.162 As an example,
one of the Chinese entities included Mornsun Guangzhou Sci-
ence and Technology Co LTD, which supplied electronic integral
monolithic circuits to a Russia-based entity that specializes in
the production and marketing of airborne weapons control ra-
dars for Russian fighter aircraft.163
• On June 12, 2024, the Treasury Department issued new sanc-
tions on entities that support Russia’s war economy and mil-
itary-industrial base.164 As one example, Treasury sanctioned
the China-based Shenzhen Youxin Technology Co Ltd (Shen-
zhen Youxin), which was said to have provided electronic inte-
grated circuits and other components to Russia-based distribu-
tor Elekkom Logistik, which supplies Russia’s defense industry
with foreign-made electronic components used in the production
of unmanned aerial vehicles (UAVs).165 Shenzhen Youxin also
provided microchips found in Russian reconnaissance UAVs.166
117
• On September 24, 2024, Ukraine’s presidential advisor Vla-

dyslav Vlasiuk told reporters that roughly 60 percent of for-
eign-made components found in Russian weapons recovered
from the battlefield in Ukraine come from China.167
• In 2024, the U.S. Department of Commerce placed numerous
Chinese entities on the Entity List for supporting Russia’s mil-
itary. For example, on April 11, 2024, Jiangxi Xintuo Enterprise
Co. Ltd., was added to the Entity List for “supporting Russia’s
military through the procurement, development, and prolifer-
ation” of Russian UAVs.168 On May 14, Commerce added six
additional Chinese entities to the Entity List for being involved
in the shipment of controlled items to Russia.169 On August
23, 2024, Commerce added 42 entities in China, including Hong
Kong, for shipping U.S.-origin and U.S.-branded items to Russia,
contravening U.S. export controls.170
China’s Ukraine Peace Diplomacy Falls Short in Europe,
Echoes Russia’s Views
In March 2024, China made a show of conducting so-called “shut-
tle diplomacy” * between Russia, Ukraine, and European countries,
but—not surprisingly—efforts by a country in a self-described “no
limits” partnership with the aggressor country have not produced
any tangible result.171 From March 2 to 11, 2024, China’s Special
Representative of the Chinese Government for Eurasian Affairs
Li Hui visited Russia, the EU headquarters in Brussels, Poland,
Ukraine, Germany, and France to promote a political settlement of
the war in Ukraine.172 These meetings, although highly praised in
China’s own Party-state media, appeared to culminate in a single
briefing in Beijing for domestic and foreign media and the diplomat-
ic envoys stationed in China.173
China continues to advocate for a political and diplomatic settle-
ment to the war with Ukraine that Moscow has endorsed.† 174 During
discussions between Li Hui and EU representatives, it was reported
that Li Hui presented a repetition of Moscow’s talking points.175 Ac-
cording to officials familiar with the talks, Li Hui reportedly told EU
officials that discussion on Ukraine’s territorial integrity would not
take place until violence stopped, which he said could only happen
when the EU stops sending weapons to Ukraine.176 The impression
Li Hui reportedly left on officials in Brussels was that China simply
sought to create the illusion of good faith efforts to end Russia’s
war in Ukraine—when in reality the move was likely intended to
* The term “shuttle diplomacy” refers to negotiations especially between countries carried on by
an intermediary who goes back and forth between disputants. China’s Ministry of Foreign Affairs
refers to these activities as its “second round of shuttle diplomacy on the Ukraine crisis.” The
so-called first round occurred in May 2023. China’s Ministry of Foreign Affairs, Special Represen-
tative of the Chinese Government on Eurasian Affairs Li Hui Holds Briefing on the Second Round
of Shuttle Diplomacy on the Ukraine Crisis, March 22, 2024; Rakshith Shetty, “China’s Shuttle
Diplomacy with Ukraine and Russia: All Symbol, No Substance,” Diplomat, March 2, 2024; Chi-
na’s Embassy in Iceland, Foreign Ministry Spokesperson Mao Ning’s Regular Press Conference on
May 29, 2023, March 29, 2023.
† According to Russia’s Ministry of Foreign Affairs, during Li Hui’s meeting with the Russian
Deputy Foreign Minister Mikhail Galuzin on March 2 in Moscow, both sides discussed the issue
that “a settlement in Ukraine is impossible without the participation of Russia and taking into
account its security interests.” TASS, “Russian and Chinese Diplomats Noted That Discussing
a Settlement in Ukraine Is Impossible without the Russian Federation” (Дипломаты РФ и КНР
отметили, что обсуждение урегулирования на Украине невозможно без РФ), March 3, 2024. Transla-
tion.
118
mitigate risks to its own interests as a result of its support for Rus-
sia.177 Li Hui also used his meetings with EU officials to condemn
the EU’s sanctions—released on February 23, 2024—on three Chi-
nese firms and one Hong Kong-based company due to their role in
trading electronic components of EU-origin products to Russia.178
In a readout of meetings published by China’s Ministry of Foreign
Affairs, Li Hui urged the EU to unconditionally cancel the listing of
Chinese enterprises and return to the “right track” of consultation
with China.179
Despite China’s vocal claims that it has “stayed committed to pro-
moting peace talks and played a positive role in efforts to restore
peace,” Beijing declined to participate in the Swiss peace summit on
Ukraine from June 15 to 16, 2024.180 China’s Ministry of Foreign Af-
fairs spokesperson said the Swiss peace summit failed to incorporate
three elements proposed by China: recognition from both Russia and
Ukraine, equal participation of all parties, and fair discussion of all
peace plans.181 Instead, China offered a proposal for peace negotia-
tions jointly developed with Brazil in May 2024.* 182 Russia has in-
dicated its support for China’s proposal, with Russia’s Foreign Min-
ister Sergei Lavrov indicating that China should consider arranging
a peace conference in which both Russia and Ukraine would partic-
ipate.183 Minister Lavrov said in an interview with RIA, a Russian
state-owned news agency, that Russia shares China’s position that
“root causes of the conflict need to be addressed in the first place
and legal interests of all parties need to be protected.” 184 Finally,
undermining Ukraine’s attempts to build international consensus
on its approach to resolve the conflict, China increased diplomatic
outreach to other global leaders in Turkey, Egypt, Saudi Arabia, the
United Arab Emirates, South Africa, Indonesia, and Kazakhstan in
a so-called “third round of shuttle diplomacy” to build support for
China’s Russian-approved peace proposals.185
China Pushes Europe to View It as a Partner, with Mixed
Results
China intensified its European diplomacy in 2024 in an effort to
offset European criticism of its support for Ukraine and to discour-
age closer coordination of U.S. and European policies on trade and
other issues, hoping to maintain access to the economic and political
benefits that close ties with European countries can provide. In his
presentation at the start of the year on China’s diplomatic goals for
2024, Minister Wang described China’s major objective for its Euro-
pean diplomacy as “increas[ing] high-level exchanges and strategic
communication with the EU to promote the steady and sustained
* China and Brazil’s joint proposal for peace negotiations with the participation of Russia and
Ukraine called for the following six points: (1) All relevant parties observe three principles for
deescalating the situation, namely no expansion of the battlefield, no escalation of fighting, and
no provocation by any party; (2) All parties should create conditions for the resumption of direct
dialogue and push for the de-escalation of the situation. China and Brazil support an interna-
tional peace conference held at a proper time that is recognized by both Russia and Ukraine,
with equal participation of all parties as well as fair discussion of all peace plans; (3) Efforts are
needed to increase humanitarian assistance, attacks on civilians and civilian facilities must be
avoided, and prisoners of war (POWs) must be protected. China and Brazil support the exchange
of POWs; (4) The use of weapons of mass destruction, particularly nuclear weapons and chemical
and biological weapons, must be opposed; (5) Attacks on nuclear power plants and other peaceful
nuclear facilities must be opposed; and (6) Dividing the world into isolated political or economic
groups should be opposed. Government of Brazil, Brazil and China Present Joint Proposal for
Peace Negotiations with the Participation of Russia and Ukraine, May 23, 2024.
119
growth of their relations.” 186 Xi pursued this objective in a summit

with the EU and a high-profile tour of several European countries,
although the mainly positive messages China reported from those
meetings present a contrast with the two sides’ deepening disagree-
ments over Ukraine, * electric vehicles (EVs), and other economic
issues. (For more on China’s economic tensions with Europe in 2024,
see Chapter 1, “U.S.-China Economic and Trade Relations (Year in
Review).”)
During a leaders’ meeting with European Commission President
Ursula von der Leyen in December 2023, General Secretary Xi ar-
gued that Europe should overlook its differences with China in fa-
vor of deeper cooperation.187 Xi endeavored to challenge European
arguments for competition or rivalry between China and the EU,
including by downplaying the relevance of its authoritarian polit-
ical system.188 He attempted to paint China as a critical strategic
partner for the EU on economic and trade issues, on science and
technology, and on industrial supply chains.189 Xi further claimed
that China and the EU have a responsibility to cooperate on geopo-
litical matters, but he did so while invoking China’s own geopolitical
priorities † and attempting to discourage EU cooperation with the
United States.‡ 190 Throughout 2024, China’s diplomats continued
to argue that European governments should adhere to Xi’s desired
pattern of prioritizing partnership over differences.§ 191
* In June 2024, the EU imposed sanctions on 19 Chinese companies for being involved in the
“circumvention of trade restrictions and engaged in the procurement of sensitive item,” such as
the production of drones, or “providing material support for Russian military operations. France
24, “EU Hits 19 Chinese Firms with Sanctions over Links to Russian War Effort,” June 25, 2024;
Reuters, “China Urges EU to Revoke Sanctions on Chinese Firms over Russian Links,” June 25,
2024; European Council, Russia’s War of Aggression against Ukraine: Comprehensive EU’s 14th
Package of Sanctions Cracks Down on Circumvention and Adopts Energy Measures, June 24,
2024.
† Xi framed his desired partnership state as “two major forces promoting multipolarization,”
“two major markets supporting globalization,” and “two major civilizations advocating diversity.”
This terminology echoes the Central Foreign Affairs Work Conference call for China to promote
“equal and orderly multipolarization” and “inclusive and beneficial economic globalization.” Xin-
hua, “First Observation | Why Xi Jinping Emphasizes the ‘Strategic Significance’ and ‘World
Impact’ of China-EU Relations” (第一观察｜习近平主席为何强调中欧关系“战略意义”和“世界影响”),
December 8, 2023. Translation; People’s Daily, “Central Foreign Affairs Work Conference Held
in Beijing: Xi Jinping Delivered an Important Speech. Zhao Leji, Wang Huning, Cai Qi, Ding
Xuexiang, Li Xi and Han Zheng Attended the Meeting” (中央外事工作会议在北京举行: 习近平发
表重要讲话李强主持赵乐际王沪宁蔡奇丁薛祥李希韩正出席会议), December 29, 2023. Translation.
‡ Xi argued that if China and Europe focus on dialogue and cooperation, then “camp confron-
tation will not form.” Xinhua, “First Observation | Why Xi Jinping Emphasizes the ‘Strategic
Significance’ and ‘World Impact’ of China-EU Relations” (第一观察｜习近平主席为何强调中欧关系“
战略意义”和“世界影响”), December 8, 2023. Translation.
§ At China’s NPC in March 2024, Minister Wang insisted that China-Europe cooperation could
forestall the development of “bloc confrontation” and “anti-globalization,” and he expressed frus-
tration at the EU’s three-fold view of China as simultaneously a partner, competitor, and systemic
rival. Later in March, China’s Consul General in Strasbourg, France, delivered a speech describ-
ing China and Europe as two major geopolitical forces advancing “multipolarization” and “glo-
balization,” repeating both Xi’s framing on China-Europe relations and the overall objectives of
China’s diplomacy laid out at the Central Foreign Affairs Work Conference. He expressed “regret”
at what he called “discordant voices” promoting the EU’s partner-competitor-rival characteriza-
tion of China and openly blamed the United States for having inspired the “rival” aspect. Con-
sulate-General of the People’s Republic of China in Strasbourg, Full Text of the Keynote Speech
by Consul General Pan Yumin at the European Circle Association’s “China-EU Relations” Theme
Exchange Meeting, “China Is a Reliable Partner of France and Europe, and Win-Win Cooperation
Is the Key to a Better Future” (潘昱旻总领事在欧洲圈协会“中欧关系”主题交流会上的主旨发言《中国
是法国也是欧洲可信赖的伙伴，合作共赢才是美好未来》全文), March 22, 2024. Translation; Xinhua,
“China Vows to be Staunch Force for Peace, Stability, Progress,” State Council of the People’s
Republic of China, March 8, 2024; Li Yi, “Wang Yi: As Long as China and Europe Cooperate for
Mutual Benefit, There will be No Confrontation between the Two Camps” (王毅: 只要中欧互利
合作，阵营对抗就搞不起来), March 7, 2024. Translation; People’s Daily, “Central Foreign Affairs
Work Conference Held in Beijing: Xi Jinping Delivered an Important Speech. Zhao Leji, Wang
Huning, Cai Qi, Ding Xuexiang, Li Xi and Han Zheng Attended the Meeting” (中央外事工作会
120
Xi also traveled to Europe in April 2024 in an effort to reinforce

his message.192 Many Western analysts observed that Xi’s itinerary
of France, Serbia, and Hungary featured what could be viewed as
China’s stronger relationships in Europe, an argument that Party
media also confirmed from Beijing’s perspective.* 193 Outcomes of
the trip for China were mixed, however, cementing China’s already
strong diplomatic position in Serbia and Hungary but also casting
remaining differences with France and the EU into sharper relief:
• France: Ahead of the visit, Minister Wang reportedly told French
President Emmanuel Macron’s diplomatic advisor that he hoped
Paris could push the EU to pursue a more pragmatic policy
toward China.194 Nevertheless, in a trilateral meeting with
General Secretary Xi in Paris, President Macron and Europe-
an Commission President von der Leyen reportedly emphasized
China’s responsibility to resolve structural economic difficulties,
particularly related to trade and its export of overcapacity in
new energy products, while China’s readout suggests Xi took
the contrasting position, claiming that “the so-called ‘problem of
China’s overcapacity’ does not exist.” 195 Reporting also suggests
the two European leaders pushed Xi on China’s continued sup-
port for Russia’s war in Ukraine, a discussion that China’s read-
out omits in favor of a regurgitation of official talking points
and self-congratulatory language about China’s supposed con-
tributions to ending the conflict.196 Although short on details,
some French media coverage suggests that “several hours” of
bilateral talks between Macron and Xi may not have gone en-
tirely as planned for either side, with certain topics such as cli-
mate change, human rights, Taiwan, and the South China Sea
having “eclipsed” other issues.197
• Serbia: In a victory for Beijing’s agenda, Serbia expressed an
official commitment to Xi’s concept of a “community of common
human destiny” and agreed to establish a “China-Serbia com-
munity of common destiny,” with Serbia’s President Aleksan-
dar Vucic describing it as “the highest possible form of cooper-
ation between two countries.” 198 President Vucic also reiterated
support for Beijing’s One China principle, referred to tensions
议在北京举行: 习近平发表重要讲话李强主持赵乐际王沪宁蔡奇丁薛祥李希韩正出席会议), December

29, 2023. Translation; Xinhua, “First Observation | Why Xi Jinping Emphasizes the ‘Strategic
Significance’ and ‘World Impact’ of China-EU Relations” (第一观察｜习近平主席为何强调中欧关系“
战略意义”和“世界影响”), December 8, 2023. Translation.
* For example, the same People’s Daily article in Qiushi argues that China-France relations
have always been “at the forefront of China’s relations with Western countries” and attributes
their recent ability to “maintain good development momentum” to a shared spirit of “indepen-
dence.” This is likely referencing French President Emmanuel Macron’s willingness to publicly
take positions that differ from those of the United States on certain issues of China policy and
France’s emphasis on the European concept of “strategic autonomy,” a policy concept emphasiz-
ing the agency of European powers that China has attempted to push European governments
to interpret to mean distancing themselves from policies that challenge China’s interests and
refraining from coordination with the United States over such policies. The article states that
China and Serbia “have a deep ironclad friendship” that “can be regarded as a model of friendly
relations between China and European countries.” It describes Hungary as an important BRI
partner that has “insisted on . . . eliminating interference and pressure and firmly deepening co-
operation with China” even “under the turbulent international situation”—an approach it argues
“strongly proves” that China is an opportunity rather than a challenge to Europe. He Yin, “Pro-
mote the Healthy and Stable Development of China-Europe Relations” (促进中欧关系健康稳定发
展), People’s Daily in Qiushi, May 5, 2024. Translation; U.S.-China Economic and Security Re-
view Commission, 2023 Annual Report to Congress, November 2023, 526, 550, 528–529; Elizabeth
Koch, “European Strategic Autonomy after Macron’s Trip to China,” Wilson Center, May 9, 2023.
121
across the Strait as China’s internal issue, and reportedly drew

parallels between Taiwan and Kosovo.199 Other favorable out-
comes for China included a signing ceremony for a free trade
agreement on certain agricultural goods and bilateral agree-
ments on cultural and scientific exchanges.* 200
• Hungary: During the visit, China and Hungary declared an
elevation of their relationship to “all-weather comprehensive
strategic partnership for the new era,” which observers view
as a step up from the previous “comprehensive strategic part-
nership” they had established in 2017.† 201 General Secretary
Xi and Hungarian Prime Minister Viktor Orbán oversaw the
signing of 17 agreements between the two countries.202 One
news outlet reports that they agreed to strengthen high-level
exchanges, continue pursuing BRI, and promote deeper coop-
eration in areas including clean energy, AI, mobile communi-
cation technology and nuclear energy, while another lists coop-
eration in supply chains, culture, media, and other sectors.203
During the meeting with Xi, Prime Minister Orbán reportedly
welcomed more Chinese businesses to invest in Hungary.204 He
also notably distanced Hungary from EU positions, stating that
Budapest did not agree with EU’s “de-risking” policy or con-
cerns about overcapacity of China’s EVs and batteries.205
A stream of meetings by the director of the CCP’s Internation-
al Liaison Department with political parties and individual leaders
across the continent in the first half of the year also revealed that
the Party perceives a very wide range in European governments’
willingness to interact on China’s terms. In a meeting with a Ger-
man delegation, Director Liu communicated the CCP’s desire for
greater “dialogue and cooperation” in strategic relations with Eu-
rope broadly and with Germany specifically.206 When meeting with
the ambassador from the Netherlands, he encouraged the country
to contribute to promoting “stable” China-Europe relations and to
“push the EU to adhere to openness” and “oppose ‘de-coupling.’ ” 207
In a meeting with a Finnish diplomat, Director Liu similarly stated
a hope that Finland would “push China-EU relations” toward “stable
development.” 208 While meeting the Polish ambassador, he called for
deepened exchanges and emphasized Poland’s importance to China
as an EU member with influence in Central and Eastern Europe.209
To Spain’s ambassador, by contrast, Director Liu expressed appreci-
ation for the country’s “adherence to a positive and friendly policy
toward China,” and a readout of the meeting with Slovakia’s am-
bassador focused mainly on promoting BRI and deepening political
exchanges.210 In a party-to-party engagement with representatives
from Hungary, Director Liu praised the two countries’ “traditional
friendship” and mutual support on issues concerning “core inter-
ests,” argued for compatibility between BRI and Hungary’s foreign
* China Digital Times reports that 29 agreements were signed in total, promoting legal, regu-
latory, and economic cooperation. Arthur Kaufman, “Xi’s Visits to Serbia and Hungary, Pushing
Wedge into Europe,” China Digital Times, May 10, 2024.
† According to an expert from the Chinese Academy of Social Sciences speaking to China’s state
media in 2015, the “all-weather” label signifies that China and a country have close relations
“regardless of changes in time or global landscape.” Other countries with this “all-weather” label
include Belarus, Ethiopia, Pakistan, Uzbekistan, and Venezuela. Kelly Wang and Hu Xuan, “Chi-
na, Hungary Elevates Ties to ‘All Weather’ Partnership,” Caixin Global, May 10, 2024.
122
policy, and promoted expanded exchanges at the local government

and enterprise levels.211 Director Liu’s meeting with the ambassa-
dor from Belarus—a key Russian partner in Europe but not an EU
member—called for deepened exchanges across political, legislative,
social, and industrial domains and emphasized the two states’ com-
mitment to mutual support for “core interests.” 212
Finally, when European actions did not conform to China’s pre-
ferred pattern for the relationship, China’s proclaimed desire for
strategic stability did not prevent it from launching harsh criti-
cisms. On July 11, 2024, Germany announced a new two-step plan
to ban the use of critical components made by Huawei and ZTE in
core parts of the country’s 5G network beginning in 2026.213 Reject-
ing the German government’s security concerns, China’s Ministry of
Foreign Affairs framed the policy decision as “politicizing trade and
tech issues” and “disrupt[ing] normal exchanges and cooperation in
technology.” 214 The following day, a spokesperson for China’s Minis-
try of Foreign Affairs criticized the EU for releasing a statement re-
iterating its support for the conclusion of the legally binding South
China Sea arbitration ruling.215
NATO Sharpens Its Position on Challenges from China

The United States continued to urge Europe and NATO al-
lies to place increased scrutiny on China’s support for Rus-
sia’s war in Ukraine. During U.S. Deputy Secretary of State
Kurt Campbell’s visit to Brussels in September 2024, he met
with Belgian, NATO, and EU officials and urged more force-
ful condemnation of China’s “substantial support” to Russia’s
military industrial base and deepening defense cooperation.216
According to Mr. Campbell, while some countries in the EU
and NATO may take differing perspectives, the United States,
the EU, and NATO allies are increasingly aligned on policies
related to China.217 At the conclusion of its July 2024 summit
in Washington, DC, NATO released a declaration stating the
alliance’s strongest position to date on challenges from China,
reflecting an escalation of concerns about China’s irresponsible
international behavior. Most notably, the declaration labeled
China “a decisive enabler of Russia’s war against Ukraine” and
stated that China “cannot enable the largest war in Europe
in recent history without this negatively impacting its inter-
ests and reputation.” 218 NATO called on China to “cease all
material and political support to Russia’s war effort,” specifi-
cally citing the “transfer of dual-use materials such as weap-
ons components, equipment, and raw materials that serve as
inputs for Russia’s defense sector.” 219 This language represents
a significant evolution beyond the communique issued only a
year prior at NATO’s 2023 summit in Vilnius, Lithuania, which
had called upon China to “act responsibly,” “play a construc-
tive role,” and “abstain from supporting Russia’s war effort.” 220
Concern about China’s “deepening strategic partnership” with
Russia and the two countries’ “mutually reinforcing efforts” to
undercut the rules-based international order was also elevated
to a much more prominent section of the document.221 Aside
123
NATO Sharpens Its Position on Challenges from China—

Continued
from Russia and Ukraine, the 2024 declaration maintained at-
tention on previously mentioned concerns about China’s “stat-
ed ambitions and coercive policies,” including China’s malicious
cyber activities and disinformation, and the expansion of its
nuclear arsenal.222
China seized upon the occasion of the summit to promote dis-
information about NATO and also revealed its own heightened
concern about the group’s intensifying focus on China’s policies.*
China’s Ministry of Foreign Affairs spokesperson spoke public-
ly against the alliance on every day of the summit, painting it
repeatedly as a serious danger to the world and accusing its
members of seeking to “incite confrontation and rivalry.” 223 On
July 11, 2024 the spokesperson also accused NATO of “spread-
ing disinformation created by the [United States] and blatantly
[seeking] to undermine China’s relations with Europe,” ignoring
the agency of the alliance’s other members and mischaracterizing
the group as an anti-China tool of the United States.224 After the
conclusion of the summit, the spokesperson reacted to a speech
by NATO Secretary General Jens Stoltenberg with not only a
vociferous denunciation of the remarks themselves, but also ad
hominem attacks.225
China in the Indo-Pacific: Cooperation and Coercion

China intensified its use of all available tools from persuasion
to coercion in its attempt to reshape international norms and poli-
cies across the Indo-Pacific. China’s aggression in the South China
Sea reached new heights as it escalated longstanding harassment of
Philippine vessels and personnel within their own EEZ into violent
and dangerous clashes. In the Pacific Islands, by contrast, China
courted the governments and political parties of both its traditional
partners and those of the United States, seeking not only endorse-
ments of its Taiwan policy but also stronger support for China’s role
as a key economic player in the region and for its authoritarian
system.
* China also spoke out against NATO’s growing relationships with countries in the Indo-Pa-
cific, as leaders or deputies from Australia, New Zealand, Japan, and South Korea attended the
NATO summit in Washington DC in July 2024. NATO has taken steps to increase coordination
with like-minded partners in the Indo-Pacific, having invited Australia, Japan, South Korea, and
New Zealand to participate in ministerial-level meetings and NATO summits since December
2020. In 2023, NATO and Japanese officials acknowledged ongoing discussion during Secretary
General Stoltenberg’s January visit about opening a NATO liaison office in Tokyo and Japanese
mission to NATO. By June, however, President Macron had voiced opposition, arguing that NATO
should not expand its reach beyond the North Atlantic and signaling that the required consent
of all 31 NATO members might not be possible. In response to the reports that NATO was con-
sidering opening a liaison office in Tokyo, China criticized the plan when its Foreign Ministry
spokesperson Wang Wenbin said Japan should “avoid doing things that could dismantle trust
and affect peace and stability in the region.” China’s Ministry of Foreign Affairs, Foreign Ministry
Spokesperson Lin Jian’s Regular Press Conference on July 11, 2024, July 11, 2024; Ken Moritsu-
gu, “China Warns NATO Not to Create ‘Chaos’ in Asia and Rejects Label of ‘Enabler’ of Russia,”
PBS News, July 11, 2024; Justin McCurry, “France Opposed to Opening of Nato Liaison Office
in Japan, Official Says,” Guardian, June 6, 2023; Demetri Sevastopulo et al., “France Objects to
Nato Plan for Office in Tokyo,” Financial Times, June 5, 2023; Xinhua, “China Cautions against
Potential NATO Office in Japan,” May 12, 2023; Ken Moriyasu, Rieko Miki, and Takashi Tjuji,
“NATO to Open Japan Office, Deepening Indo-Pacific Engagement,” Nikkei Asia, May 3, 2023.
124
China Ramps Up Pressure on Taiwan’s New President

In 2024, China continued to intensify its coercion of Taiwan fol-
lowing the inauguration of Taiwan’s new President Lai Ching-te of
the ruling Democratic Progressive Party (DPP), whom Beijing has
deemed a “separatist.” 226 In June, China used “lawfare” tactics to
intimidate Taiwan’s government and people through the announce-
ment of new guidelines that officially designate “Taiwan indepen-
dence”—including the denial of Beijing’s claim that Taiwan is part
of China, the promotion of Taiwan’s participation in international
organizations, and attempts to change Taiwan’s status through legal
means in Taiwan—as a crime that is punishable by detention, prison
terms ranging from three years to life, confiscation of possessions,
and even the death sentence.227 Beijing also employed economic co-
ercion against Taiwan, announcing in May 2024 that it would sus-
pend some of the preferential trade benefits on 134 products export-
ed from Taiwan, including chemical products, metals, rubbers and
plastics, and machinery.228 Three days after Taiwan’s presidential
inauguration in May 2024, China conducted a military exercise, Op-
eration Joint Sword 2024A, to demonstrate its operational skills for
blockade or invasion.229 The exercise notably included the China
Coast Guard (CCG) and represented an intimidating show of mili-
tary might in tandem with its increasingly frequent and regular air
and naval operations around Taiwan.230 Beijing also continued dip-
lomatic coercion against Taiwan, for example by making attempts
to bully foreign parliamentarians and stop them from attending the
Inter-Parliamentary Alliance on China (IPAC) * summit, a global
coalition of lawmakers aimed at countering threats from China.231
(For a more in depth and comprehensive analysis of China’s inten-
sified coercion against Taiwan, see Chapter 9, “Taiwan.”)
China’s Violence toward the Philippines Escalates
China’s attempts to block Philippine activities in the South Chi-
na Sea, especially resupply missions to the Philippine Navy trans-
port ship Sierra Madre grounded on the reef near Second Thomas
Shoal in the Philippines’ EEZ, have escalated. Chinese forces have
gone from using water cannons and lasers to ramming vessels and
committing other acts of violence, including the use of bladed weap-
ons.† 232 In further attempts to use lawfare to assert China’s control
over Second Thomas Shoal, Beijing also called on the Philippines to
notify China in advance of conducting activities to and from Second
Thomas Shoal, a direct violation of the Philippines’ rights under in-
ternational law.233 These events, which frequently involved aggres-
sion by the CCG, maritime militia, and the PLA Navy, suggest Bei-
jing is seeking to establish a new status quo whereby it can control
or deny the Philippines’ access to an area within the Philippines’
* IPAC seeks to build a global coalition that unites lawmakers worldwide by promoting democ-
racy and addressing threats to the rules-based and human rights systems posed by China. IPAC
held its fourth annual summit in Taipei, Taiwan, which was attended by 50 parliamentarians
from 23 countries. Inter-Parliamentary Alliance on China, “About”; Helen Davidson, “China Used
‘Shocking’ Bullying Tactics ahead of Taiwan IPAC Meeting, Organiser Says,” Guardian, July 30,
2024.
† China’s escalating aggression against the Philippines follows a series of steps taken by the
United States and the Philippines to strengthen military cooperation. White House, Fact Sheet:
Celebrating the Strength of the U.S.-Philippines Alliance, April 11, 2024; U.S. Department of De-
fense, Philippines, U.S. Announce Locations of Four New EDCA Sites, April 3, 2023.
125
own EEZ under the guise of law enforcement activities.234 China’s

highly aggressive actions were likely emboldened by a Chinese reg-
ulation * that entered into force in June 2024, granting the CCG
authority to seize and detain foreign vessels operating within “Chi-
nese jurisdiction”—despite the fact that Second Thomas Shoal does
not lie within the lawful jurisdiction of China.235 Although China
and the Philippines agreed to lower tensions following the violent
encounters in June 2024 and established a hotline between the two
presidential offices to prevent new confrontation from spiraling out
of control, none of these efforts have altered Beijing’s aggressive be-
havior in the South China Sea.236 (For more on Philippine views of
China’s aggressive actions and on U.S. defense commitments to the
Philippines in the South China Sea, see Chapter 8, “China’s Evolv-
ing Counter-Intervention Capabilities and the Role of Indo-Pacific
Allies.”)
• On March 5, 2024, the CCG collided with a Philippine Coast
Guard vessel after carrying out “dangerous maneuvers” to block
the Philippine Coast Guard vessel from escorting a resupply
mission to Second Thomas Shoal.237 Hours later, two CCG ves-
sels shot water cannons at a Philippine supply boat in the area,
reportedly injuring four people onboard and shattering three
panes of the boat’s windshield.238 The CCG released a state-
ment blaming the Philippines for the incidents.239 In remarks
to the media in Australia the following day, Philippine Presi-
dent Ferdinand Marcos Jr. expressed alarm at the continuing
dangerous maneuvers and actions against the Philippines while
clarifying that this incident did not necessitate an invocation of
the U.S.-Philippines Mutual Defense Treaty.240
• On March 23, 2024, two CCG ships and two militia vessels sur-
rounded a wooden Philippine supply boat on its way to Second
Thomas Shoal.241 The CCG ships reportedly fired water can-
nons at the boat for almost an hour, injuring three Philippine
crew members and disabling the boat.242 In the following days,
the Philippines summoned China’s ambassador in Manila to
protest the aggressive actions, and the Philippine Embassy in
Beijing lodged a demarche with China’s Ministry of Foreign Af-
fairs.243 China’s embassy accused the Philippines of “deliberate
and provocative” actions that had supposedly “infringed upon
China’s sovereignty and maritime rights,” completely ignoring
the legally binding ruling of the 2016 Court of Arbitration Tri-
bunal, which invalidated any Chinese claim to special rights
around Second Thomas Shoal.† 244
* China’s Coast Guard Regulation No. 3 appears to implement the 2021 China Coast Guard
Law which contains ambiguous language on the scope of CCG authority to use weapons and
its geographic application. In analysis conducted by U.S. INDOPACOM’s Joint Operational Law
Team, the regulation, which took effect on June 15, 2024, authorizes CCG commanders to detain
foreign vessels and persons in “waters under China’s jurisdiction” for up to 60 days. USINDOPA-
COM Joint Operational Law Team, TOPIC: China Coast Guard Regulation No. 3, May 30, 2024;
China Coast Guard, China Coast Guard Has Issued the “Regulations on Administrative Law
Enforcement Procedures for Coast Guard Agencies” (中国海警局制定出台《海警机构行政执法程序规
定),” May 15, 2024. Translation.
† The tribunal ruled that Second Thomas Shoal is a low-tide elevation—a feature that, in its
natural state, is above water only at low tide—and thus incapable of generating any maritime
zones (such as a territorial sea, EEZ, or continental shelf) of its own. This categorization, com-
bined with the fact that the feature lies outside the legal territorial sea of any state, means it is
not subject to “appropriation” (i.e., claims of “territorial sovereignty”) by any state. These rulings
126
• In April 2024, the Philippines task force on South China Sea

issues said the CCG ships had harassed and damaged a Philip-
pine Coast Guard ship and a Philippine fisheries vessel headed
to Scarborough Shoal * to assist Filipino fishermen in the ar-
ea.245 According to the statement, the CCG ships used water
cannons against both of the Philippine vessels and repeatedly
rammed the fisheries vessel.246
• In May 2024, the CCG attempted to block the Philippine Coast
Guard conducting a medical evacuation of a sick member of
the country’s armed forces from Second Thomas Shoal.247 The
blocking maneuvers reportedly continued despite calls from
the Philippine Coast Guard explaining the humanitarian na-
ture of the mission.248 The Philippine Coast Guard ultimately
completed the mission in spite of China’s interference, which it
described as “barbaric and inhumane.” 249
• On June 17, 2024, CCG ships intercepted Philippine vessels
attempting to deliver supplies to Philippine troops stationed
at Second Thomas Shoal, instigating a violent encounter that
left at least eight Philippine Navy personnel injured.250 CCG
personnel boarded the Philippine vessels, carrying with them
bladed weapons, and seized all Philippine firearms they found
onboard.251 They also slashed at Philippine rubber boats, re-
portedly leaving them in tatters.252 Philippine personnel who
resisted were reportedly left to do so “with their bare hands,”
and one Filipino servicemember lost his thumb in the confron-
tation.253 The violent encounter led to a debate among West-
ern observers about what threshold of force would trigger the
U.S.-Philippine mutual defense clause of the 1951 treaty.254
• On August 19, 2024, vessels of the CCG and Philippine Coast
Guard collided near Sabina Shoal,† causing structural damage
invalidate any claim of “territorial sovereignty” over the feature (which China claims over all
features in the Spratlys) and any claim to maritime zones around it. The tribunal further ruled
that Second Thomas Shoal is located fully within the EEZ of the Philippines, thereby granting
the Philippines legal right to explore, exploit, conserve, and manage the natural resources in and
around the shoal—rights it found China to have violated. The tribunal determined that China’s
ambiguous claim to “historic rights” in the South China Sea is baseless, as no such historic
rights are recognized under the UN Convention on the Law of the Sea (UNCLOS), which China
has signed. Additionally, the tribunal clarified that if any of China’s ambiguous claims were to
amount to a claim over “internal waters” in the area, such claims would also lack any legal ba-
sis in UNCLOS. Thus, the only rights that China’s vessels are entitled to in the area of Second
Thomas Shoal are the standard rights afforded to all foreign vessels within another country’s
EEZ. USINDOPACOM J06/SJA TACAID Series, Topic: Sierra Madres, Second Thomas Shoal,
and the U.S. Commitment to Defend the Philippines; U.S.-China Economic and Security Review
Commission, Chapter 2, Section 1: “Rule by Law: China’s Increasingly Global Legal Reach,” in
2023 Annual Report to Congress, November 2023, 189–190; Permanent Court of Arbitration, The
South China Sea Arbitration (The Republic of The Philippines v. The People’s Republic of China),
July 12, 2016, 8–10.
* The tribunal ruled that Scarborough Shoal is a high-tide feature rightfully classified as a
“rock” under UNCLOS, meaning it is entitled to a 12-nautical-mile territorial sea but not to its
own EEZ or continental shelf. The tribunal did not have jurisdiction to take a position on which
country has sovereignty over the feature itself. The tribunal ruled that the fisherfolk of both
countries retain a degree of “traditional fishing rights” in the area that were not extinguished
by the adoption of UNCLOS or by the feature’s location within the Philippines’ EEZ. It further
ruled that China had infringed upon the rights of Filipino fishermen by obstructing all fishing
by Philippine nationals. Permanent Court of Arbitration, The South China Sea Arbitration (The
Republic of The Philippines v. The People’s Republic of China), July 12, 2016, 9–10.
† Like nearby Second Thomas Shoal, Sabina Shoal is a low-tide elevation in the Spratlys, well
inside the Philippines EEZ and only 86 miles from the Philippine island of Palawan. Rebecca
Tan and Lyric Li, “Chinese and Philippine Ships Collide at Sabina Shoal, a New Flash Point,”
Washington Post, August 18, 2024; Radio Free Asia, “Manila Accuses Beijing of Island Building in
127
to the Philippine Coast Guard vessels.255 According to Philip-

pine National Security Council director general Jonathan Mala-
ya, the first Philippines coast guard vessel sustained a 13-centi-
meter hole after “aggressive” maneuvers by the CCG.256 Fifteen
minutes later, a second Philippine coast guard ship was report-
edly “rammed twice” by a CCG vessel and suffered “minor struc-
tural damage.” 257 China’s Ministry of Foreign Affairs refuted
the Philippines’ reports, claimed the Philippine coast guard
vessels entered “China’s territory” without permission from the
Chinese government, and accused the Philippine coast guard of
“deliberately ramming the China Coast Guard vessel that was
carrying out law enforcement operation[s].” 258
Regional Reactions to China’s Violent Behavior
China attempted to justify its violent actions occurring on June
17, 2024 against the Philippines by illegally claiming jurisdiction
over the South China Sea, raising concern from countries in the re-
gion. China’s Ministry of Foreign Affairs continued to act as if China
had the ability to enforce its domestic laws within the Philippines’
EEZ and blamed the incident on the Philippines, claiming that the
CCG “only took necessary control measures against the Philippine
vessels.” 259 On the day of the June 17, 2024 incident, the spokes-
person for the State Department asserted that the United States
“stands with its ally the Philippines and condemns the escalatory
and irresponsible actions” by China to deny the Philippines its law-
ful rights.260 He also reaffirmed that U.S. commitments under the
U.S.-Philippines Mutual Defense Treaty apply to armed attacks on
Philippine armed forces, public vessels, or aircraft—including those
of its coast guard—anywhere in the South China Sea.261 The Phil-
ippine Department of National Defense, Office of the National Se-
curity Advisor, and Department of Foreign Affairs released a joint
statement on June 24, 2024, stating that the Philippines views the
incident “not as a misunderstanding or an accident” but as “a delib-
erate act of the Chinese officialdom” and “an act of aggressive and
illegal use of force” while also noting that the Philippines “contin-
ue[s] to find peaceful solutions” to the issue.262 Japan, South Korea,
and Australia have also expressed concerns about China’s danger-
ous behavior in the South China Sea and its aggressive obstruction
of Philippine vessels.263
Possible Evidence of Chinese Land Reclamation in

South China Sea
In May 2024, the Philippines announced it was monitoring Sa-
bina Shoal following signs of suspected Chinese island-building
activities on the feature.264 Like nearby Second Thomas Shoal,
Sabina Shoal is a low-tide elevation in the Spratlys, well inside
the Philippines EEZ.* 265 The Philippine Coast Guard commodore
South China Sea,” May 13, 2024; Permanent Court of Arbitration, The South China Sea Arbitra-
tion (The Republic of The Philippines v. The People’s Republic of China), July 12, 2016.
* Under UNCLOS, a coastal state has “the exclusive right to construct and to authorize and
regulate the construction, operation and use of . . . artificial islands” in its own EEZ. Radio Free
Asia, “Manila Accuses Beijing of Island Building in South China Sea,” May 13, 2024; Permanent
Court of Arbitration, The South China Sea Arbitration (The Republic of The Philippines v. The
128
Possible Evidence of Chinese Land Reclamation in

South China Sea—Continued
reported that crushed corals had been dumped on the reef, declar-
ing it “highly likely that the maritime features [of Sabina Shoal]
were altered” by human activity.266 According to a statement
from the Office of the President of the Philippines, the dumping
of the corals represented the very early stages of a suspected arti-
ficial island-building effort by China.267 The Philippines institut-
ed a rotational deployment of coast guard vessels to monitor the
shoal, noting the presence of PLA Navy vessels and helicopters,
CCG ships, Chinese Maritime Militia vessels, and Chinese re-
search vessels around the shoal at various times.268 China’s Min-
istry of Foreign Affairs dismissed the reports as “futile” efforts
to smear China and “mislead the international community.” 269
Not all experts agree on whether the corals indicate an ongoing
island-building effort. According to Gregory B. Poling, director of
the Southeast Asia program and Asia Maritime Transparency
Initiative at the Center for Strategic and International Studies,
“There is no evidence in commercially available satellite imagery
to suggest any island building or reclamation, with all the sand-
bars in question remaining the same average size for the last
decade or more.” 270
China Gray Zone Operations near Japan Intensify

China has steadily ramped up its pressure on Japan around the
Senkaku Islands in the East China Sea, which Japan administers
but which China claims as its own territory. On a visit to the East
China Sea Command Headquarters of the CCG on November 29,
2023, Xi told the CCG to “resolutely” defend China’s sovereignty
claims in the area and that China “can only move forward, not back-
ward” on the matter.271 According to Japanese media reports, the
CCG subsequently drafted a plan to maintain a ship presence near
the islands every day of 2024.272 On July 5, 2024, the Japanese
Coast Guard spokesman reported that China had sailed near the
Japan-administered Senkaku Islands and within Japan’s EEZ in
the East China Sea for a record 197 consecutive days.* 273
China’s naval presence around the Senkaku Islands and flights
near Japanese airspace represented a significant escalation from
previous activity. According to the Japanese Coast Guard, in June
2024, three CCG vessels entered within 12 nautical miles of the
Senkaku Islands and appeared to be armed with deck-mounted ma-
chine guns.274 Japan’s then-Prime Minister Fumio Kishida stated
that China’s “unilateral attempts to change the status quo are being
intensified,” calling the situation “a grave concern.” 275 Senior level
exchanges between the two countries have not impacted the tempo
of China’s East China Sea activities, as the Japanese Coast Guard
detected the four CCG ships a day after then-Prime Minister Kishi-
People’s Republic of China), July 12, 2016; United Nations Convention on the Law of the Sea, §
60, 1982.
* China’s activities near the Senkakus surpassed the previous record of 157 consecutive days
in 2021. Japan Times, “Japan Spots Chinese Ships near Senkaku Islands for Record 158 Days,”
May 27, 2024.
129
da held his first formal bilateral meeting with China’s Premier Li

on May 26, 2024.276 China’s military has also begun to utilize UAVs
near Japan’s territorial airspace, a move without historical prece-
dent.277 On May 27, 2024, the Japan Air Self-Defense Force observed
a PLA reconnaissance and attack drone flying over the East China
Sea, north of the southwestern Japanese prefecture of Okinawa.278
On June 4, 2024, the Air Self-Defense Force scrambled fighter jets
to intercept another PLA reconnaissance and attack drone that flew
in international airspace near Okinawa.279 In August 2024, Japan’s
Defense Ministry said a PLA Y-9 reconnaissance aircraft violated
the country’s territorial airspace, 12 nautical miles from the coast
of Japanese territory on the eastern side of the Danjo Islands in the
East China Sea.280 The PLA continued to ramp up its presence the
following month when a Chinese aircraft carrier entered Japan’s
contiguous zone,* reportedly for the first time, by sailing between
the southern Yonaguni and Iriomote islands.281
China Expands Persuasion Efforts in the Pacific Islands
China continued and expanded its campaign to persuade Pacific
Island states to deepen their reliance on China and adopt Beijing’s
preferred policies on a range of issues, further increasing concerns
that China could seek to use its relationships in the region to con-
strain U.S. security partnerships.† In November 2023, Special Envoy
for Pacific Island Countries Affairs of the Chinese Government Qian
Bo visited the Cook Islands to participate in the Pacific Island Fo-
rum Leaders Meeting and also took the opportunity to meet bilater-
ally with national leaders from across the region.282 In his speech at
the forum, Representative Qian continued to advertise China as an
economic partner by announcing new development assistance mea-
sures and arguing that “Chinese modernization” and “high-quality”
BRI cooperation would bring major opportunities for Pacific Island
countries.283 On the sidelines of the forum, he met with Cook Is-
lands Prime Minister, and Chair of the Pacific Islands Forum, Mark
Stephen Brown, who reportedly reiterated the government’s com-
mitment to Beijing’s One China principle.284 According to reporting
by China’s Ministry of Foreign Affairs, Representative Qian also met
with participating leaders from Fiji, Kiribati, Niue, Samoa, and the
Solomon Islands over the course of his stay in the country and con-
ducted “friendly exchanges” with leaders of the Federated States of
Micronesia, Papua New Guinea, Tonga, and Vanuatu.285
China made new efforts to strengthen its relationship with the
political leadership of the Solomon Islands in 2024, seeking to main-
tain the advantageous position it had enjoyed under outgoing Prime
Minister Manasseh Sogavare. In January 2024, Xinhua news agency
* Contiguous zone as defined by the UN is an area that extends up to 24 nautical miles from a
country’s coastline within which a coastal state “may exercise the control necessary” to “prevent”
or “punish” “infringement of its customs, fiscal, immigration or sanitary laws and regulations
within its territory or territorial sea.” Reuters, “Japan says Chinese Carrier Entered Its Contig-
uous Waters for First Time,” September 18, 2024; United Nations Convention on the Law of the
Sea, § 33, 1982.
† China’s pursuit of deepened relations and especially security agreements in the region has
generated concern in the past about the leverage it could give China to deny U.S. security ac-
cess. For example, after signing a security agreement with China in 2022, the government of
the Solomon Islands refused to grant permission for routine visits by U.S. and UK vessels in its
ports. U.S.-China Economic and Security Review Commission, 2022 Annual Report to Congress,
November 2022, 380–381.
130
publicized remarks by then Prime Minister Sogavare, then running

for reelection,* in which he not only argued that his government
had made the right choice in severing diplomatic relations with
Taiwan in 2019 but also parroted China’s false narrative that UN
Resolution 2758 obligated every UN member state to recognize Tai-
wan as part of China.286 (For more on China’s misrepresentation of
UN Resolution 2758, see Chapter 9, “Taiwan.”) In early April 2024,
Representative Qian visited the Solomon Islands and met with the
country’s Permanent Secretary of the Ministry of Foreign Affairs
and External Trade Collin Beck.287 In an example of China’s use
of subnational diplomacy to advance its goals, he also made a dedi-
cated trip to Malaita Province, where he met Premier Martin Fini,
visited a community school, and attended the signing ceremony of a
memorandum of understanding on establishing a sister province re-
lationship between Malaita and Jiangsu.† 288 Later in April, China’s
state-backed media seized the opportunity of the Solomon Islands’
parliamentary elections to spread false narratives about U.S. for-
eign policy objectives in the region and about China’s supposed com-
mitment to not interfere in other countries’ internal affairs while
again touting the development opportunities China would bring to
the country.289 Following the election, Solomon Islands lawmakers
selected as the new prime minister former Foreign Minister Jere-
miah Manele, who pledged to continue the Pacific Island country’s
international policy of close relations with China.290 In early July
2024, China invited Prime Minister Manele to meet with Gener-
al Secretary Xi in Beijing, where they released a joint statement
outlining planned future cooperation.291 Notably, the statement in-
cluded a commitment by China to continue sending “police liaison
teams” to the country, likely indicating continuity of the police coop-
eration agreement that China signed with the Sogavare government
in 2023.292
The CCP in 2024 also undertook substantial efforts to deepen polit-
ical connections in Vanuatu with an emphasis on solidifying support
for China on key political issues such as Taiwan. In April and May
2024, International Liaison Department Director Liu held a series of
meetings with representatives from Vanuatu’s various political par-
ties.293 In these meetings and other venues, Director Liu promoted
China’s economic development opportunities and sought support for
China’s “core interests and major concerns.” 294 As a demonstration
of one such core interest, readouts from the party-to-party meetings
consistently mentioned the commitment of Vanuatu and of each in-
dividual political party to Beijing’s One China principle, suggesting
* In the runup to the Solomon Islands election, news media reported that incumbent Prime
Minister Sogavare unsurprisingly favored closer ties with China, while opposition parties report-
edly favored closer ties with Western countries, including Australia, and had even stated that
they may scrap or hold a referendum on the security deal that Sogavare’s government had signed
with China, if elected. Reuters, “Explainer: China, Health System Top Issues as Solomon Islands
Holds National Election,” April 16, 2024; Charley Piringi, “As Solomon Islands’ Election Looms,
China’s Influence on the Pacific Country Draws Scrutiny,” Guardian, April 14, 2024; Kristy Need-
ham and Lucy Craymer, “Solomon Islands Election Watched by US, China amid Pacific Influence
Contest,” Reuters, April 12, 2024.
† Preexisting sister province relationships between China and the Solomon Islands include
between Isabel Province and Shandong Province (established 2023) and between Guadalcanal
Province and Guangdong Province (reestablished 2021). According to news coverage of the event
by the Solomon Islands government, there were “ongoing discussions” by other provinces inter-
ested in establishing similar relationships with China. Solomon Islands Government, PRC Pacific
Envoy Pays Visit to Ministry of Foreign Affairs and External Trade, April 8, 2024.
131
Beijing may continue finding support for its Taiwan agenda even if
the party in power were to change.* 295 The meeting readouts also
referenced “governance experience” and “governance capacity build-
ing,” suggesting efforts by the CCP to promote its authoritarian
practices as it has in the Solomon Islands.296 Director Liu described
China’s relations with Vanuatu as “a microcosm of China’s relations
with Pacific Island countries,” suggesting that China’s government
sees Vanuatu as a willing partner for its objectives in the region.297
In early July 2024, China completed the construction of a new presi-
dential palace and finance ministry building in Vanuatu, in addition
to renovations to Vanuatu’s foreign affairs department building.† 298
Shortly thereafter, China invited Prime Minister of Vanuatu Charlot
Salwai to meet with General Secretary Xi in Beijing, where the two
leaders released a joint statement.299
China’s efforts in the region seem to be paying off. In 2024, China
secured a degree of rhetorical support from its established partners
the Solomon Islands and Vanuatu, from Fiji, and from the Federated
States of Micronesia, one of the three Pacific Island countries with
a Compact of Free Association (COFA) agreement with the United
States. (For more on the COFA agreements, see Chapter 8, “China’s
Evolving Counter-Intervention Capabilities and the Role of Indo-Pa-
cific Allies.”) After separate meetings between Xi and the respective
heads of state from these four countries, they released joint state-
ments endorsing a wide range of political and geopolitical priorities
for China, including several that are oriented to undercut and dis-
credit the United States and its allies.300
• First, each of the four statements included support for China’s
political priorities and sovereignty claims to some degree. Each
described Taiwan as “an inalienable part of China’s territory,”
and all but Fiji opposed “Taiwan independence” and supported
efforts by the Chinese government to “realize national reunifica-
tion.” 301 All but Fiji also included mentions of Hong Kong, Xinji-
ang, and Tibet, with the Federated States of Micronesia and the
Solomon Islands additionally stating that they “firmly support”
China’s position on these issues, and Vanuatu describing them
as “internal matters for China to deal with.” 302 The Solomon
Islands and Vanuatu also mentioned “issues related to . . .human
rights,” with the former stating they “firmly support” China’s
position and Vanuatu again describing human rights as an in-
ternal matter for China.303 Finally, both the Solomon Islands
and Vanuatu statements added that their government “fully
understands and supports” China’s position on the South China
Sea.304
• Second, each of the four statements endorsed the set of diplo-
matic slogans China has emphasized in 2024 to contrast its os-
tensible international leadership with that of the United States.
* Following the Taiwan election, the government of Vanuatu publicly reaffirmed its position that
“Taiwan is an integral part of the People’s Republic of China’s territory” and called on the inter-
national community to respect China’s supposed sovereignty over Taiwan. Daily Post, “Vanuatu
Gov’t Reaffirms Recognition of ‘One China Policy,’ ” January 16, 2024.
† Some Australian officials expressed concern that the construction project would provide Chi-
na greater opportunities for surveillance and intelligence gathering in Vanuatu. Leah Lowonbu,
“China Hands over Lavish New Presidential Palace to Vanuatu, ahead of PM’s Visit to Beijing,”
Australian Broadcasting Company, July 3, 2024.
132
This included support not only for Xi’s community of common

human destiny and his three global initiatives but also “equal
and orderly multipolar[ization]” and “inclusive economic global-
ization.” 305 All four statements also stated opposition to “he-
gemonism and power politics,” which China attributes to the
United States.306
• Third, while all four statements reiterated a commitment to
upholding the international nuclear non-proliferation regime,
the Federated States of Micronesia, the Solomon Islands, and
Vanuatu also included additional language on nuclear issues
that could be interpreted as a veiled criticism of both Japan’s
discharge of treated water from the Fukushima power station *
and the operation of nuclear-powered submarines by the Unit-
ed States, the UK, and eventually Australia under the AUKUS
agreement.† 307 (For more on the AUKUS partnership and the
planned pathway for Australia’s acquisition of conventionally
armed nuclear submarine technology, see Chapter 8, “China’s
Evolving Counter-Intervention Capabilities and the Role of In-
do-Pacific Allies.”)
China Downplays Maritime and Territorial Disputes with Vietnam
Over the past year, China and Vietnam have undertaken wide-rang-
ing cooperation and professed to have constructive political relations,
despite the two countries’ unresolved territorial-maritime disputes
in the South China Sea. In December 2023, General Secretary Xi
and General Secretary of the Communist Party of Vietnam Nguyen
Phu Trong released a joint statement declaring the establishment
of a “China-Vietnam community of common destiny.” 308 The joint
statement covered a wide range of issues, including strengthened
party-to-party ties; greater military exchanges; expanded coopera-
tion on law enforcement, regime security, and intelligence; deepened
economic ties; and support for China’s global initiatives.309 It also
contained a lengthy section on “better management and settlement
of differences” which focused on managing disputes in the South
China Sea.310 Analysts note that the agreement closely followed
the upgrade of U.S.-Vietnam relations to a comprehensive strategic
partnership three months prior, and Vietnam’s officials reportedly
characterize the further development of relations with China as a
“strategic choice” and part of a “diversified foreign policy.” 311 In early
April 2024, General Secretary Xi met with Chairman of the Nation-
al Assembly of Vietnam Vuong Dinh Hue in Beijing and noted that
implementation of the agreement was proceeding well from China’s
perspective.312 Xi and Prime Minister Pham Minh Chinh then met
in Beijing in June 2024, where Xi again stated that cooperation was
progressing “smoothly.” 313 Prime Minister Chinh reportedly voiced
opposition for “the politicization of economic, trade, and technolog-
* The International Atomic Energy Agency confirmed in April 2024 that the discharge of treated
water from the power station has proceeded according to accepted standards of protection from
harmful radiation, with tritium concentrations in each batch of treated water to date measuring
“far below Japan’s operational limit.” International Atomic Energy Agency, “Japan’s ALPS Treat-
ed Water Release Is Progressing as Planned, IAEA Task Force Says,” April 26, 2024.
† Former special assistant and press secretary to the president in the government of the Fed-
erated States of Micronesia, Richard Clark, has called this provision “concerning” and points out
that it fails to acknowledge China’s own use of nuclear-powered submarines in the region. Rich-
ard Clark, “The Trouble with Micronesia’s New China Policy,” Diplomat, April 19, 2024.
133
ical issues” and claimed that Vietnam’s relations with China “will
not be disrupted by external provocations and interference.” 314
It is notable that Vietnam has managed to maintain cordial re-
lations with China despite Vietnam’s on-going construction in the
South China Sea. Vietnam’s expansion of its occupied features in
the Spratly Islands has gone uncontested this year by China’s Navy,
Coast Guard, or Maritime Militia, a sharp contrast to Beijing’s re-
sponse to the Philippines activities at Second Thomas Shoal.315
According to the Asia Maritime Transparency Initiative, between
November 2023 and June 7, 2024, Vietnam has created 692 new
acres of land across a total of ten features, a significant expansion
of its outposts in the Spratly Islands.316 Vietnam’s activities in the
South China Sea do not appear to have impacted defense and se-
curity cooperation with China. In early December 2023, Minister
Wang and Vietnamese Foreign Minister Bui Thanh Son reportedly
agreed to “jointly maintain peace and stability at sea.” 317 In April
2024, Chinese and Vietnamese coast guards completed a joint patrol
in the Beibu Gulf.* 318 According to Chinese state media reporting,
an official statement heralds the joint patrol as a model for “mari-
time law enforcement in the South China Sea” adding that practical
cooperation with the Vietnamese to properly handle maritime emer-
gencies will continue.319 Also in April, the defense ministers of Chi-
na and Vietnam announced the establishment of a hotline between
the Vietnamese Navy and the PLA Southern Theater Command,
framing the agreement as part of their efforts to improve maritime
cooperation under their community of common destiny.320
China’s state media used the agreement as an opportunity to con-
trast Vietnam and the Philippines, arguing that Vietnam had right-
ly judged that its “common interests [with China] far outweigh [its]
differences” whereas the Philippines had chosen a so-called path of
“radical actions” and provocation backed by the United States.321
Western analysts have assessed that Beijing’s different approaches
towards the Philippines and Vietnam may be influenced by the two
countries’ different approaches to formal alliances with the United
States and publicly shaming China’s coercive behavior.322 China’s
comparably low-key response to Vietnam’s activities in the South
China Sea may in part showcase Beijing’s preference for countries
to bilaterally manage disputes with China privately and publicly
demonstrate support and cooperation for China’s stated foreign pol-
icy objectives.323
Nevertheless, in late September 2024, law enforcement authori-
ties from China engaged in a violent altercation with a civilian ves-
sel from Vietnam in the South China Sea. On September 29, 2024,
according to Vietnamese accounts, two patrol ships from China’s
Maritime Safety Administration Sansha City United Law Enforce-
ment Unit were deployed to interdict a Vietnamese fishing vessel
near the Paracels.† 324 Local Vietnamese media reported that up to
* The three-day joint patrol included observing and inspecting fishing boats from both countries
while patrolling along planned routes. China Military Online, “China, Vietnam Coast Guards
Complete Joint Patrol in Beibu Gulf,” April 30, 2024.
† China, Vietnam, and Taiwan claim sovereignty over the Paracels; however, China effectively
controls them and has constructed 20 outposts in the area. In addition to claiming sovereignty
over the features themselves, China also maintains a straight baseline claim around them that
is inconsistent with international law, illegally claiming the waters between them as China’s
internal waters. Center for Strategic and International Studies, Asia Maritime Transparency Ini-
134
40 officers from China’s Maritime Safety Administration boarded

the Vietnamese civilian fishing vessel with metal rods and attacked
ten Vietnamese fishermen, resulting in severe injuries to four fish-
ermen, some of whom suffered broken limbs.325 China’s Ministry of
Foreign Affairs defended the actions of China’s authorities as “pro-
fessional and restrained,” claiming that “no injuries were found” and
the Vietnamese fishing boats were illegally fishing in the relevant
waters without the permission of the Beijing government.326 In re-
sponse, Vietnam’s foreign ministry confirmed the incident, lodged a
protest with China’s embassy in Vietnam, and asserted that Chinese
law enforcement officials did in fact beat Vietnamese fisherman and
confiscate their fishing equipment.327 It remains to be seen whether
this incident represents a new trend.
China Deepens Exchanges and Military Access in Cambodia
In 2024, China and Cambodia continued to deepen ties following
Cambodia’s leadership transition from then-Prime Minister Hun
Sen to his son General Hun Manet last August.328 In April 2024,
Minister Wang visited Cambodia and met with high-level leader-
ship including the king, prime minister, deputy prime minister,
and senate chairman.329 The two sides reaffirmed their pursuit
of a “China-Cambodia community of common destiny,” which they
had declared in a joint statement in 2023, and Minister Wang
described the arrangement between the two countries as “a model
for building a new type of international relations.” 330 In addition
to expanded cooperation on exports, infrastructure, agriculture,
and tourism, the two governments reportedly agreed to deepen
exchanges in “state governance,” to jointly combat transnation-
al crimes, and to “strengthen defense cooperation” through con-
tinued joint exercises and training, medical services cooperation,
and mine clearing.331 They also declared their intention to coop-
erate under the framework of Xi’s Global Development, Security,
and Civilization Initiatives.332 In May 2024, China and Cambodia
also held their annual Golden Dragon military exercise * focused
on counter-terrorism and humanitarian relief.333
China has expanded on its activities at Cambodia’s Ream Na-
val Base by maintaining a consistent PLA Navy presence there
since December 2023.† 334 While the Cambodian government has
insisted that the presence of the two Chinese Navy corvettes is
not “permanent,” the two Chinese warships have been the only
ships docked at the new Chinese-built pier.335 The Cambodian
Commander of Ream, Mey Dina, told the New York Times the
tiative, “Reading between the Lines: The Next Spratly Legal Dispute,” March 21, 2019; Center
for Strategic and International Studies, Asia Maritime Transparency Initiative, “China Island
Tracker.”; Sourabh Gupta and Matt Geraci, “China’s Claims in the South China Sea,” Institute for
China-American Studies; National Bureau of Asian Research, “Country Profile from the Maritime
Awareness Project: China.”
* This is the sixth annual China-Cambodia Golden Dragon joint exercise; the first occurred in
December 2016. Wu Ke and Meng Peng, “China-Cambodia “Golden Dragon 2024” Joint Exercise
Concludes,” China Military Online, May 31, 2024; Associated Press, “China, Cambodia to Begin
Annual Military Drills to Strengthen Cooperation, Fight Terrorism,” Voice of America, May 13,
2024.
† China’s Ministry of National Defense has denied claims that Cambodia has given the PLA
exclusive rights to use some facilities at Ream. In 2022, a spokesperson for China’s Ministry of
National Defense stated the upgrade and renovation project of Ream Naval Base was an aid proj-
ect undertaken by China. China Military Online, “China-Cambodia Ream Naval Base Upgrading
Project Completely Legitimate, Neutral: Defense Spokesperson,” June 30, 2022.
135
Chinese warships were docked for “training only.” 336 In June,

Cambodia’s leadership reportedly told U.S. Defense Secretary
Austin that China’s military activities at Ream were intended
to help Cambodia modernize its military, not to establish the lo-
cation as a permanent base for China’s forces.337 According to
Thomas Shugart, an adjunct senior fellow at the Center for a
New American Security, the facilities that have been built by Chi-
na at Ream look like “a medium-size naval base with facilities
to support training, maintenance, personnel support, supply, and
other functions,” all of which could make it a resupply station for
the PLA Navy similar to that at Djibouti.338
China Does Little to Hold North Korea Accountable for Escalatory
Activities
China avoided condemning North Korea’s provocative military ac-
tivities * in violation of UN Security Council resolutions.† Instead,
China’s UN Ambassador Fu Cong issued generic warnings against
raising tensions on the Korean Peninsula, particularly in the form of
planned large-scale joint military exercise conducted by other coun-
tries.339 China has also fallen short in fulfilling its international
obligations to implement UN Security Council resolutions on North
Korea to disrupt its nuclear and ballistic missile programs.340 For
instance, Beijing has failed to stop North Korea from evading sanc-
tions measures by using China’s territorial waters to facilitate the
trade of sanctioned petroleum products and has downplayed the ac-
tivities of Chinese companies that have provided, transacted with,
or exported goods to North Korea.341 China’s military also continues
to harass foreign militaries conducting missions in the East China
Sea in support of a multinational coalition enforcing UN sanctions
on North Korea.342
Furthermore, China has done nothing to condemn the deepen-
ing ties between North Korea and Russia, including North Korea’s
willingness to supply Russia with ammunition and ballistic missiles
as well as the signing of a defense pact between Russia and North
Korea on June 19, 2024.‡ 343 Under the terms of the pact, North Ko-
rea and Russia “shall immediately provide military and other assis-
tance” to the other party if it “falls into a state of war due to armed
invasion,” establish mechanisms to “strengthen defense capabilities
to prevent war,” and facilitate Russian assistance to North Korea’s
nuclear energy and space programs, all of which violate UN secu-
rity council resolutions.344 Instead, Beijing has sought to avoid any
semblance of association with the Russian-North Korean military
relationship.345
* North Korea claimed at the end of June 2024 that it had successfully tested a new ballistic
missile capable of carrying a 4.5-ton warhead. Jack Kim, “North Korea Says It Tested Ballistic
Missile Capable of Carrying Super-Large Warhead,” Reuters, July 1, 2024.
† UN Security Council Resolution 1695 passed in 2006 calls on North Korea to suspend activ-
ities related to its ballistic missile program, and subsequent resolutions condemn North Korea
for pursuing nuclear weapons and ballistic missiles instead of the welfare of its people. Kelsey
Davenport, “UN Security Council Resolutions on North Korea,” Arms Control Association, Jan-
uary 2022.
‡ In June 2024, a South Korean broadcaster cited an anonymous Republic of Korea government
official who claimed that North Korea planned to dispatch military engineers to aid construction
efforts in the Russian-controlled Donetsk region. However, these reports appear to be rumors as
North Korea has made no such announcement. Shreyas Reddy, “Fact Check: North Korea Has Not
Announced Plans to Send Troops to Ukraine—Yet,” NK News, June 27, 2024.
136
China’s Transactional Approach in the Middle East Supports

Its Interests
In late 2023 and 2024, China pursued a selective and transac-
tional approach to relations in the Middle East and demonstrated
willingness to exploit regional tensions for geopolitical gain. Bei-
jing made several diplomatic overtures to paint itself as a conflict
mediator between Israel and Hamas, but these have failed to re-
sult in substantive steps advancing a resolution to the conflict.346
At the same time, China has sought to appeal to Arab states and
has offered support for Iran to advance its own interests.347 China’s
failure to clearly and unequivocally condemn the Hamas terrorist
attack against Israel on October 7, 2023, exposed China’s use of the
conflict to further align itself with Arab countries and other coun-
tries in the “Global South.” 348 Despite the PLA’s stated mission in
the region being focused on anti-piracy, it also did not contribute to
coalition efforts to protect maritime shipping from Iranian-backed
Houthi terrorist attacks on commercial shipping in the Red Sea.349
However, China did denounce Israel’s assassination of Hamas ter-
rorist chief Ismail Haniyeh in Tehran.350 (For more on China’s stra-
tegic interests and activities in the Middle East, see Chapter 5,
“China and the Middle East.”)
China Seeks Benefits from Wide-Ranging Contacts in African
Countries
China began the year with a push to showcase its diverse and
deepening ties in Africa as a key indicator of China’s supposed glob-
al diplomatic leadership. For the 34th consecutive year, China used
the minister of foreign affairs’ first overseas visit of the year to high-
light relations with the countries of Africa as a core part of China’s
international affairs.351 Minister Wang traveled first to Egypt* and
Tunisia in North Africa, then to Togo and Côte d’Ivoire in West-
ern Africa, meeting with both the president and foreign minister
of each country.352 China’s official readouts assert a commonality
of interests, often promoting Xi’s three major global initiatives and
highlighting areas of potential cooperation (variously, trade, infra-
structure, energy, agricultural technology, AI, healthcare, invest-
ment, and development).353 China also sought to benefit from low-
er-profile party-to-party meetings, especially in central and southern
Africa. Between January and May 2024, the CCP’s International
Liaison Department met with representatives of political parties in
Rwanda, Lesotho, Malawi, Burundi, Equatorial Guinea, and Namib-
ia.354 Readouts of these meetings echo many of the same claims and
topics as the readouts from the meetings with government officials,
while in some cases they reveal China’s ongoing efforts to promote
the CCP’s authoritarian governance model.355
The 2024 Summit of the Forum on China-Africa Cooperation (FO-
CAC), held in Beijing from September 4 to 6, provided China with
a high-profile opportunity to press its case for global leadership in
Africa. Representatives from 53 of 54 African countries attended
the triennial gathering, with the lone exception of Eswatini, which
maintains diplomatic relations with Taiwan.356 Delegates to the
* Egypt’s membership in BRICS was formalized in January 2024. Thaer Mansour, “Egypt’s
BRICS Membership Officially Activated under Russian Leadership,” New Arab, January 2, 2024.
137
2024 FOCAC summit approved the Beijing Action Plan (2025–2027),

in which Beijing promised to provide Africa with approximately $50
billion (renminbi [RMB] 360 billion) in financial support during the
next three years, including $30 billion (RMB 210 billion) in loans
as well as other forms of aid and investment, such as $140 million
(RMB 1 billion) in military aid.357 On the one hand, China’s pledge
to provide about $10 billion annually in loans to African countries
over the next three years represents a significant increase relative
to the recent past. On the other hand, the value of the promised
new loans remains far less than China’s lending to African coun-
tries during the peak years of BRI (2013–2018), when Chinese loans
often exceeded $15 billion per year.358 Some of the promised new
funding reflects the priorities of China’s Global Development Initia-
tive, which emphasizes small-scale projects addressing issues such
as climate change and poverty, rather than large infrastructure.359
At the FOCAC summit, China vowed to help fund 1,000 “small and
beautiful” projects to “improve people’s livelihood” in Africa and en-
courage greater Chinese investment in solar, wind, and other green
energy initiatives across the continent.360 At the same time, China
continued to provide loans for more traditional large-scale infra-
structure projects, including $1 billion for a railway in Nigeria.361
Significantly, China’s financial assistance to African countries will
also include yuan-denominated loans, and the Beijing Action Plan
explicitly calls for “expanding the use of the RMB in Africa”—part
of China’s wider goal to internationalize the RMB.362 (For more on
internationalization of the RMB, see Chapter 7, “China’s New Mea-
sures for Control, Mobilization, and Resilience.”)
While the FOCAC summit was replete with rhetorical nods to
China’s global leadership and thinly veiled criticisms of the United
States and its allies, it also laid bare problems and imbalances in
the China-Africa relationship. The summit declaration includes lan-
guage explicitly reaffirming that “Taiwan is an inalienable part of
China’s territory” and supporting “all efforts by the Chinese govern-
ment to achieve national reunification.” 363 In an attempt to frame
China-Africa ties within the context of China’s larger vision for an
alternative global order, the Beijing Action Plan is suffused with
references to China’s preferred diplomatic principles, such as “equal
and orderly multipolarization” and “beneficial and inclusive econom-
ic globalization,” and it refers to China and Africa as “representa-
tives of the Global South.” 364 The action plan also repeated Beijing’s
frequent criticisms of “unilateralism, protectionism, and maximum
pressure” as well as “erecting walls and barriers” and “decoupling
and supply chain disruption,” criticisms that are largely directed
at the United States.365 Nevertheless, the FOCAC summit failed
to address several pressing concerns about China-Africa relations,
particularly with regard to debt and market access. The renewed
expansion of Chinese lending to African countries has exacerbated
concerns over debt sustainability, especially considering the lack of
transparency in the Chinese lending model.366 The FOCAC summit
also revealed China’s lack of progress on promises to import more
products from Africa. At the 2021 summit, Xi had vowed to import
$300 billion worth of African goods over three years.367 China failed
to reach this target, and in his address to the 2024 summit, Xi made
138
only vague promises to “unilaterally expand” access to the Chinese

market.368
China Elevates Diplomatic Outreach to Countries in Latin
America and the Caribbean
China sought to deepen its diplomatic and political engagement
with countries in Latin America and the Caribbean in 2024 as part
of its effort to cast itself as a leader of what it refers to as the
“Global South.” Most notably and for the first time, after its regular
commencement in Africa, Foreign Minister Wang’s first overseas trip
of the year also included visits to two countries in Latin America
and the Caribbean,* namely Brazil and Jamaica.† 369 In meetings
throughout the year, China’s diplomats tried to present China as a
key partner for economic development opportunities and a partner
who would work with Latin American and Caribbean countries to
safeguard their interests internationally.370 Chinese officials also
conducted party-to-party exchanges in Mexico (multiparty par-
liamentary delegation), El Salvador (New Ideas Party), and Cuba
(Communist Party of Cuba) seeking to promote China’s internation-
al interests.371
China sought to deepen political exchanges with Brazil and fur-
ther efforts to counterbalance the United States and its allies, with
some success. During his visit to Brazil in January 2024, Minis-
ter Wang met Brazil’s President Luiz Inácio Lula and pushed for
strengthening what he called the two countries’ “strategic align-
ment.” 372 Chinese government readouts assert that the meetings
also discussed trade, investment, BRICS, and “state governance.” 373
Exchanging governance experience was a theme, as well, from the
seventh meeting between the CCP and the Brazilian Workers Party
held in April 2024.374 In May 2024, Director Liu met with Brazil’s
deputy foreign minister in Beijing, seeking the country’s potential
collaboration to reform global governance in multilateral mecha-
nism such as BRICS, the China Community of Latin American and
Caribbean States (CELAC) Forum, and the G20.375 China’s efforts
in Brazil appear to have had some success. In May 2024, the two
countries presented a joint plan for ending the war in Ukraine that
did not acknowledge Russia’s aggression.376 Instead, it opposed
“dividing the world into isolated political or economic groups” and
made a broad call seemingly unrelated to the conflict itself to “en-
hance international cooperation on energy, currency, finance, trade,
food security and the security of critical infrastructure”—all policy
areas in which China seeks to deepen ties with other countries to
counterbalance the United States.377
Concerns about distortions caused by China’s economic model
may be growing, however. Chinese companies have recently en-
joyed significant relative growth in “new infrastructure” industries
in the region such as information and communication technology,
* A Chinese state media commentator argued that the visits were a deliberate effort to raise
the profile of a region that is “more integrated into the Western system” compared to the rest of
the “Global South” and where China’s diplomacy has comparatively lagged as a result. Pan Deng,
“Wang Yi’s First Annual Latin America Visit Holds Landmark Significance,” CGTN, January 22,
2024.
† Jamaica was the first Caribbean state to establish a strategic partnership with China. Pan
Deng, “Wang Yi’s First Annual Latin America Visit Holds Landmark Significance,” CGTN, Jan-
uary 22, 2024.
139
high-end manufacturing, renewable energy, and EVs, and the first

half of 2024 saw a flood of Chinese EVs into Brazilian and Mexican
markets.378 To support its domestic industry, in January 2024 Bra-
zil reinstated tariffs on imported EVs starting at 10 percent, which
then increased to 18 percent by July and are set to reach 35 percent
by July 2026.379 In April 2024, Mexico’s government ceased provid-
ing incentives such as tax cuts and low-cost public land for EVs in
the country.380 The United States and Mexico also announced joint
tariffs of 25 percent on steel not melted and poured in the United
States, Mexico, or Canada and tariffs of 10 percent on aluminum
from China, Russia, Belarus, and Iran.381
140
1. Center for Strategic and International Studies, “Unpacking the 20th Party Con-
gress,” October 28, 2022; Charlie Campbell, “Xi Jinping Designates No Obvious Suc-
cessor, Laying the Foundation for a Long Reign,” Time, October 25, 2017.
2. Economist, “Xi Jinping has No Interest in Succession Planning,” October 20,
2022.
3. Neil Thomas, written testimony for U.S.-China Economic and Security Review
Commission, Hearing on CCP Decision-Making and the 20th Party Congress, January
27, 2022, 15; Jude Blanchette and Richard McGregor, “China’s Looming Succession
Crisis: What Will Happen When Xi Is Gone?” Foreign Affairs, July 20, 2021.
4. Center for Strategic and International Studies, “Unpacking the 20th Party Con-
gress,” October 28, 2022.
5. Aaran Hope, “Learning from National Security Education Day,” Jamestown
Foundation, April 26, 2024.
6. Aaran Hope, “Learning from National Security Education Day,” Jamestown
Foundation, April 26, 2024; China Daily, “It Concerns You and Me! One Graphic
Completely Explains the Comprehensive National Security Concept” (事关你我！一图
全解总体国家安全观), April 15, 2024. Translation; People’s Daily, “Comprehensive Na-
tional Security Concept 10 Year Anniversary Promotional Video | These Ten Years”
(总体国家安全观10周年宣传片｜这十年), April 15, 2024. Translation; Ministry of State
Security WeChat and People’s Daily, “National Security Education Day: Comprehen-
sive National Security Concept—the 10th Anniversary of Innovation and Leader-
ship” (全民国家安全教育日: 总体国家安全观·创新引领10周年), Ministry of Culture and
Tourism, April 15, 2024. Translation.
7. Nie Furu, “Nie Furu: Deeply Implement the Comprehensive National Security
Concept and Continuously Promote the High-Quality Development of National Secu-
rity Publicity and Education” (聂福如: 深入贯彻总体国家安全观持续推动国家安全宣传
教育高质量发展), Red Flag Manuscript in Qiushi, April 13, 2024. Translation.
8. Xinhua, “China’s Top Legislature Concludes Annual Session,” National Commit-
tee of the Chinese People’s Political Consultative Conference, March 12, 2024; William
Zheng, “ ‘Two Sessions’ 2024: China’s ‘All About the Party Leadership’ As It Gets More
Control over Cabinet,” South China Morning Post, March 12, 2024; NPC Observer,
“NPC 2024: Annotated Translation of the Revised State Council Organic Law,” March
11, 2024; Mei Mei Chu and Laurie Chen, “China Passes Law Granting Communist
Party More Control over Cabinet,” Reuters, March 11, 2024; Xinhua, “Chinese Nation-
al Lawmakers Pass Revised Organic Law of the State Council, State Council of the
People’s Republic of China, March 11, 2024; Xinhua, “Relevant Person in Charge of
the National People’s Congress Standing Committee Legislative Affairs Commission
Interprets the Draft Amendment to the State Council Organic Law” (全国人大常委会
法工委相关负责人解读国务院组织法修订草案), People’s Government of the People’s Re-
public of China, March 7, 2024. Translation.
9. Xinhua, “Relevant Person in Charge of the National People’s Congress Standing
Committee Legislative Affairs Commission Interprets the Draft Amendment to the
State Council Organic Law” (全国人大常委会法工委相关负责人解读国务院组织法修订草
案), People’s Government of the People’s Republic of China, March 7, 2024. Transla-
tion; People’s Daily, “Explanation of ‘Organic Law of the State Council of the People’s
Republic of China (Draft Revision)’ ” (关于《中华人民共和国国务院组织法(修订草案)》
的说明), March 5, 2024. Translation.
10. Li Hongzhong, “Explanation of ‘Organic Law of the State Council of the Peo-
ple’s Republic of China (Draft Revision)’ ” (关于《中华人民共和国国务院组织法(修订草
案)》的说明), People’s Daily, March 6, 2024. Translation.
11. NPC Observer, “NPC 2024: Annotated Translation of the Revised State Council
Organic Law,” March 11, 2024; People’s Daily, “Explanation of ‘Organic Law of the
State Council of the People’s Republic of China (Draft Revision)’ ” (关于《中华人民共
和国国务院组织法(修订草案)》的说明), March 5, 2024. Translation.
12. David Bandurski, “Nine Withs (Nine Requirements),” China Media Project,
April 10, 2024; Martin Purbrick, “All the President’s Men—Corruption in the Xi Jin-
ping Era,” Jamestown Foundation, September 20, 2022; Rahul Karan Reddy, “China’s
Anti-Corruption Campaign: Tigers, Flies, and Everything in Between,” Diplomat,
May 12, 2022; Christopher Carothers, “Xi’s Anti-Corruption Campaign: All All-Pur-
pose Governing Tool,” China Leadership Monitor, March 1, 2021.
13. Zhao Cheng, “Providing Strong Disciplinary Guarantees for the Unremitting
Promotion of Comprehensive and Strict Party Governance——Interpretation of the
Newly Revised ‘Regulations on Disciplinary Actions of the Chinese Communist Par-
ty’ ” (为一刻不停推进全面从严治党提供坚强纪律保障为一刻不停推进全面从严治党提供坚
强纪律保障——解读新修订的《中国共产党纪律处分条例》), People’s Daily, December
141
29, 2023. Translation; Chinese Communist Party, “Regulations on Disciplinary Ac-
tions of the Chinese Communist Party (Approved by the CCP Central Committee
Politburo on December 23, 2003, Issued by the CCP Central Committee on December
31, 2003, Revised for the Third Time by the CCP Central Committee Politburo on
December 8, 2023, and Issued by the CCP Central Committee on December 19, 2023)”
(中国共产党纪律处分条例 (2003年12月23日中共中央政治局会议审议批准 2003年12月31
日中共中央发布 2023年12月8日中共中央政治局会议第三次修订 2023年12月19日中共中
央发布)), China Military Online, December 19, 2023. Translation.
14. China’s CCP Central Commission for Discipline Inspection and National Su-
pervisory Commission Legal Affairs Office, Providing Strong Disciplinary Guarantees
for Achieving the Party’s Mission and Tasks in the New Era and New Journey (为实
现新时代新征程党的使命任务提供坚强纪律保障), People’s Daily, May 30, 2024. Trans-
lation; Zhao Cheng, “Providing Strong Disciplinary Guarantees for the Unremitting
29, 2023. Translation.
15. China’s CCP Central Commission for Discipline Inspection and National Su-
pervisory Commission Legal Affairs Office, Providing Strong Disciplinary Guarantees
for Achieving the Party’s Mission and Tasks in the New Era and New Journey (为实
现新时代新征程党的使命任务提供坚强纪律保障), People’s Daily, May 30, 2024. Transla-
tion; Xinhua, “CCP Central Committee Issues ‘Regulations on Disciplinary Actions of
the Chinese Communist Party’ ” (中共中央印发《中国共产党纪律处分条例》), Decem-
ber 27, 2023. Translation.
17. Xinhua, “General Office of the CCP Central Committee Issued a ‘Notice’ to
Carry Out Party Discipline Study and Education throughout the Party” (中共中央办
公厅印发《通知》在全党开展党纪学习教育), People’s Daily, April 7, 2024. Translation;
Xinhua, “CCP Launches Education Campaign on Party Discipline,” April 7, 2024.
18. Xinhua, “General Office of the CCP Central Committee Issued a ‘Notice’ to
Carry Out Party Discipline Study and Education throughout the Party” (中共中央办
公厅印发《通知》在全党开展党纪学习教育), People’s Daily, April 7, 2024. Translation;
Zhang Yi, “CPC Solving Problems of Formalism,” China Daily, October 13, 2022; Party
Building Magazine, “Strictly Prevent ‘Low-Level Red’ and ‘High-Level Black’ ” (严防“
低级红”“高级黑”), Communist Party Members Network, May 5, 2019. Translation.
19. Ryan Ho Kilpatrick, “The CMP Dictionary: Self-Revolution,” China Media Proj-
ect, August 20, 2024; Arran Hope, “ ‘Self-Revolution’ Suggests Stronger CCDI Man-
date,” Jamestown Foundation, January 19, 2024; Qiushi Commentator, “Effectively
Unify Thoughts and Actions with General Secretary Xi Jinping’s Important Thoughts
on the Party’s Self-Revolution” (切实把思想和行动统一到习近平总书记关于党的自我革命
的重要思想上来), Qiushi, January 15, 2024. Translation; Xinhua, “Authorized Release
| Communiqué of the Third Plenary Session of the 20th Central Commission for
Discipline Inspection of the Chinese Communist Party” (受权发布｜中国共产党第二十
届中央纪律检查委员会第三次全体会议公报), January 10, 2024. Translation; Communist
Party Member Network, “Xi Jinping Delivers an Important Speech at the Third Ple-
nary Session of the 20th Central Commission for Discipline Inspection; Deepen the
Party’s Self-Revolution and Resolutely Win the Tough and Protracted Battle against
Corruption” (习近平在二十届中央纪委三次全会上发表重要讲话强调深入推进党的自我革
命坚决打赢反腐败斗争攻坚战持久战), January 8, 2024. Translation.
20. Arran Hope, “ ‘Self-Revolution’ Suggests Stronger CCDI Mandate,” Jamestown
Foundation, January 19, 2024.
21. Ryan Ho Kilpatrick, “The CMP Dictionary: Self-Revolution,” China Media Proj-
ect, August 20, 2024; David Bandurski, “The CMP Dictionary: Nine Withs (Nine Re-
quirements),” China Media Project, April 10, 2024; Qiushi Commentator, “Effectively
Unify Thoughts and Actions with General Secretary Xi Jinping’s Important Thoughts
on the Party’s Self-Revolution” (切实把思想和行动统一到习近平总书记关于党的自我革
命的重要思想上来), Qiushi, January 15, 2024. Translation; Xinhua, “Authorized Re-
lease | Communiqué of the Third Plenary Session of the 20th Central Commission
for Discipline Inspection of the Chinese Communist Party” (受权发布｜中国共产党第
二十届中央纪律检查委员会第三次全体会议公报), January 10, 2024. Translation; Li Xi,
“Deeply Study and implement General Secretary Xi Jinping’s Important Thought on
142
the Party’s Self-Revolution, Deeply Promote the High-Quality Development of Dis-
cipline Inspection and Supervision Work in the New Journey” (深入学习贯彻习近平
总书记关于党的自我革命的重要思想纵深推进新征程纪检监察工作高质量发展), People’s
Daily, January 8, 2024; Communist Party Member Network, “Xi Jinping Delivers
an Important Speech at the Third Plenary Session of the 20th Central Commission
for Discipline Inspection; Deepen the Party’s Self-Revolution and Resolutely Win the
Tough and Protracted Battle against Corruption” (习近平在二十届中央纪委三次全会上
发表重要讲话强调深入推进党的自我革命坚决打赢反腐败斗争攻坚战持久战), January 8,
2024. Translation.
22. Xinhua, “Authorized Release | Communiqué of the Third Plenary Session of
the 20th Central Commission for Discipline Inspection of the Chinese Communist
Party” (受权发布｜中国共产党第二十届中央纪律检查委员会第三次全体会议公报), Janu-
ary 10, 2024. Translation; Li Xi, “Deeply Study and implement General Secretary
Xi Jinping’s Important Thought on the Party’s Self-Revolution, Deeply Promote the
High-Quality Development of Discipline Inspection and Supervision Work in the
New Journey” (深入学习贯彻习近平总书记关于党的自我革命的重要思想纵深推进新征程
纪检监察工作高质量发展), People’s Daily, February 26, 2024. Translation; Communist
Party Member Network, “Xi Jinping Delivers an Important Speech at the Third Ple-
nary Session of the 20th Central Commission for Discipline Inspection; Deepen the
Party’s Self-Revolution and Resolutely Win the Tough and Protracted Battle against
Corruption” (习近平在二十届中央纪委三次全会上发表重要讲话强调深入推进党的自我革
命坚决打赢反腐败斗争攻坚战持久战), January 8, 2024. Translation.
23. People’s Daily, “Central Military Commission Political Work Conference Held
in Yan’an, Xi Attends the Meeting and Delivers an Important Speech Emphasiz-
ing: Implementing the New Era Political Military Building Strategy, Providing
a Strong Political Guarantee for the Cause of Strengthening the Military” (中
央军委政治工作会议在延安召开,习近平出席会议并发表重要讲话强调,贯彻落实新时代
政治建军方略,为强军事业提供坚强政治保证), June 20, 2024. Translation; Liu Zhen,
“Xi Jinping Tells Top PLA Leaders They Must Eliminate ‘Conditions That Breed
Corruption,” South China Morning Post, June 20, 2024; Laurie Chen, “China’s Xi
Says Army Faces ‘Deep-Seated’ Problems in Anti-Corruption Drive,” Reuters, June
19, 2024.
in Yan’an, Xi Attends the Meeting and Delivers an Important Speech Emphasizing
Implementing the New Era Political Military Building Strategy, Providing a Strong
Political Guarantee for the Cause of Strengthening the Military” (中央军委政治工作
会议在延安召开,习近平出席会议并发表重要讲话强调,贯彻落实新时代政治建军方,为强军
事业提供坚强政治保证), June 20, 2024. Translation.
in Yan’an, Xi Attends the Meeting and Delivers an Important Speech Emphasizing
会议在延安召开,习近平出席会议并发表重要讲话强调,贯彻落实新时代政治建军方略,为强
军事业提供坚强政治保证), June 20, 2024. Translation.
in Yan’an, Xi Attends the Meeting and Delivers an Important Speech Emphasizing:
会议在延安召开,习近平出席会议并发表重要讲话强调,贯彻落实新时代政治建军方略,为
强军事业提供坚强政治保证), June 20, 2024. Translation; Communist Party Member
Network, “Xi Jinping Delivers an Important Speech at the Third Plenary Session of
the 20th Central Commission for Discipline Inspection; Deepen the Party’s Self-Rev-
olution and Resolutely Win the Tough and Protracted Battle against Corruption” (习
近平在二十届中央纪委三次全会上发表重要讲话强调深入推进党的自我革命坚决打赢反腐
败斗争攻坚战持久战), January 8, 2024. Translation.
27. Xinhua Daily Telegraph, “Li Shangfu, Wei Fenghe Receive Punishment of Ex-
pulsion from the Party” (李尚福,魏凤和受到开除党籍处分),June 28, 2024. Translation;
Brandon Tran, “The Shakeup in China’s Rocket Force Continues,” Diplomat, January
3, 2024; Xinhua, “(Authorized Release) National People’s Congress Standing Commit-
tee Announcement (14th Session) No. 2” ((受权发布)全国人民代表大会常务委员会公告
(十四届〕第二号), QQ, December 29, 2023. Translation; Bloomberg News, “China
Ousts Nine Military Lawmakers as Defense Purge Widens,” December 29, 2023.
28. Xinhua, “(Authorized Release) National People’s Congress Standing Commit-
(十四届〕第二号), QQ, December 29, 2023. Translation; Bloomberg News, “China
Ousts Nine Military Lawmakers as Defense Purge Widens,” December 29, 2023.
143
29. Xinhua, “(Authorized Release) National People’s Congress Standing Commit-
(十四届〕第二号), QQ, December 29, 2023. Translation.
30. Shizuka Kuramitsu, “Chinese Military Purge Said to Show Corruption, Weak-
ness,” Arms Control Association, March 2024; Xinhua, “(Authorized Release) National
People’s Congress Standing Committee Announcement (14th Session) No. 2” ((受权发
布)全国人民代表大会常务委员会公告 (十四届〕第二号), QQ, December 29, 2023. Trans-
lation.
31. William Yang, “China Launches New Wave of Purges against Key Defense In-
dustry Leaders,” Voice of America, December 29, 2023.
32. People’s Daily, “Member of the Central Military Commission, Former State
Councilor and Minister of National Defense Li Shangfu Receives Punishment of Ex-
pulsion from the Party” (中央军委原委员,原国务委员兼国防部长李尚福受到开除党籍处
分), Chinese Communist Party News Network, June 28, 2024. Translation; People’s
Daily, “Member of the Central Military Commission, Former State Councilor and
Minister of National Defense Wei Fenghe Receives Punishment of Expulsion from the
Party” (中央军委原委员,原国务委员兼国防部长魏凤和受到开除党籍处分), Chinese Com-
munist Party News Network, June 28, 2024. Translation; Xinhua Daily Telegraph, “Li
Shanghu, Wei Fenghe Receive Punishment of Expulsion from the Party” (李尚福,魏凤
和受到开除党籍处分), June 28, 2024. Translation.
33. Shizuka Kuramitsu, “Chinese Military Purge Said to Show Corruption, Weak-
ness,” Arms Control Association, March 2024; Elliot Ji, “Rocket-Powered Corruption:
Why the Missile Industry Became the Target of Xi’s Purge,” War on the Rocks, Jan-
uary 23, 2024; Yukio Tajima, “China’s Military Purge Highlights Persistence of Cor-
ruption,” Nikkei Asia, January 10, 2024; Nectar Gan, “Xi’s Latest Purge Targets the
Military. Why Did Powerful Generals Fall Out of Favor?” CNN, January 5, 2024; Yew
Lun Tian and Laurie Chen, “Chinese Military Purge Exposes Weakness, Could Wid-
en,” Reuters, December 31, 2023.
34. William Zheng, “Dozens of China’s State Regulators, Bankers, Finance Bosses
in Corruption Net as Crackdown Stepped up in New Year,” South China Morning
Post, May 18, 2024.
35. CCP Commission for Discipline Inspection and People’s Republic of China Na-
tional Supervisory Commission, Former Member of the Standing Committee of the
Party Committee of China Railway Construction Corporation Limited, Wang Wen-
zhong, Former Member of the Standing Committee of the Party Committee and Vice
President of China Railway Construction Corporation Limited, is Subject to Disci-
plinary Review and Supervisory Investigation (中国铁道建筑集团有限公司原党委常
委，中国铁建股份有限公司原党委常委、副总裁汪文忠接受纪律审查和监察调查), August
22, 2024. Translation; CCP Commission for Discipline Inspection and People’s Re-
public of China National Supervisory Commission, Zhou Liang, Former Secretary of
the Honggutan District Committee of Nanchang City, Jiangxi Province, is Subject to
Disciplinary Review and Supervisory Investigation (江西省南昌市红谷滩区委原书记周
亮接受纪律审查和监察调查), August 22, 2024. Translation; CCP Commission for Dis-
cipline Inspection and People’s Republic of China National Supervisory Commission,
Dai Shoulun, Former Secretary of the Mudanjiang Municipal Party Committee of Hei-
longjiang Province, is Subject to Disciplinary Review and Supervisory Investigation
(黑龙江省牡丹江市委原书记代守仑接受纪律审查和监察调查), August 22, 2024. Transla-
tion; Zhang Yichuan and Kelley Wang, “Another Mayor of Provincial Capital Falls to
Graft Probe,” Caixin Global, August 7, 2024; CCP Central Commission for Discipline
Inspection and People’s Republic of China National Supervisory Commission, Wen
Zhiming, Party Secretary and Chairman of Jiangxi Railway and Aviation Investment
Group Co., Ltd., Is Subject to Disciplinary Review and Supervisory Investigation (江西
省铁路航空投资集团有限公司党委书记,董事长温治明接受纪律审查和监察调查), July 24,
2024. Translation; CCP Central Commission for Discipline Inspection and People’s
Republic of China National Supervisory Commission, Niu Zhanwen, Vice Chairman
and General Manager of Danda Express Railway Co., Ltd. of the Shenyang Railway
Bureau, is under Review and Investigation (原沈阳铁路局丹大快速铁路有限责任公司副
董事长,总经理牛占文接受审查调查), July 24, 2024. Translation; CCP Central Commis-
sion for Discipline Inspection and People’s Republic of China National Supervisory
Commission, Xu Cheng, Former Deputy Director of the Finance Department of the
Fire and Rescue Bureau of the Ministry of Emergency Management, Is Subject to
Disciplinary Review and Supervision Investigation (应急管理部原消防救援局财务处副
处长徐成接受纪律审查和监察调查), July 23, 2024. Translation.
36. Xiang Kai and Han Wei, “Former Shenzhen Mayor Gets Life Sentence for
Taking $15 Million Bribes,” Caixin Global, August 7, 2024; Huang Yuxin and Kel-
ley Wang, “Former Provincial Senior Official Indicted on Bribery, Illegal Land Sale
Charges,” Caixin Global, August 6, 2024; Bao Zhiming and Han Wei, “Former Boss of
144
Shanghai’s State-Owned Conglomerate Tried for Embezzlement and Bribery,” Caixin
Global, August 6, 2024.
37. Shi Jiangtao, “Ex-Chinese FM Qin Gang Loses Seat at Party Top Table but
May Escape Punishment,” South China Morning Post, July 18, 2024; Wataru Suzu-
ki, “China Plenum Vows Reforms, Accepts Qin Gang Resignation,” Nikkei Asia, July
18, 2024; Sylvie Zhuang, “China’s Ex-Foreign Minister Qin Gang Stripped of Last
Remaining State Title,” South China Morning Post, October 24, 2023; Lingling Wei,
“China’s Former Foreign Minister Ousted after Alleged Affair, Senior Officials Told,”
Wall Street Journal, September 19, 2023; Lingling Wei, “China Tries to Reassure
U.S. amid Speculation around Missing Foreign Minister,” Wall Street Journal, July
19, 2023.
38. Gordon Arthur, “Why China Axed the Strategic Support Force and Reshuffled
the Military,” Defense News, April 26, 2024.
39. Center for Intelligence and Research, “The PLA Strategic Support Force: A
‘Joint’ Force for Information Operations,” June 8, 2024; J. Michael Dahm, “A Dis-
turbance in the Force: The Reorganization of People’s Liberation Army Command
and Elimination of China’s Strategic Support Force,” Jamestown Foundation, April
26, 2024; Brendan S. Mulvaney, “The PLA’s New Information Support Force,” China
Aerospace Studies Institute, April 22, 2024.
40. J. Michael Dahm, “A Disturbance in the Force: The Reorganization of People’s
Liberation Army Command and Elimination of China’s Strategic Support Force,”
Jamestown Foundation, April 26, 2024.
42. China Military Online, “Chinese PLA Embraces a New System of Services and
Arms: Defense Spokesperson,” April 19, 2024.
43. Gordon Arthur, “Why China Axed the Strategic Support Force and Reshuffled
the Military,” Defense News, April 26, 2024.
45. Joel Wuthnow and Phillip C. Saunders, “A New Step Forward in PLA Profes-
sionalization,” Jamestown Foundation, March 15, 2021.
Jamestown Foundation, April 26, 2024; Edmund J. Burke and Arthur Chan, “Coming
to a (New) Theater Near You: Command, Control, and Forces” in Phillip C. Saunders
et al. eds, Chairman Xi Remakes the PLA: Assessing Chinese Military Reforms, Na-
tional Defense University, 2019.
47. China’s Ministry of Foreign Affairs, President Xi Jinping Meets with U.S. Pres-
ident Joe Biden, November 16, 2024; White House, Readout of President Joe Biden’s
Meeting with President Xi Jinping of the People’s Republic of China, November 15,
2023.
48. White House, Readout of President Joe Biden’s Meeting with President Xi Jin-
ping of the People’s Republic of China, November 15, 2023.
49. White House, Readout of President Joe Biden’s Call with President Xi Jinping
of the People’s Republic of China, April 2, 2024; China’s Ministry of Foreign Affairs,
President Xi Jinping Speaks with U.S. President Joe Biden on the Phone, April 2,
2024.
50. U.S. Department of Defense, Readout of Secretary of Defense Lloyd J. Austin
III’s Meeting with People’s Republic of China (PRC) Minister of National Defense
Admiral Dong Jun, May 31, 2024; U.S. Department of State, Secretary Blinken’s Visit
to the People’s Republic of China, April 26, 2024; U.S. Department of State, Secretary
Blinken’s Trip to the People’s Republic of China, April 20, 2024; U.S. Department of
the Treasury, “Press Conference | Secretary Yellen in Beijing, People’s Republic of
China,” YouTube, July 12, 2023; U.S. Department of the Treasury, Secretary of the
Treasury Janet L. Yellen to Travel to the People’s Republic of China, April 2, 2024.
51. U.S. Department of Commerce, Readout of Secretary Raimondo’s Meeting with
Minister of Commerce of China Wang Wentao, January 11, 2024.
52. U.S. International Trade Administration, Readout of Inaugural Meeting of the
U.S.-China Commercial Issues Working Group, April 4, 2024.
54. Graeme Dobell, “US Versus China in Asian Security at Shangri-La Dialogue,”
Australian Strategic Policy Institute, June 3, 2024.
145
55. Eleanor Watson, “U.S. and Chinese Military Commanders Hold Rare Phone
Call to Avoid Miscalculation,” CBS News, September 10, 2024; U.S. Indo-Pacific Com-
mand, “Readout of Commander U.S. Indo-Pacific Command Call with PLA Southern
Theater Commander,” September 9, 2024; Dzirhan Mahadzir, “INDOPACOM: Chi-
na Has Not Responded to U.S. Attempts to Establish Communication,” USNI News,
March 16, 2023.
56. Eleanor Watson, “U.S. and Chinese Military Commanders Hold Rare Phone
Call to Avoid Miscalculation,” CBS News, September 10, 2024; U.S. Indo-Pacific Com-
mand, “Readout of Commander U.S. Indo-Pacific Command Call with PLA Southern
Theater Commander,” September 9, 2024.
57. U.S. Department of Defense, Readout of September 2024 U.S.-PRC Defense Pol-
icy Coordination Talks, September 15, 2024.
58. U.S. Department of Defense, Readout of September 2024 U.S.-PRC Defense Pol-
icy Coordination Talks, September 15, 2024.
59. Brian Spegele, “China Restricts Fentanyl Chemicals after Years of U.S. Pres-
sure,” Wall Street Journal, August 7, 2024; Lauren Greenwood and Kevin Fashola,
“Illicit Fentanyl from China: An Evolving Global Operation,” U.S.-China Economic
and Security Review Commission, August 24, 2021.
60. U.S. White House, Readout of President Joe Biden’s Meeting with President Xi
Jinping of the People’s Republic of China, November 15, 2023.
61. Alexandra Alper and Michael Martina, “Biden Removes Sanctions from Chi-
nese Institute in Push for Fentanyl Help,” Reuters, November 16, 2023; U.S. Depart-
ment of Commerce, “Entity List Removal,” Federal Register, 15 CFR Part 744, No-
vember 17, 2023.
62. U.S. Department of State, Launch of United States-People’s Republic of China
Counternarcotics Working Group, February 1, 2024.
63. U.S. Department of the Treasury, Remarks by Secretary of the Treasury Janet L.
Yellen at Press Conference in Atlanta, Georgia, June 20, 2024; U.S. Department of the
Treasury, Secretary Yellen Announces Sanctions against Top Leaders of Mexico’s La
Nueva Familia Michoacana Drug Cartel, New Fentanyl Advisory, June 20, 2024; U.S.
Department of the Treasury, READOUT: Secretary of the Treasury Janet L. Yellen’s
Bilateral Meeting with the Leadership of the U.S.-People’s Republic of China Econom-
ic and Financial Working Groups, April 16, 2024; U.S. Department of the Treasury,
Remarks by Secretary of the Treasury Janet L. Yellen at a Press Conference in Beijing,
the People’s Republic of China, April 8, 2024.
64. Holly Chik, “US-China Fentanyl Cooperation Deepens as Beijing Tightens
Controls for Precursor Chemicals,” South China Morning Post, August 7, 2024; Bri-
an Spegele, “China Restricts Fentanyl Chemicals after Years of U.S. Pressure,” Wall
Street Journal, August 7, 2024; Demetri Sevastopulo, “China Imposes Restrictions on
Fentanyl Chemicals after Pressure from US,” Financial Times, August 6, 2024.
65. John Coyne and Liam Auliciems, “No, China Isn’t Really Suppressing Its Pro-
duction of Fentanyl Precursors,” Australian Strategic Policy Institute, August 23,
2024; Sharp China, “A Conversation with Rep. Raja Krishnamoorthi on TikTok, Tech
Investment, and Competition between the U.S. and China,” June 26, 2024; Reuters,
“China Halts High-Level Military Dialogue with U.S., Suspends other Cooperation,”
August 5, 2022.
67. White House, Statement from NSC Spokesperson Adrienne Watson on the U.S.-
PRC Talks on AI Risk and Safety, May 15, 2024.
68. Jamey Keaten and Kelvin Chan, “In First AI dialogue, US Cites ‘Misuse’ of AI
by China, Beijing Protests Washington’s Restrictions,” AP News, May 15, 2024; White
House, Statement from NSC Spokesperson Adrienne Watson on the U.S.-PRC Talks on
AI Risk and Safety, May 15, 2024.
71. Embassy of the People’s Republic of China in the United States of America,
Ambassador Xie Feng: The Reaching out to Each other by Our Peoples has Injected
Warmth into the China-U.S. Relationship, May 17, 2024; China’s Ministry of Foreign
Affairs, Chinese Modernization, A Community with a Shared Future for Mankind,
and China-U.S. Relations——Speech by H.E. Ambassador Xie Feng at the Harvard
Kennedy School China Conference 2024, April 21, 2024; Party Building Network,
“Study Language | The Future of China-U.S. Relations is Created by the People” (学
习语丨中美关系的未来是由人民创造的), CCP Central Propaganda Department, April 8,
2024. Translation; Xinhua, “Xi Jinping’s Speech at the Joint Welcome Banquet Host-
146
ed by U.S. Friendly Groups (Full Text)” (习近平在美国友好团体联合欢迎宴会上的演讲
(全文)), November 16, 2023. Translation; Study Strong Country, “Xi Jinping Attends
Joint Welcome Banquet Hosted by U.S. Friendly Groups and Delivered a Speech” (习
近平出席美国友好团体联合欢迎宴会并发表演讲), November 16, 2023. Translation.
72. Jonathan Cheng, “In Rare Rebuke, U.S. Ambassador Accuses China of Under-
mining Diplomacy,” Wall Street Journal, June 25, 2024.
74. Jonathan Cheng, “China Rejects U.S. Ambassador’s Accusation That Beijing Is
Undermining Diplomacy,” Wall Street Journal, June 26, 2024.
ident Joe Biden, November 16, 2024.
76. Xinhua, “Xinhua Commentary | Establish a Correct Strategic Perception—One
of a Series of Commentaries on Promoting the Sustained, Stable, and Healthy De-
velopment of China-U.S. Relations” (新华时评丨树立正确战略认知——推动中美关系持
续稳定健康向前发展系列评论之一), March 28, 2024. Translation; Mo Jingxi, “China-US
Relations Key to World Stability, Envoy Says,” China Daily, March 11, 2024; Xinhua,
“Xinhua Commentary | Maintain the Good Momentum of Increasing China-U.S. In-
teractions” (新华时评｜维护好中美互动增多的好势头), February 3, 2024. Translation.
77. China’s Ministry of Foreign Affairs, President Xi Jinping Speaks with U.S.
President Joe Biden on the Phone, April 2, 2024.
79. Study Strong Country, “Xi Jinping Attends Joint Welcome Banquet Hosted by
U.S. Friendly Groups and Delivered a Speech” (习近平出席美国友好团体联合欢迎宴会
并发表演讲), November 16, 2023. Translation; Xinhua, “Xi Jinping’s Speech at the
Joint Welcome Banquet Hosted by U.S. Friendly Groups” (习近平在美国友好团体联合
欢迎宴会上的演讲(全文)), November 16, 2023. Translation.
80. China Daily, “He Pingli: Strengthen Communication Prevent Misjudgments,
Promote Positive Development of China-U.S. Relations” (和评理 | 加强交流避免误判
推动中美关系向好发展), January 12, 2024. Translation; Xinhua, “Xi Jinping’s Speech
at the Joint Welcome Banquet Hosted by U.S. Friendly Groups” (习近平在美国友好团
体联合欢迎宴会上的演讲(全文)), November 16, 2023. Translation.
81. Xinhua, “Xinhua Commentary | Establish a Correct Strategic Perception—One
of a Series of Commentaries on Promoting the Sustained, Stable, and Healthy Devel-
opment of China-U.S. Relations” (新华时评丨树立正确战略认知——推动中美关系持续稳
定健康向前发展系列评论之一), March 28, 2024. Translation; China Daily, “He Pingli:
Strengthen Communication Prevent Misjudgments, Promote Positive Development
of China-U.S. Relations” (和评理 | 加强交流避免误判推动中美关系向好发展), January
ping of the People’s Republic of China, November 15, 2023; U.S. Department of the
Treasury, Remarks by Secretary of the Treasury Janet L. Yellen at a Press Conference
in Beijing, the People’s Republic of China, April 8, 2024; U.S.-China Economic and
Security Review Commission, Chapter 1, Section 1, “A Global Contest for Power and
Influence: China’s View of Strategic Competition with the United States,” in 2020
Annual Report to Congress, December 2020, 31–79.
83. Elizabeth Economy, “China’s Alternative Order and What America Should
Learn from It,” Foreign Affairs, April 23, 2024; U.S.-China Economic and Security
Review Commission, 2023 Annual Report to Congress, November 2023, 130–132;
U.S.-China Economic and Security Review Commission, 2020 Annual Report to Con-
gress, December 2020, 80–135.
85. CCTV, “International Incisive Commentary | Only By Solving this Fundamen-
tal Problem Can China-US Relations Really Improve” (国际锐评丨解决好这个根本问
题，中美关系才会真正好起来), April 27, 2027. Translation; Liu Xin and Zhang Yuying,
“A Series of Interactions Hint at a Smooth Start for China-US Relations in 2024;
Cautious over Upward Momentum of Ties: Experts,” Global Times, February 7, 2024;
Xinhua, “Xinhua Commentary | Maintain the Good Momentum of Increasing Chi-
na-U.S. Ties” (新华时评｜维护好中美互动增多的好势头), February 3, 2024. Translation;
China Daily, “He Pingli: Strengthen Communication Prevent Misjudgments, Promote
Positive Development of China-U.S. Relations” (和评理 | 加强交流避免误判推动中美关
系向好发展), January 12, 2024. Translation;
147
87. China’s Ministry of National Defense, Dong Jun Holds Talks with US Secretary
of Defense, May 31, 2024. Translation.
88. Sylvie Zhuang, “China Calls of Arms Control Talks with US over Weapon Sales
to Taiwan,” South China Morning Post, July 17, 2024; China’s Ministry of Foreign
Affairs, Regular Press Conference by Ministry of Foreign Affairs Spokesperson Lin
Jian on July 17, 2024 (2024年7月17日外交部发言人林剑主持例行记者会), July 17,
2024. Translation.
ident Joe Biden, November 16, 2024; White House, Readout of President Joe Biden’s
Meeting with President Xi Jinping of the People’s Republic of China, November 15,
2023.
91. China’s Ministry of Foreign Affairs, Chinese Modernization, A Community with
a Shared Future for Mankind, and China-U.S. Relations——Speech by H.E. Ambas-
sador Xie Feng at the Harvard Kennedy School China Conference 2024, April 21,
2024; Mo Jingxi, “China-US Relations Key to World Stability, Envoy Says,” China
Daily, March 11, 2024; Liu Xin and Zhang Yuying, “A Series of Interactions Hint at
a Smooth Start for China-US Relations in 2024; Cautious over Upward Momentum
of Ties: Experts,” Global Times, February 7, 2024; Ma Xuejing, “Experts’ Takes on
China-US Relations,” China Daily, November 20, 2023.
92. Liu Xin and Zhang Yuying, “A Series of Interactions Hint at a Smooth Start
for China-US Relations in 2024; Cautious Over Upward Momentum of Ties: Experts,”
Global Times, February 7, 2024; Xinhua, “Xinhua Commentary | Maintain the Good
Momentum of Increasing China-U.S. Ties” (新华时评｜维护好中美互动增多的好势头),
February 3, 2024. Translation; China Daily, “He Pingli: Strengthen Communication
Prevent Misjudgments, Promote Positive Development of China-U.S. Relations” (和评
理 | 加强交流避免误判推动中美关系向好发展), January 12, 2024. Translation; China’s
Ministry of Foreign Affairs, President Xi Jinping Meets with U.S. President Joe Biden,
November 16, 2024; White House, Readout of President Joe Biden’s Meeting with
President Xi Jinping of the People’s Republic of China, November 15, 2023.
94. China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Mao Ning’s
Regular Press Conference on April 12, 2024, April 12, 2024.
95. U.S. Cybersecurity and Infrastructure Security Agency, PRC State-Sponsored
Actors Compromise and Maintain Persistent Access to U.S. Critical Infrastructure,
February 7, 2024.
96. U.S. Department of the Treasury, Treasury Sanctions China-Linked Hackers for
Targeting U.S. Critical Infrastructure, March 25, 2024.
97. U.S. Federal Bureau of Investigation, Chinese Government Poses ‘Broad and
Unrelenting’ Threat to U.S. Critical Infrastructure, FBI Director Says, April 18, 2024.
98. U.S. Federal Bureau of Investigation, Chinese Government Poses ‘Broad and
Unrelenting’ Threat to U.S. Critical Infrastructure, FBI Director Says, April 18, 2024.
99. White House, National Security Memorandum on Critical Infrastructure Secu-
rity and Resilience, April 30, 2024.
100. White House, National Security Memorandum on Critical Infrastructure Se-
curity and Resilience, April 30, 2024.
101. U.S. Department of Homeland Security, Secretary Mayorkas Outlines National
Priorities for Critical Infrastructure Security and Resilience for Next Two Years, June
20, 2024.
102. U.S. Cybersecurity and Infrastructure Security Agency, People’s Republic of
China (PRC) Ministry of State Security APT40 Tradecraft in Action, July 8, 2024.
103. Rebecca Tan and Vic Chiang, “China Courts Developing Nations in its Push to
Build a New World Order,” Washington Post, August 10, 2024; Mercy A. Kuo, “China’s
Rise in the Global South,” Diplomat, June 24, 2024; Michael Schuman, “Why China
Won’t Win the Global South,” Atlantic Council, October 16, 2023; U.S.-China Econom-
ic and Security Review Commission, Chapter 1, Section 2, “China’s Influence in Latin
America and the Caribbean,” in 2021 Annual Report to Congress, November 2021;
U.S.-China Economic and Security Review Commission, Chapter 1, Section 3, “Chi-
na’s Strategic Aims in Africa,” in 2020 Annual Report to Congress, December 2020;
U.S.-China Economic and Security Review Commission, Chapter 1, Section 2, “The
China Model: Return of the Middle Kingdom,” in 2020 Annual Report to Congress,
December 2020; U.S.-China Economic and Security Review Commission, Chapter 1,
Section 1, “A Global Contest for Power and Influence: China’s View of Strategic Com-
petition with the United States,” in 2020 Annual Report to Congress, December 2020,
148
38–40; State Council Information Office of the People’s Republic of China, White Pa-
per: China and the World in the New Era, October 17, 2019.
104. Rebecca Tan and Vic Chiang, “China Courts Developing Nations in its Push
to Build a New World Order,” Washington Post, August 10, 2024; Mercy A. Kuo, “Chi-
na’s Rise in the Global South,” Diplomat, June 24, 2024; U.S.-China Economic and
Security Review Commission, Chapter 1, Section 2, “U.S.-China Security and Foreign
Affairs,” in 2023 Annual Report to Congress, November 2023, 130–132; Xinhua, “Xi’s
Remarks on Strengthening Cooperation between China, LAC Countries,” December
4, 2021; U.S.-China Economic and Security Review Commission, Chapter 1, Section
2, “The China Model: Return of the Middle Kingdom,” in 2020 Annual Report to Con-
gress, December 2020; State Council Information Office of the People’s Republic of
China, White Paper: China and the World in the New Era, October 17, 2019; Belt and
Road Portal, “The Belt and Road Initiative Progress, Contributions, and Prospects,”
April 22, 2019; Xinhua, “Full Text of China’s Arab Policy Paper,” State Council of the
People’s Republic of China, January 13, 2016.
to Build a New World Order,” Washington Post, August 10, 2024; Mercy A. Kuo, “Chi-
na’s Rise in the Global South,” Diplomat, June 24, 2024; U.S.-China Economic and
Security Review Commission, Chapter 1, Section 2, “U.S.-China Security and Foreign
Affairs,” in 2023 Annual Report to Congress, November 2023, 130–132; U.S.-China
Economic and Security Review Commission, Chapter 1, Section 2, “The China Model:
Return of the Middle Kingdom,” in 2020 Annual Report to Congress, December 2020.
106. China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Lin Jian’s
Regular Press Convergence on July 17, 2024, July 17, 2024; Huang Bing, “China and
the Global South Write a New Chapter of Development” (中国与全球南方共谱发展新
篇章), China Military Online, June 3, 2024. Translation; Xinhua, “Xinhua Headlines:
China-Arab States Cooperation Accelerates Building of Community with Shared
Future,” May 31, 2024; China’s Ministry of Foreign Affairs, “Wang Yi: Chinese and
African Leaders Will Gather in Beijing Again to Discuss Future Development and
Cooperation,” March 7, 2024; Xinhua, “Xi’s Remarks on Strengthening Cooperation
between China, LAC Countries,” December 4, 2021; State Council Information Office
of the People’s Republic of China, China and Africa in the New Era: A Partnership of
Equals, November 2021; Belt and Road Portal, “The Belt and Road Initiative Prog-
ress, Contributions, and Prospects,” April 22, 2019; Xinhua, “Full Text of China’s Arab
Policy Paper,” State Council of the People’s Republic of China, January 13, 2016.
Regular Press Convergence on July 17, 2024, July 17, 2024; China Media Group In-
ternational, “[Institute: China and the World] Xi Jinping: China Has Always Been
a Member of the “Global South” and Will Always Be a Developing Country” (【讲
习所·中国与世界】习近平: 中国始终是“全球南方”的一员，永远属于发展中国家), People’s
Daily, June 13, 2024. Translation; Xi Jinping, “Carrying Forward the Five Principles
of Peaceful Coexistence and Jointly Building a Community with a Shared Future
for Mankind,” China’s Ministry of Foreign Affairs, June 28, 2024; Xinhua, “Xi Jin-
ping’s Speech at the Commemoration of the 70th Anniversary of the Five Principles
of Peaceful Coexistence” (习近平在和平共处五项原则发表70周年纪念大会上的讲话(全
文)), People’s Daily, June 28, 2024. Translation; Huang Bing, “China and the Global
South Write a New Chapter of Development” (中国与全球南方共谱发展新篇章), China
Military Online, June 3, 2024. Translation; Xinhua, “Xinhua Headlines: China-Arab
States Cooperation Accelerates Building of Community with Shared Future,” May
31, 2024; Liu Jianchao, “Follow the Major Historical Trend, Join Hands to Promote
Solidarity and Cooperation in the Global South” (顺应历史大势携手推进全球南方团
结合作), Qiushi, March 16, 2024. Translation; China’s Ministry of Foreign Affairs,
Wang Yi: Chinese and African Leaders Will Gather in Beijing Again to Discuss Future
Development and Cooperation, March 7, 2024; Zhao Yusha, “Chinese FM’s Trips to
Africa, LatAm Highlight Beijing’s Ties with Global South,” Global Times, January 21,
2024; Xinhua, “Xinhua Commentary: The Global South Shares a Common Destiny” (
新华时评: “全球南方”同呼吸共命运), August 23, 2023. Translation; Xinhua, “Xi’s Re-
marks on Strengthening Cooperation between China, LAC Countries,” December 4,
2021; State Council Information Office of the People’s Republic of China, China and
Africa in the New Era: A Partnership of Equals, November 2021; Xinhua, “China Al-
ways Breathes Same Air, Shares Common Destiny with Developing Countries: FM,”
July 20, 2021; State Council Information Office of the People’s Republic of China,
White Paper: China and the World in the New Era, October 17, 2019; Xinhua, “Full
Text of China’s Arab Policy Paper,” State Council of the People’s Republic of China,
January 13, 2016.
Regular Press Convergence on July 17, 2024, July 17, 2024; China Media Group In-
149
ternational, “[Institute: China and the World] Xi Jinping: China Has Always Been a
Member of the ‘Global South’ and Will Always be a Developing Country” (【讲习所·
中国与世界】习近平: 中国始终是“全球南方”的一员，永远属于发展中国家), People’s Daily,
June 13, 2024. Translation; Huang Bing, “China and the Global South Write a New
Chapter of Development” (中国与全球南方共谱发展新篇章), China Military Online,
June 3, 2024. Translation; Xinhua, “Xinhua Headlines: China-Arab States Coopera-
tion Accelerates Building of Community with Shared Future,” May 31, 2024; China’s
Ministry of Foreign Affairs, Wang Yi: Chinese and African Leaders Will Gather in
Beijing Again to Discuss Future Development and Cooperation, March 7, 2024; Xin-
hua, “Xinhua Commentary: The Global South Shares a Common Destiny” (新华时评:
“全球南方” 同呼吸共命运), August 23, 2023. Translation; Xinhua, “Xi’s Remarks on
Strengthening Cooperation between China, LAC Countries,” December 4, 2021; State
Council Information Office of the People’s Republic of China, China and Africa in the
New Era: A Partnership of Equals, November 2021; Xinhua, “China Always Breathes
Same Air, Shares Common Destiny with Developing Countries: FM,” July 20, 2021;
State Council Information Office of the People’s Republic of China, White Paper: Chi-
na and the World in the New Era, October 17, 2019; Xinhua, “Full Text of China’s
Arab Policy Paper,” State Council of the People’s Republic of China, January 13, 2016.
to Build a New World Order,” Washington Post, August 10, 2024; World Bank Group,
“World Bank Group Launches High Level Council to Tackle Looming Jobs Crisis,”
August 12, 2024; Ken Moriyasu, “China Presses Global South Leaders to Support
Taiwan ‘Reunification,’ ” Nikkei Asia, June 24, 2024; Margaret Meyers, “Is China the
Leader of the Global South?” Dialogue, November 2, 2023; United Nations, “Coop-
eration across Global South, Key to Reaching SDGs,” September 12, 2023; Steward
Patrick and Alexandra Huggins, “The Term ‘Global South’ Is Surging. It Should be
Retired.” Carnegie Endowment for International Peace, August 15, 2023; David Ris-
ing, “Everyone’s Talking about the Global South. But What Is It?” AP News, Sep-
tember 7, 2023; Li Yan, “Where Did the Term ‘Global South’ Originate?” China-US
Focus, September 21, 2023; Zhao Minghao, “The Global South, the Global East, and
U.S.-China Rivalry,” China-US Focus, August 22, 2023,; White House, Remarks by
President Biden and Prime Minister Modi of the Republic of India in Joint Press
Conference, June 22, 2023; G77, “Statement on Behalf of the Group of 77 and China
by Ambassador Pedro L. Pedroso Cuesta, Permanent Representative of Cuba to the
United Nations, at Briefing by the Secretary General on His Priorities for 2023 (New
York, 6 February 2023)”; United Nations, “What Is South-South Cooperation’ and
Why Does It Matter?”.
110. Erica Hogan and Stewart Patrick, “A Closer Look at the Global South,” Carn-
egie Endowment for International Peace, May 20, 2024;
111. China Media Group International, “[Institute: China and the World] Xi Jin-
ping: China Has Always Been a Member of the “Global South” and Will Always Be
a Developing Country” (【讲习所·中国与世界】习近平: 中国始终是“全球南方”的一员，永
远属于发展中国家), People’s Daily, June 13, 2024. Translation; Graham Kanwit, “Is
China Still a Developing Country?” Voice of America, August 28, 2023; World Bank
Data Team, “Changes in Country Classifications,” World Bank Blogs, July 1, 2011;
UN Development Programme, “About China.”
112. Mihir Sharma, “Is China a Developing Nation? I Don’t Think So,” Bloomberg,
September 3, 2024; Graham Kanwit, “Is China Still a Developing Country?” Voice
of America, August 28, 2023; Mark A. Green, “China Still Gets ‘Developing Nation’
Preferential Treatment,” Wilson Center, June 20, 2023; Lin Yang, “China: We’re Still
a Developing Nation. US Lawmakers: No Way,” Voice of America, April 8, 2023; Ve-
ronika Ertl and David Merkle, “China: A Developing Country as a Global Power?”
Konrad Adenauer Stiftung, November 15, 2019; Amanda Lee, “China Refuses to Give
Up ‘Developing Country Status at WTO despite US Demands, South China Morning
113. People’s Daily, “Central Foreign Affairs Work Conference Held in Beijing: Xi
Jinping Delivered an Important Speech. Zhao Leji, Wang Huning, Cai Qi, Ding Xuex-
iang, Li Xi and Han Zheng Attended the Meeting” (中央外事工作会议在北京举行: 习
近平发表重要讲话李强主持赵乐际王沪宁蔡奇丁薛祥李希韩正出席会议), December 29,
2023. Translation; Xinhua, “Central Conference on Work Relating to Foreign Affairs
Held in Beijing,” December 28, 2023.
2023. Translation.
150
115. Xinhua, “China’s Top Diplomat Presents Diplomatic Goals for 2024,” January
9, 2024.
116. Embassy of the People’s Republic of China in the United States of America,
Wang Yi: We Firmly Choose Solidarity over Division, January 9, 2024.
117. Wang Yi, “Deeply Implement the Spirit of the Central Foreign Affairs Work
Conference and Continue to Create a New Situation in Major-Country Diplomacy
with Chinese Characteristics” (深入贯彻中央外事工作会议精神不断开创中国特色大国
外交新局面), Qiushi, January 16, 2024. Translation; People’s Daily, “Central Foreign
Affairs Work Conference Held in Beijing: Xi Jinping Delivered an Important Speech.
Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang, Li Xi and Han Zheng Attended the
Meeting” (中央外事工作会议在北京举行: 习近平发表重要讲话李强主持赵乐际王沪宁蔡
奇丁薛祥李希韩正出席会议), December 29, 2023. Translation.
with Chinese Characteristics” (深入贯彻中央外事工作会议精神不断开创中国特色大国
外交新局面), Qiushi, January 16, 2024. Translation; People’s Daily, “Central Foreign
Affairs Work Conference Held in Beijing: Xi Jinping Delivered an Important Speech.
奇丁薛祥李希韩正出席会议), December 29, 2023. Translation.
2023. Translation.
with Chinese Characteristics” (深入贯彻中央外事工作会议精神不断开创中国特色大国外
交新局面), Qiushi, January 16, 2024. Translation.
121. Xinhua, “Boao Forum 2024 Concludes on Successful Note,” March 29, 2024;
People’s Daily, “Zhao Leji Attends the Opening Ceremony of the Boao Forum for Asia
Annual Conference 2024 and Delivers a Keynote Speech” (赵乐际出席博鳌亚洲论坛
2024年年会开幕式并发表主旨演讲), March 29, 2024. Translation.
122. China’s Ministry of Foreign Affairs, Wang Yi’s Speech at the Meeting of the
Council of Foreign Ministers of the Shanghai Cooperation Organization Member
States (王毅在上海合作组织成员国外长理事会会议上的讲话), May 21, 2014. Translation.
123. China’s Ministry of Foreign Affairs, Wang Yi’s Speech at the Meeting of the
Council of Foreign Ministers of the Shanghai Cooperation Organization Member
States (王毅在上海合作组织成员国外长理事会会议上的讲话), May 21, 2014. Translation.
124. Graeme Dobell, “US Versus China in Asian Security at Shangri-La Dialogue,”
Australian Strategic Policy Institute, June 3, 2024; Xinhua, “China’s Global Security
Vision Resonates at the Shangri-La Dialogue” (中国全球安全观在香格里拉对话会上引
发共鸣), People’s Government of the People’s Republic of China, June 4, 2024. Trans-
lation.
125. Xinhua, “China’s Global Security Vision Resonates at the Shangri-La Dia-
logue” (中国全球安全观在香格里拉对话会上引发共鸣), People’s Government of the Peo-
ple’s Republic of China, June 4, 2024. Translation; Graeme Dobell, “US Versus China
in Asian Security at Shangri-La Dialogue,” Australian Strategic Policy Institute, June
3, 2024; Dong Jun, “China’s Approach to Global Security,” International Institute for
Strategic Studies, June 2, 2024.
126. Xi Jinping, “Carrying Forward the Five Principles of Peaceful Coexistence and
Jointly Building a Community with a Shared Future for Mankind,” China’s Ministry
of Foreign Affairs, June 28, 2024; Xinhua, “Xi Jinping’s Speech at the Commemora-
tion of the 70th Anniversary of the Five Principles of Peaceful Coexistence” (习近平
在和平共处五项原则发表70周年纪念大会上的讲话(全文)), People’s Daily, June 28, 2024.
Translation.
127. Liu Jianchao, “Follow the Major Historical Trend, Join Hands to Promote
Solidarity and Cooperation in the Global South” (顺应历史大势携手推进全球南方团
结合作), Qiushi, March 16, 2024. Translation; People’s Daily, “Central Foreign Affairs
Work Conference Held in Beijing: Xi Jinping Delivered an Important Speech. Zhao
Leji, Wang Huning, Cai Qi, Ding Xuexiang, Li Xi and Han Zheng Attended the Meet-
ing” (中央外事工作会议在北京举行: 习近平发表重要讲话李强主持赵乐际王沪宁蔡奇丁薛
祥李希韩正出席会议), December 29, 2023. Translation.
128. Liu Jianchao, “Follow the Major Historical Trend, Join Hands to Promote Sol-
idarity and Cooperation in the Global South” (顺应历史大势携手推进全球南方团结合
作), Qiushi, March 16, 2024. Translation.
151
129. Liu Jianchao, “Follow the Major Historical Trend, Join Hands to Promote Sol-
idarity and Cooperation in the Global South” (顺应历史大势携手推进全球南方团结合
作), Qiushi, March 16, 2024. Translation.
Translation.
Translation.
132. Shi Jiangtao, “Putin’s China Visit Confirms West’s Worst Fears about Emerg-
ing Beijing-Moscow Axis,” South China Morning Post, May 21, 2024; Manoj Kewalra-
mani, “Breakdown of Xi-Putin Meeting & China-Russia Joint Statement,” Tracking
People’s Daily, May 16, 2024; Bernard Orr, Guy Faulconbridge, and Andrew Osborn,
“Putin and Xi Pledge a New Era and Condemn the United States,” Reuters, May 16,
2024.
133. Shi Jiangtao, “Putin’s China Visit Confirms West’s Worst Fears about Emerg-
ing Beijing-Moscow Axis,” South China Morning Post, May 21, 2024; Government
of China, Joint Statement of the People’s Republic of China and the Russian Feder-
ation on Deepening the Comprehensive Strategic Partnership of Coordination in the
New Era on the Occasion of the 75th Anniversary of the Establishment of Diplomatic
Relations between the Two Countries (Full Text) (中华人民共和国和俄罗斯联邦在两国
建交75周年之际关于深化新时代全面战略协作伙伴关系的联合声明(全文)), May 16, 2024.
Translation.
134. Government of China, Joint Statement of the People’s Republic of China and
the Russian Federation on Deepening the Comprehensive Strategic Partnership of
Coordination in the New Era on the Occasion of the 75th Anniversary of the Estab-
lishment of Diplomatic Relations between the Two Countries (Full Text) (中华人民共
和国和俄罗斯联邦在两国建交75周年之际关于深化新时代全面战略协作伙伴关系的联合声
明(全文)), May 16, 2024. Translation; Manoj Kewalramani, “Breakdown of Xi-Putin
Meeting & China-Russia Joint Statement,” Tracking People’s Daily, May 16, 2024.
the Russian Federation on Deepening the Comprehensive Strategic Partnership of Co-
ordination in the New Era on the Occasion of the 75th Anniversary of the Establish-
ment of Diplomatic Relations between the Two Countries (Full Text) (中华人民共和国
和俄罗斯联邦在两国建交75周年之际关于深化新时代全面战略协作伙伴关系的联合声明(全
文)), May 16, 2024. Translation.
137. Hyung-Jin Kim, “Suspected North Korean Hypersonic Missile Exploded in
Flight, South Korea Says,” AP News, June 26, 2024; Government of China, Joint
Statement of the People’s Republic of China and the Russian Federation on Deepening
the Comprehensive Strategic Partnership of Coordination in the New Era on the Oc-
casion of the 75th Anniversary of the Establishment of Diplomatic Relations between
the Two Countries (Full Text) (中华人民共和国和俄罗斯联邦在两国建交75周年之际关于
深化新时代全面战略协作伙伴关系的联合声明(全文)), May 16, 2024. Translation; Vann
H. Van Diepen, “North Korea Emphasizes Theater Strike Missiles in the First Third
of 2024,” Stimson Center, May 1, 2024.
152
140. Global Times, “Nature of China-Russia Naval Drills Fundamentally Differs
from That of US-Led Exercises,” China Military Online, July 16, 2024; AP News,
“China, Russia Start Joint Naval Drills, Days after NATO Allies Called Beijing a
Ukraine War Enabler,” July 15, 2024; Xinhua, “China-Russia Joint Naval Exercise
Kicks Off,” July 14, 2024.
141. Tomasz Grootnik, “Ocean-2024—Russian Navy Flexes Its Muscles, China As-
sists,” Naval News, September 13, 2024; Dzirhan Mahadzir, “Russia, China Kick Off
Large Scale Naval Exercise, USNI News, September 11, 2024; William Yang, “Rus-
sia, China Kick Off Joint Military Exercises, Challenging US-Led Coalition,” Voice
of America, September 10, 2024; Associated Press, “Russia Launches Massive Naval
Drills with China,” Defense News, September 10, 2024.
142. Reuters, “Russia and China Start Naval Exercises in Sea of Japan, Agencies
Report,” September 21, 2024; Xinhua, “Russia to Join China in Military Drills,” Sep-
tember 9, 2024; AP News, “China Announces Joint Naval, Air Drills with Russia,”
September 9, 2024.
143. Manoj Kewalramani, “Breakdown of Xi-Putin Meeting & China-Russia Joint
Statement,” Tracking People’s Daily, May 16, 2024.
144. Temur Umarov and Nargis Kassenova, “China and Russia’s Overlapping In-
terests in Central Asia,” Carnegie Endowment for International Peace, February 22,
2024; China Power Project, “What are the Weaknesses of the China-Russia Relation-
ship?” Center for Strategic and International Studies, June 29, 2022.
145. Alexander Gabuev, “Putin and Xi’s Unholy Alliance,” Foreign Affairs, April
9, 2024; Alexander Gabuev, “China’s New Vassal,” Foreign Affairs, August 9, 2022;
gress, November 2019, 327–328;
146. Max Seddon, et al., “Xi Jinping Warned Vladimir Putin against Nuclear At-
tack in Ukraine,” Financial Times, July 5, 2023.
147. Laura Bicker, “China-Russia Relations: What is Xi Jinping Prepared to Pay
for Putin’s War?” BBC, May 15, 2024.
148. Keith Bradsher and Anatoly Kurmanaev, “How China and Russia Compete,
and Cooperate, in Central Asia,” New York Times, July 4, 2024; Marc Lanteigne, “A
China-Russia Arctic Alliance? Not So Fast.,” Diplomat, February 21, 2024; U.S.-China
Economic and Security Review Commission, 2019 Annual Report to Congress, Novem-
ber 2019, 327–330; 335–342.
149. Max Seddon, et.al., “Russia-China Gas Pipeline Deal Stalls Over Beijing’s
Price Demands,” Financial Times, June 2, 2024; Anna Galtsova and Tianshi Huang,
“ ‘New’ Gas from Russia to China via Power of Siberia-2 Pipeline: New Route and
New Strategic Opportunities,” S&P Global, July 16, 2020.
150. Max Seddon, et.al., “Russia-China Gas Pipeline Deal Stalls over Beijing’s
Price Demands,” Financial Times, June 2, 2024.
Price Demands,” Financial Times, June 2, 2024.
Price Demands,” Financial Times, June 2, 2024; Reuters, “Explainer: Does China
Need More Russia Gas via the Power-of-Siberia 2 Pipeline?” March 22, 2023.
153. North Atlantic Treaty Organization, Washington Summit Declaration, July
10, 2024.
sion of Ukraine,” Atlantic Council, June 18, 2024; Demetri Sevastopulo, Guy Chazan,
and Sam Jones, “U.S. Says China Is Supplying Missile and Drone Engines to Russia,”
Financial Times, April 12, 2024; Gleb Stolyarov, “As Trade with China Booms, Some
Russian Companies Are Flourishing,” Reuters, March 13, 2024.
155. United States Senate, Hearing to Receive Testimony on Worldwide Threats,
May 2, 2024, 68.
156. Igor Patrick and Robert Delaney, “US, EU Raise Alarm over China’s ‘Very
Substantial’ Support for Russia in Ukraine War,” South China Morning Post, Septem-
ber 12, 2024; U.S. Department of State, “Joint Press Release on the U.S.-EU Dialogue
on China and Indo-Pacific Consultations,” September 11, 2024; Henry Foy, et.al., “US
Accuses China of Directly Supporting Russia’s ‘War Machine,’ ” Financial Times, Sep-
tember 10, 2024.
157. Igor Patrick and Robert Delaney, “US, EU Raise Alarm over China’s ‘Very
Substantial’ Support for Russia in Ukraine War,” South China Morning Post, Septem-
ber 12, 2024; U.S. Department of State, “Joint Press Release on the U.S.-EU Dialogue
on China and Indo-Pacific Consultations,” September 11, 2024; Henry Foy, et.al., “US
153
Accuses China of Directly Supporting Russia’s ‘War Machine,’ ” Financial Times, Sep-
tember 10, 2024.
158. Henry Foy, et.al., “US Accuses China of Directly Supporting Russia’s ‘War Ma-
chine,’ ” Financial Times, September 10, 2024.
159. China’s Ministry of Foreign Affairs, Foreign Minister Spokesperson Lin Jian’s
Regular Press Conference on June 19, 2024, June 19, 2024.
160. Demetri Sevastopulo, Guy Chazan, and Sam Jones, “U.S. Says China Is Sup-
plying Missile and Drone Engines to Russia,” Financial Times, April 12, 2024.
161. Demetri Sevastopulo, Guy Chazan, and Sam Jones, “U.S. Says China Is Sup-
plying Missile and Drone Engines to Russia,” Financial Times, April 12, 2024.
162. U.S. Department of State, Imposing New Measures on Russia for Its Full-Scale
War and Use of Chemical Weapons against Ukraine, May 1, 2024; Alan Rappeport,
“U.S. Imposes Sanctions on Chinese Companies Aiding Russia’s War Effort,” New
York Times, May 1, 2024.
163. U.S. Department of State, Imposing New Measures on Russia for Its Full-Scale
War and Use of Chemical Weapons against Ukraine, May 1, 2024.
164. U.S. Department of the Treasury, As Russia Completes Transition to a Full
War Economy, Treasury Takes Sweeping Aim at Foundational Financial Infrastruc-
ture and Access to Third Country Support, June 12, 2024.
167. Julia Payne, “Ukraine Says China is Key Route for Foreign Tech in Russian
Weapons,” Reuters, September 24, 2024.
168. U.S. Department of Commerce, Bureau of Industry and Security, “Addition of
Entities to and Revision of Entry on the Entity List,” Federal Register 15 CFR Part
744 (April 19, 2024).
169. U.S. Department of Commerce, Bureau of Industry and Security, “Additions of
Entities to the Entity List,” Federal Register 15 CFR Part 744 (May 14, 2024).
170. U.S. Department of Commerce, Bureau of Industry and Security, “Revisions to
the Entity List,” Federal Register 15 CFR Part 7y44 (August 27, 2024); U.S. Depart-
ment of Commerce, Commerce Tightens Export Controls, Targets Illicit Procurement
Networks For Supplying Russian War Machine, August 23, 2024.
171. Bernard Orr, Guy Faulconbridge, and Andrew Osborn, “Putin and Xi Pledge
a New Era and Condemn the United States,” Reuters, May 16, 2024; Nataliya Bu-
tyrska, “China Probes the Ground for Negotiations in the Russian-Ukrainian War,”
China Observers in Central and Eastern Europe, March 14, 2024; Zhou Jin, “Beijing’s
Efforts Seen as Key to Resolving Crisis,” China Daily, March 12, 2024.
172. China’s Ministry of Foreign Affairs, Special Representative of the Chinese
Government on Eurasian Affairs Li Hui Holds a Briefing on the Second Round
of Shuttle Diplomacy on the Ukraine Crisis, March 22, 2024; François Chimits,
Yurii Poita, and Grzegorz Stec, “Li Hui’s Europe Tour 2.0 + Beijing’s Mediation
as Seen from Kyiv + Market Distortions,” Mercator Institute for China Studies,
March 21, 2024.
173. China’s Ministry of Foreign Affairs, Special Representative of the Chinese Gov-
ernment on Eurasian Affairs Li Hui Holds a Briefing on the Second Round of Shuttle
Diplomacy on the Ukraine Crisis, March 22, 2024; Zhou Jin, “Beijing’s Efforts Seen
as Key to Resolving Crisis,” China Daily, March 12, 2024.
174. Reuters, “Moscow Says Russia, China Agree That Russia Must Be Present in
Ukraine Talks,” March 3, 2024.
175. Finbarr Bermingham, “EU Locks Horns with China’s Envoy on Ukraine, as
Schisms on War Remain,” South China Morning Post, March 6, 2024.
178. China’s Ministry of Foreign Affairs, Special Representative of the Chinese Gov-
ernment on Eurasian Affairs Li Hui Holds Talks with Officials of the European Exter-
nal Action Service, March 5, 2024; European Neighbourhood Policy and Enlargement
Negotiations, “EU Adopts 13th Package of Sanctions against Russia after Two Years
of Its War of Aggression against Ukraine,” February 23, 2024; Julia Payne, Andrew
Gray, and Gabriela Baczynska, “EU Approves New Sanctions Package against Rus-
sia,” Reuters, February 21, 2024.
154
179. China’s Ministry of Foreign Affairs, Special Representative of the Chinese
Government on Eurasian Affairs Li Hui Holds Talks with Officials of the European
External Action Service, March 5, 2024.
180. Viking Bohman, Patrik Andersson, and Hugo Von Essen, “Final Blow to Chi-
nese ‘Neutrality’ on Ukraine War,” Politico, June 19, 2024; China’s Ministry of Foreign
Affairs, Wang Yi Elaborates on China’s Position on Ukraine Crisis, February 18, 2024.
Regular Press Conference on May 31, 2024, May 31, 2024.
182. Laurie Chen and Liz Lee, “Exclusive: China Pushes Rival Ukraine Peace Plan
before Swiss Summit, Diplomats Say,” Reuters, June 14, 2024; Government of Brazil,
Brazil and China Present Joint Proposal for Peace Negotiations with the Participa-
tion of Russia and Ukraine, May 23, 2024.
183. Laurie Chen and Liz Lee, “Exclusive: China Pushes Rival Ukraine Peace Plan
before Swiss Summit, Diplomats Say,” Reuters, June 14, 2024; Reuters, “China Could
Arrange Russia-Ukraine Peace Conference, Lavrov Tells RIA,” May 29, 2024.
184. Reuters, “China Could Arrange Russia-Ukraine Peace Conference, Lavrov
Tells RIA,” May 29, 2024.
185. China’s Ministry of Foreign Affairs, “Foreign Ministry Spokesperson Wang
Wenbin’s Regular Press Conference on May 13, 2024,” May 13, 2024; Global Times,
“Chinese FM Reveals Details of Third Round of Shuttle Diplomacy over Ukraine
Crisis,” May 10, 2024.
186. Xinhua, “China’s Top Diplomat Presents Diplomatic Goals for 2024,” January
9, 2024.
187. Xinhua, “First Observation | Why Xi Jinping Emphasizes the ‘Strategic Sig-
nificance’ and ‘World Impact’ of China-EU Relations” (第一观察｜习近平主席为何强调
中欧关系“战略意义”和“世界影响”), December 8, 2023. Translation.
中欧关系“战略意义”和“世界影响”), December 8, 2023. Translation; European External
Action Service, EU China Relations Factsheet, July 12, 2023.
191. China’s Consulate-General in Strasbourg, Full Text of the Keynote Speech by
Consul General Pan Yumin at the European Circle Association’s “China-EU Relations”
Theme Exchange Meeting, “China Is a Reliable Partner of France and Europe, and
Win-Win Cooperation is the Key to a Better Future” (潘昱旻总领事在欧洲圈协会“中欧
关系”主题交流会上的主旨发言《中国是法国, 也是欧洲可信赖的伙伴, 合作共赢才是美好未
来》全文), March 22, 2024. Translation; Xinhua, “China Vows to be Staunch Force for
Peace, Stability, Progress,” State Council of the People’s Republic of China, March 8,
2024; Li Yi, “Wang Yi: As Long as China and Europe Cooperate for Mutual Benefit,
There will be No Confrontation between the Two Camps” (王毅: 只要中欧互利合作，
阵营对抗就搞不起来), March 7, 2024. Translation; People’s Daily, “Central Foreign Af-
fairs Work Conference Held in Beijing: Xi Jinping Delivered an Important Speech.
奇丁薛祥李希韩正出席会议), December 29, 2023. Translation; Xinhua, “First Observa-
tion | Why Xi Jinping Emphasizes the ‘Strategic Significance’ and ‘World Impact’ of
China-EU Relations” (第一观察｜习近平主席为何强调中欧关系“战略意义”和“世界影响”),
December 8, 2023. Translation.
192. He Yin, “Promote the Healthy and Stable Development of China-Europe Rela-
tions” (促进中欧关系健康稳定发展), People’s Daily in Qiushi, May 5, 2024. Translation.
193. Andrew Scobell et al., “In Europe, Xi Looks to Boost Ties—and Sow Divi-
sions,” United States Institute of Peace, May 16, 2024; Zhu Zhongbo, “Gathering Stra-
tegic Consensus, China-EU Cooperation Sets Off Again” (凝聚战略共识,中欧合作再出
发), Guangming Daily in Qiushi, May 12, 2024. Translation; He Yin, “Promote the
Healthy and Stable Development of China-Europe Relations” (促进中欧关系健康稳定
发展), People’s Daily in Qiushi, May 5, 2024. Translation; Mailys Pene-Lassus, “Xi Jin-
ping’s Trip to Europe to Center on Trade as Challenges ‘Pile Up,’ ” Nikkei Asia, May 3,
2024; Strait Times, “Xi on a Mission to Convince Europe It Can Offer More Economic
Opportunities than US,” April 30, 2024; Reuters, “China’s Xi to Visit France, Serbia
and Hungary, Aims to Boost EU Ties,” April 29, 2024.
194. Strait Times, “Xi on a Mission to Convince Europe It Can Offer More Econom-
ic Opportunities than US,” April 30, 2024.
155
195. China’s Ministry of Foreign Affairs, President Xi Jinping Holds China-France-
EU Trilateral Leaders’ Meeting with French President Emmanuel Macron and Euro-
pean Commission President Ursula von der Leyen, May 6, 2024; Elizabeth Pineau,
John Irish and Ingrid Melander, “Macron, von der Leyen Press China’s Xi on Trade
in Paris Talks,” Reuters, May 6, 2024.
196. Reuters, “Macron, von der Leyen Press China’s Xi on Trade in Paris Talks,”
Nikkei Asia, May 6, 2024; China’s Ministry of Foreign Affairs, President Xi Jinping
Holds China-France-EU Trilateral Leaders’ Meeting with French President Emmanu-
el Macron and European Commission President Ursula von der Leyen, May 6, 2024.
197. France24, “Le président chinois Xi Jinping est arrivé en France pour une vis-
ite officielle,” YouTube, May 5, 2024. Translation.
198. China’s Ministry of Foreign Affairs, Joint Statement of the People’s Republic of
China and the Republic of Serbia on Deepening and Elevating Comprehensive Strate-
gic Partnership Relations, Building a New Era China-Serbia Community of Common
Destiny (中华人民共和国和塞尔维亚共和国关于深化和提升全面战略伙伴关系, 构建新时代
中塞命运共同体的联合声明), May 9, 2024. Translation; Dusan Stojanovic and Jovana
Gec, “China and EU-Candidate Serbia Sign an Agreement to Build a “Shared Fu-
ture,” AP News, May 8, 2024.
199. Thomas Grove, “China’s Xi Enjoys Embrace of Europe’s Renegades, Serbia
and Hungary,” Wall Street Journal, May 8, 2024.
200. Thomas Grove, “China’s Xi Enjoys Embrace of Europe’s Renegades, Serbia
and Hungary,” Wall Street Journal, May 8, 2024.
201. Kelly Wang and Hu Xuan, “China, Hungary Elevates Ties to ‘All Weather’
Partnership,” Caixin Global, May 10, 2024.
202. Arthur Kaufman, “Xi Visits Serbia and Hungary, Pushing Wedge into Europe,”
China Digital Times, May 10, 2024.
203. Arthur Kaufman, “Xi Visits Serbia and Hungary, Pushing Wedge into Europe,”
China Digital Times, May 10, 2024; Kelly Wang and Hu Xuan, “China, Hungary Ele-
vate Ties to ‘All Weather’ Partnership,” Caixin Global, May 10, 2024.
204. Kelly Wang and Hu Xuan, “China, Hungary Elevate Ties to ‘All Weather’ Part-
nership,” Caixin Global, May 10, 2024.
205. Kelly Wang and Hu Xuan, “China, Hungary Elevates Ties to ‘All Weather’
Partnership,” Caixin Global, May 10, 2024.
206. CCP International Liaison Department, Liu Jianchao Meets Shulz, Former
Chairman of Germany’s Social Democratic Party, President of the Albert Foundation,
and Former President of the European Parliament (刘建超会见德国社民党前主席、艾
伯特基金会会长舒尔茨), February 6, 2024. Translation.
207. CCP International Liaison Department, Liu Jianchao Meets Ambassador of
the Netherlands to China (刘建超会见荷兰驻华大使昊使博), December 25, 2023. Trans-
lation.
208. CCP International Liaison Department, Liu Jianchao Meets with Jukka Sa-
lovaara, Permanent State Secretary at the Ministry for Foreign Affairs of Finland,
May 16, 2024.
209. CCP International Liaison Department, Liu Jianchao Meets Polish Ambassa-
dor to China Gu Tianwei (刘建超会见波兰驻华大使古天卫), December 25, 2023. Trans-
lation.
210. CCP International Liaison Department, Liu Jianchao Meets Spain’s Ambas-
sador to China Betanzos (刘建超会见西班牙驻华大使贝坦索斯), April 16, 2024. Transla-
tion; CCP International Liaison Department, Liu Jianchao Meets Slovak Ambassador
to China Lizak (刘建超会见斯洛伐克驻华大使利扎克), February 2, 2024. Translation.
211. CCP International Liaison Department, Liu Jianchao Meets with Delegation
of the Hungarian Young Democrats Union-Hungarian Civic Union (刘建超会见匈牙利
青年民主主义者联盟—匈牙利公民联盟代表团), February 2, 2024. Translation.
212. CCP International Liaison Department, Liu Jianchao Meets Belarusian Am-
bassador to China Chervyakov (刘建超会见白俄罗斯驻华大使切尔维亚科夫), April 16,
2024. Translation.
213. Geir Moulson, “Germany to Bar Chinese Companies’ Components from Core
Parts of its 5G Networks,” AP News, July 11, 2024.
214. China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Li Jian’s
Regular Press Conference on July 11, 2024, July 11, 2024.
Regular Press Conference on July 12, 2024, July 12, 2024; European External Action
Service, South China Sea: Statement by the Spokesperson on the Anniversary of the
Award Rendered in the Arbitration between the Philippines and China, July 11, 2024.
216. Reuters, “U.S.-Urges Europe to Raise Disquiet over China-Russia Defense
Ties,” September 10, 2024.
156
217. Reuters, “U.S.-Urges Europe to Raise Disquiet over China-Russia Defense
Ties,” September 10, 2024.
10, 2024.
10, 2024.
220. North Atlantic Treaty Organization, Vilnius Summit Communiqué, July 11,
2023; North Atlantic Treaty Organization, Washington Summit Declaration, July 10,
2024.
2024.
2024.
Regular Press Conference on July 11, 2024, July 11, 2024; China’s Ministry of Foreign
Affairs, Foreign Ministry Spokesperson Lin Jian’s Regular Press Conference on July
10, 2024, July 10, 2024; China’s Ministry of Foreign Affairs, Foreign Ministry Spokes-
person Lin Jian’s Regular Press Conference on July 9, 2024, July 9, 2024.
226. Xinhua, “Mainland Says Lai Takes More Radical ‘Taiwan Independence’
Stance,” May 22, 2024; Xinhua, “Xinhua Commentary: Lai’s Risky Gamble with ‘Tai-
wan Independence,’ ” May 21, 2024.
227. Matthew Strong, “China Launches Measures Targeting Taiwan Independence
Supporters,” Taiwan News, June 21, 2024; Kathrin Hille, “China Threatens Death
Penalty for Taiwan ‘Separatists,’ ” Financial Times, June 21, 2024; Xinhua, “China Fo-
cus: China Issues Judicial Guidelines on Imposing Criminal Punishment on Diehard
‘Taiwan Independence’ Separatists,” June 21, 2024; China Supreme People’s Procu-
ratorate, The Two High Courts and Three Ministries Jointly Issued an Opinion on
Punishing “Taiwan Independence” Diehards for Splitting the Country and Inciting the
Crime of Splitting the Country in Accordance with the Law,” (“两高三部”联合发布关于
依法惩治“台独”顽固分子分裂国家, 煽动分裂国家犯罪的意见), June 21, 2024. Translation
228. Dan Blumenthal et al., “China-Taiwan Weekly Update, June 6, 2024,” Institute
for the Study of War, June 7, 2024.
229. Gerald C. Brown and Ben Lewis, “Taiwan ADIZ Violations,” PLA Tracker,
June 10, 2024; Xinhua, “PLA Conducts Joint Military Drills Surrounding Taiwan
Island,” May 23, 2024; Bonny Lin and Brian Hart, “How Is China Responding to the
Inauguration of Taiwan’s President William Lai?” Center for Strategic and Interna-
tional Studies, 2024.
230. Gerald C. Brown and Ben Lewis, “Taiwan ADIZ Violations,” PLA Tracker,
June 10, 2024; Xinhua, “PLA Conducts Joint Military Drills Surrounding Taiwan
Island,” May 23, 2024; Bonny Lin and Brian Hart, “How Is China Responding to the
Inauguration of Taiwan’s President William Lai?” Center for Strategic and Interna-
tional Studies, 2024.
231. Helen Davidson, “China Used ‘Shocking’ Bullying Tactics ahead of Taiwan
Ipac Meeting, Organiser Says,” Guardian, July 30, 2024.
232. Niharika Mandhana, “ ‘Only Pirates Do This’: China Wields Axes and Knives
in South China Sea Fight,” Wall Street Journal, June 20, 2024; U.S. INDOPACOM
Joint Operational Law Team, TOPIC: Sierra Madre, Second Thomas Shoal, and the
U.S. Commitment to Defense of the Philippines, June 17, 2024; Asia Maritime Trans-
parency Initiative, “Tracking Tensions at Second Thomas Shoal,” Center for Strategic
and International Studies, January 30, 2024; Aaron-Matthew Lariosa, “Chinese Ships
Ram Philippine Vessels, Hits Crews with Water Cannons in Series of South China
Sea Incidents,” USNI News, December 10, 2023.
233. China’s Ministry of Foreign Affairs, “Foreign Ministry Spokesperson Mao
Ning’s Regular Press Conference on June 7, 2024,” June 7, 2024; Manolo Serapio
Jr., “Philippines Rejects ‘Absurd’ Beijing Demand over South China Sea,” Bloomberg,
June 8, 2024; U.S. INDOPACOM Joint Operational Law Team, TOPIC: Sierra Madre,
Second Thomas Shoal, and the U.S. Commitment to Defense of the Philippines, Oc-
tober 23, 2023; PCA Case No. 2013–19 in the Matter of the South China Sea Arbi-
tration before an Arbitral Tribunal Constituted under Annex VII to the 1982 United
Nations Convention on the Law of the Sea between the Republic of the Philippines
157
and the People’s Republic of China, Award, July 12, 2016, 474–475; United Nations
Convention on the Law of the Sea, §55–59, 1982.
234. Raissa Robles, “South China Sea: Is Beijing Abusing Philippinese Talks to
Mask Its ‘Policy of Aggression’?” South China Morning Post, July 9, 2024; Ferdinand
R. Marcos, Jr., “21st Asia Security Summit: The Shangri-La Dialogue Key Note Ad-
dress,” International Institute for Strategic Studies, May 31, 2024, 5.
235. Matthew Miller, “U.S. Support for the Philippines in the South China Sea,”
U.S. Department of State, June 17, 2024; Keith Johnson, “China Tests U.S. Red Lines
with Attacks on Philippine Vessels,” Foreign Policy, June 20, 2024; USINDOPACOM
Joint Operational Law Team, TOPIC: China Coast Guard Regulation No.3, May 30,
2024; China Coast Guard, China Coast Guard has Issued the “Regulations on Admin-
istrative Law Enforcement Procedures for Coast Guard Agencies” (中国海警局制定出台
《海警机构行政执法程序规定)” May 15, 2024. Translation.
236. Ramon Royandoyan, “Philippine, Chinese Top Diplomats Agree to Ease South
China Sea Tensions,” Nikkei Asia, July 27, 2024; Jim Gomez, “New Deal Establishes
a Hotline Chinese and Philippine Presidents Can Use to Stop Clashes at Sea,” AP
News, July 16, 2024.
237. Ramon Royandoyan, “Philippines Blames China Coast Guard for South China
Sea Collisions,” Nikkei Asia, March 5, 2024.
238. Felix Solomon, “How China’s Aggressive Sea Tactics Look from the Deck of
an Opposing Ship,” Wall Street Journal, March 6, 2024; Ramon Royandoyan, “Phil-
ippines Blames China Coast Guard for South China Sea Collisions,” Nikkei Asia,
March 5, 2024.
239. Ramon Royandoyan, “Philippines Blames China Coast Guard for South China
Sea Collisions,” Nikkei Asia, March 5, 2024.
240. Reuters, “South China Sea Collision Not Reason to Invoke Defence Treaty
with U.S., Says Philippine President,” March 6, 2024.
241. Andrea Calonzo, “China’s Water Cannons Test US-Philippines Pact in Sea
Feud,” Bloomberg, March 25, 2024.
242. Andrea Calonzo, “China’s Water Cannons Test US-Philippines Pact in Sea
Feud,” Bloomberg, March 25, 2024.
243. Cliff Harvey Venzon, “Philippines Protests ‘Aggressive’ Moves by Chinese
Ships, Bloomberg, March 24, 2024.
244. USINDOPACOM Joint Operational Law Team, TOPIC: Sierra Madres, Second
Thomas Shoals, and the U.S. Commitment to Defend the Philippines, March 10, 2024;
Cliff Harvey Venzon, “Philippines Protests ‘Aggressive’ Moves by Chinese Ships,”
Bloomberg, March 24, 2024.
245. Reuters, “Philippines Accuses China of Damaging Its Vessels in Disputed
South China Sea Shoal,” April 30, 2024.
246. Reuters, “Philippines Accuses China of Damaging Its Vessels in Disputed
South China Sea Shoal,” April 30, 2024.
U.S. Department of State, June 17, 2024; Aaron-Matthew Lariosa, “Chinese Small
Boats Attempted to Block Philippine Medical Evacuation, Scientific Mission in the
South China Sea,” USNI News, June 7, 2024.
248. Aaron-Matthew Lariosa, “Chinese Small Boats Attempted to Block Philippine
Medical Evacuation, Scientific Mission in the South China Sea,” USNI News, June
7, 2024.
249. Aaron-Matthew Lariosa, “Chinese Small Boats Attempted to Block Philippine
Medical Evacuation, Scientific Mission in the South China Sea,” USNI News, June 7,
2024; Jay Tarriela (@jaytaryela), “On May 19, 2024, in support of the Armed Forces
of the Philippines, the Commandant of the Philippine Coast Guard, Admiral Ronnie
Gil Gavan decisively deployed the High Speed Response Boat (HSRB) from Buliluyan
Port to rendezvous with the Philippine Navy Rigid Hull Inflatable Boat (RHIB) car-
rying sick personnel for immediate medical evacuation. During our attempt to bring
the PCG HSRB alongside the PN RHIB at the rendezvous point, we were harassed
by vessels and small boats from the China Coast Guard through blocking operations.
Despite informing the Chinese Coast Guard via radio and public address system
about the humanitarian nature of our mission for medical evacuation, they still en-
gaged in dangerous maneuvers and even intentionally rammed the PN RHIB while
transporting the sick personnel. The barbaric and inhumane behavior displayed by
the China Coast Guard has no place in our society. What should have been a sim-
ple medical evacuation operation was subjected to harassment, with the excessive
deployment of two China Coast Guard vessels (21551 and 21555), two small boats,
and two rubber boats. Their actions clearly demonstrated their intention to prevent
the sick personnel from receiving the proper medical attention he urgently needed.
Despite the challenges posed by the interference from the CCG, the PN and PCG
158
displayed remarkable cooperation, professionalism, and determination. They success-
fully outmaneuvered the numerous CCG assets and completed the transfer of the
sick personnel, ensuring their safe arrival at Buliluyan Port. At 1515H on 19 May
2024, the sick AFP personnel was transported to the nearest hospital and received
immediate medical attention,” X (formerly Twitter), June 6, 2024, 8:14 p.m.
250. Keith Johnson, “China Tests U.S. Red Lines with Attacks on Philippine Ves-
sels,” Foreign Policy, June 20, 2024; Cliff Harvey Venzon, “Philippines Demands Chi-
na Pay for Damages, Return Guns,” Bloomberg, June 19, 2024; Jim Gomez, “Philip-
pine Officials Say Chinese Forces Seized 2 Navy Boats in Disputed Shoal, Injuring
Sailors,” AP News, June 18, 2024; Alyssa Chen, “Chinese and Philippine Ships Collide
in First Incident under Beijing’s New Coastguard Law,” South China Morning Post,
June 17, 2024.
na Pay for Damages, Return Guns,” Bloomberg, June 19, 2024.
na Pay for Damages, Return Guns,” Bloomberg, June 19, 2024.
253. South China Morning Post, “Filipino Sailor Recounts How Thumb was Torn
Off in South China Sea Clash,” June 26, 2024; Keith Johnson, “China Tests U.S. Red
Lines with Attacks on Philippine Vessels,” Foreign Policy, June 20, 2024; Cliff Harvey
Venzon, “Philippines Demands China Pay for Damages, Return Guns,” Bloomberg,
June 19, 2024.
sels,” Foreign Policy, June 20, 2024.
255. Agence France-Presse, “Chinese and Philippine Ships Collide near Disputed
Sabina Shoal in South China Sea,” Guardian, August 18, 2024.
258. China’s Ministry of Foreign Affairs, “Foreign Ministry Spokesperson Mao
Ning’s Regular Press Conference on August 19, 2024,” August 19, 2024.
259. Alyssa Chen, “Chinese and Philippine Ships Collide in First Incident under
Beijing’s New Coastguard Law,” South China Morning Post, June 17, 2024.
U.S. Department of State, June 17, 2024.
U.S. Department of State, June 17, 2024.
262. Office of the President of the Philippines, China’s Action in Ayungin Was an
Aggressive, Illegal Use of Force—Gov’t, June 24, 2024.
263. Australia’s Department of Foreign Affairs and Trade, “Statement Regarding
Recent Incidents in the South China Sea,” June 18, 2024; White House, Joint Vision
Statement from the Leaders of Japan, the Philippines, and the United States, April
11, 2024; Hyonhee Shin, “South Korea Has ‘Grave Concerns’ over China Using Water
Cannons against Philippine Ships,” Reuters, March 26, 2024.
264. Karen Lema, “China Denies Philippine Report of ‘Artificial Island’ in Disputed
Waters,” Reuters, May 13, 2024; Radio Free Asia, “Manila Accuses Beijing of Island
Building in South China Sea,” May 13, 2024; Office of the President of the Philip-
pines, PCG Deploys BRP Teresa Magbanua to Monitor China’s Illegal Building of an
Artificial Island on Escoda Shoal, May 12, 2024.
265. Radio Free Asia, “Manila Accuses Beijing of Island Building in South China
Sea,” May 13, 2024; Permanent Court of Arbitration, “The South China Sea Arbitra-
tion,” The Hague, July 12, 2016.
266. Jay Tarriela (@jaytaryela), “Today is the 25th day of the deployment of BRP
Teresa Magbanua in Escoda/Sabina Shoal. The decisive action to deploy and extend
the presence of the PCG vessel was made by the PCG Commandant, Admiral Ronnie
Gil Gavan, in response to the presence of the Chinese Maritime Militia near Escoda
Shoal. It is worth noting that this shoal falls within the Philippines’ exclusive eco-
nomic zone, just 75 nautical miles from the coast of Palawan. Due to the results of Dr.
Anticamara’s maritime scientific research conducted in the sandy cays last March,
the PCG has implemented a standard operating procedure of launching Rigid Hull
Inflatable Boats (RHIBs) to inspect the low tide elevation (LTE) for any dumped
crushed corals. After more than 3 weeks of monitoring, the PCG has discovered that
the physical characteristics of the LTE surrounding Escoda/Sabina Shoal are similar
to those of the sandy cays. It has been observed that crushed corals were dumped
159
and it is highly likely that the maritime features were altered,” X (formerly Twitter),
May 10, 2024, 5:25 a.m.
267. Office of the President of the Philippines, PCG Deploys BRP Teresa Magbanua
to Monitor China’s Illegal Building of an Artificial Island on Escoda Shoal, May 12,
2024.
268. Office of the President of the Philippines, PCG Deploys BRP Teresa Magbanua
to Monitor China’s Illegal Building of an Artificial Island on Escoda Shoal, May 12,
2024; Jay Tarriela (@jaytaryela), “Today is the 25th day of the deployment of BRP
Teresa Magbanua in Escoda/Sabina Shoal. The decisive action to deploy and extend
the presence of the PCG vessel was made by the PCG Commandant, Admiral Ronnie
Gil Gavan, in response to the presence of the Chinese Maritime Militia near Escoda
Shoal. It is worth noting that this shoal falls within the Philippines’ exclusive eco-
nomic zone, just 75 nautical miles from the coast of Palawan. Due to the results of Dr.
Anticamara’s maritime scientific research conducted in the sandy cays last March,
the PCG has implemented a standard operating procedure of launching Rigid Hull
Inflatable Boats (RHIBs) to inspect the low tide elevation (LTE) for any dumped
crushed corals. After more than 3 weeks of monitoring, the PCG has discovered that
the physical characteristics of the LTE surrounding Escoda/Sabina Shoal are similar
to those of the sandy cays. It has been observed that crushed corals were dumped
and it is highly likely that the maritime features were altered,” X (formerly Twitter),
May 10, 2024, 5:25 a.m.
269. Karen Lema, “China Denies Philippine Report of “Artificial Island” in Disput-
ed Waters,” Reuters, May 13, 2024.
270. Gregory B. Poling, Director of the Southeast Asia program and Asia Maritime
Transparency Initiative, Center for Strategic and International Studies, interview
with Commission staff, September 18, 2024.
271. Takahashi Kosuke, “China Sets Record for Activity near Senkaku/Diaoyu Is-
lands in 2023,” Diplomat, January 4, 2024; Kyodo News, “China Plans to Keep Ships
near Senkakus 365 Days in 2024,” December 30, 2023; Liu Zhen, “Xi Jinping Tells
Coastguard to Enforce Law, ‘Resolutely Defend’ Territorial Sovereignty, while on East
China Sea Visit,” South China Morning Post, December 1, 2023; Xinhua, “Xi Inspects
Command Office for East China Sea Area of China Coast Guard,” State Council of
the People’s Republic of China, December 1, 2023; Xinhua, “When Inspecting the
East China Sea Command of the Armed Police Coast Guard, Xi Jinping Stressed
the Importance of Grasping the Characteristics and Laws of the Construction and
Application of the Coast Guard Force to Improve the Ability to Safeguard Rights and
Enforce the Law at Sea” (习近平在视察武警海警总队东海海区指挥部时强调把握海警力
量建设运用特点规律提高海上维权执法能力), December 1, 2023. Translation.
272. Cindy Hurst, “China Increases Presence in East China Sea to Change Status
Quo,” U.S. Army, Training and Doctrine Command Foreign Military Studies Office,
April 22, 2024; Takahashi Kosuke, “China Sets Record for Activity Near Senkaku/
Diaoyu Islands in 2023,” Diplomat, January 4, 2024; Kyodo News, “China Plans to
Keep Ships Near Senkakus 365 Days in 2024,” December 30, 2023.
273. Brian McElhiney and Keishi Koja, “Chinese Coast Guard Vessels Make Re-
turn Run at Senkakus, Japan Alleges,” Stars and Stripes, July 5, 2024; Japan Times,
“Japan Spots Chinese Ships Near Senkaku Islands for Record 158 Days,” May 27,
2024.
274. Brian McElhiney and Keishi Koja, “Chinese Coast Guard Vessels Make Re-
turn Run at Senkakus, Japan Alleges,” Stars and Stripes, July 5, 2024.
275. Indo-Pacific Defense Forum, “Japan Boosts Maritime Defenses Amid PRC’s
Senkaku Islands Coercion,” May 22, 2024.
276. Kyodo News, “Japan Spots China Ships Near Senkaku Islands for Record
158th Day,” May 27, 2024; Japan’s Ministry of Foreign Affairs, Japan-China Summit
Meeting, May 26, 2024,
277. Takahashi Kosuke, “Japan Confirms Chinese Military Drone Flew Off the
Japanese Coast,” Diplomat, June 5, 2024.
Japanese Coast,” Diplomat, June 5, 2024; Cyril Ip, “Japan Reports First Sighting of
New PLA Combat Drone over East China Sea,” South China Morning Post, May 28,
2024.
Japanese Coast,” Diplomat, June 5, 2024.
280. Brad Lendon and Junko Ogura, “Japan Claims Chinese Military Plane Violat-
ed Its Territorial Airspace for the First Time,” CNN, August 27, 2024.
281. Reuters, “Japan says Chinese Carrier Entered Its Contiguous Waters for First
Time,” September 18, 2024.
160
282. China’s Ministry of Foreign Affairs, Special Envoy for Pacific Island Countries
Affairs of the Chinese Government Qian Bo Attends the Pacific Islands Forum Leaders
Meeting, November 13, 2023; China’s Ministry of Foreign Affairs, Special Envoy for
Pacific Island Countries Affairs of the Chinese Government Qian Bo Meets with Prime
Minister of the Cook Islands Mark Stephen Brown, November 9, 2023.
Meeting, November 13, 2023.
Affairs of the Chinese Government Qian Bo Meets with Prime Minister of the Cook
Islands Mark Stephen Brown, November 9, 2023.
Meeting, November 13, 2023; China’s Ministry of Foreign Affairs, Special Envoy for
Pacific Island Countries Affairs of the Chinese Government Qian Bo Meets with Prime
Minister of the Cook Islands Mark Stephen Brown, November 9, 2023.
286. Xinhua, “Decision Correct to Forge Diplomatic Relations with China: Solomon
Islands PM,” Belt and Road Portal, January 29, 2024.
287. Solomon Islands Government, PRC Pacific Envoy Pays Visit to Ministry of
Foreign Affairs and External Trade, April 8, 2024; China’s Ministry of Foreign Affairs,
Special Envoy for Pacific Island Countries Affairs of the Chinese Government Qian Bo
Visits Solomon Islands, April 7, 2024.
288. Solomon Islands Government, PRC Pacific Envoy Pays Visit to Ministry of
Foreign Affairs and External Trade, April 8, 2024; China’s Ministry of Foreign Affairs,
Special Envoy for Pacific Island Countries Affairs of the Chinese Government Qian Bo
Visits Solomon Islands, April 7, 2024.
289. Xu Keyue and Xing Xiaojing, “Solomon Islands Election Is a Response to Will
of Its People: Chinese Experts,” Global Times, April 22, 2024; Global Times, “ ‘Con-
cerns’ for China’s Influence in Solomon Islands ‘Biased,’ Reflecting US Strategic Sup-
pression: Experts,” April 15, 2024.
290. Kristy Needham, “Solomon Islands Picks China-Friendly Manele as New
Prime Minister,” Reuters, May 2, 2024.
291. Xinhua, “Xi Meets Prime Minister of Solomon Islands,” State Council of the
People’s Republic of China, July 12, 2024; China’s Ministry of Foreign Affairs, Foreign
Ministry Spokesperson Mao Ning’s Regular Press Conference on July 5, 2024, July 5,
2024.
292. Chinas’ State Council, Joint Statement between the People’s Republic of Chi-
na and Solomon Islands, July 12, 2024, 3; Xinhua, “Full text: Joint Statement on
Establishing a Comprehensive Strategic Partnership Featuring Mutual Respect and
Common Development for a New Era Between the People’s Republic of China and
Solomon Islands,” China Daily, July 11, 2023; Associated Press, “Solomon Islands
Signs Policing Pact with China,” NPR, July 11, 2023.
293. CCP International Liaison Department, Vanuatu United Movement for Re-
form Party Chairman and Prime Minister Salwai Meets Liu Jianchao (瓦努阿图统
一运动改良党主席, 政府总理萨尔维会见刘建超), May 27, 2024. Translation; CCP Inter-
national Liaison Department, Liu Jianchao Meets Leaders of Major Political Parties
in Vanuatu (刘建超集体会见瓦努阿图主要政党领导人), May 26, 2024. Translation; CCP
International Liaison Department, Liu Jianchao Meets Vanuatu Ravivo Movement
Party Chairman and Speaker Semien (刘建超会见瓦努阿图拉维沃运动党主席, 议长西
米恩), May 26, 2024. Translation; CCP International Liaison Department, Liu Jian-
chao Meets Delegation of the Vanuatu Leaders Party (刘建超会见瓦努阿图领袖党代表
团), April 26, 2024. Translation.
294. CCP International Liaison Department, Vanuatu United Movement for Reform
Party Chairman and Prime Minister Salwai Meets Liu Jianchao (瓦努阿图统一运动改
良党主席、政府总理萨尔维会见刘建超), May 27, 2024. Translation; CCP International
Liaison Department, Liu Jianchao Delivers a Speech at the Vanuatu National Confer-
ence Center (刘建超在瓦努阿图国家会议中心发表演讲), May 27, 2024. Translation; CCP
International Liaison Department, Liu Jianchao Meets Leaders of Major Political
Parties in Vanuatu (刘建超集体会见瓦努阿图主要政党领导人), May 26, 2024. Transla-
tion; CCP International Liaison Department, Liu Jianchao Meets Vanuatu Ravivo
Movement Party Chairman and Speaker Semien (刘建超会见瓦努阿图拉维沃运动党主
席、议长西米恩), May 26, 2024. Translation; CCP International Liaison Department,
Liu Jianchao Meets Delegation of the Vanuatu Leaders Party (刘建超会见瓦努阿图领
袖党代表团), April 26, 2024. Translation.
295. CCP International Liaison Department, Vanuatu United Movement for Re-
form Party Chairman and Prime Minister Salwai Meets Liu Jianchao (瓦努阿图统
一运动改良党主席, 政府总理萨尔维会见刘建超), May 27, 2024. Translation; CCP Inter-
161
national Liaison Department, Liu Jianchao Meets Leaders of Major Political Parties
in Vanuatu (刘建超集体会见瓦努阿图主要政党领导人), May 26, 2024. Translation; CCP
International Liaison Department, Liu Jianchao Meets Vanuatu Ravivo Movement
Party Chairman and Speaker Semien (刘建超会见瓦努阿图拉维沃运动党主席、议长西
米恩), May 26, 2024. Translation; CCP International Liaison Department, Liu Jian-
chao Meets Delegation of the Vanuatu Leaders Party (刘建超会见瓦努阿图领袖党代表
团), April 26, 2024. Translation.
296. Peter Connolly, “China’s Police Security in the Pacific Islands,” National Bu-
reau of Asian Research, May 30, 2024; CCP International Liaison Department, Vanu-
atu United Movement for Reform Party Chairman and Prime Minister Salwai Meets
Liu Jianchao (瓦努阿图统一运动改良党主席, 政府总理萨尔维会见刘建超), May 27, 2024.
Translation; CCP International Liaison Department, Liu Jianchao Meets Leaders
of Major Political Parties in Vanuatu (刘建超集体会见瓦努阿图主要政党领导人), May
26, 2024. Translation; CCP International Liaison Department, Liu Jianchao Meets
Delegation of the Vanuatu Leaders Party (刘建超会见瓦努阿图领袖党代表团), April 26,
2024. Translation; Xinhua, “Full Text: Joint Statement on Establishing a Comprehen-
sive Strategic Partnership Featuring Mutual Respect and Common Development for
a New Era between the People’s Republic of China and Solomon Islands,” China Dai-
ly, July 11, 2023; Solomon Islands Government, RSIPF Officers Completed Training
in China, November 8, 2022; Royal Solomon Islands Police Force, “RSIP Officers Fly
to China for Training,” October 11, 2022; China’s Ministry of Foreign Affairs, Wang
Yi Holds Talks with Foreign Minister of Solomon Islands Jeremiah Manele, May 26,
2022; Xinhua, “China, Solomon Islands to Enhance Parliamentary Cooperation,” June
2, 2021.
297. CCP International Liaison Department, Liu Jianchao Delivers a Speech at the
Vanuatu National Conference Center (刘建超在瓦努阿图国家会议中心发表演讲), May
298. Leah Lowonbu, “China Hands over Lavish New Presidential Palace to Vanu-
atu, ahead of PM’s Visit to Beijing,” Australian Broadcasting Company, July 3, 2024;
Straits Times, “China Builds New Presidential Palace in Pacific’s Vanuatu,” July 2,
2024.
299. Joint Statement between the People’s Republic of China and the Republic of
Vanuatu, July 12, 2024. China’s Ministry of Foreign Affairs, Foreign Ministry Spokes-
person Mao Ning’s Regular Press Conference on July 5, 2024, July 5, 2024.
300. China’s Ministry of Foreign Affairs, Joint Statement between the People’s Re-
public of China and the Republic of Fiji, August 22, 2024; Joint Statement between
the People’s Republic of China and Solomon Islands, July 12, 2024, 1; Joint Statement
between the People’s Republic of China and the Republic of Vanuatu, July 12, 2024, 1;
Joint Statement between the People’s Republic of China and the Federated States of
Micronesia, April 10, 2024, 1.
public of China and the Republic of Fiji, August 22, 2024. Joint Statement between
between the People’s Republic of China and the Republic of Vanuatu, July 12, 2024, 2;
Joint Statement between the People’s Republic of China and the Federated States of
Micronesia, April 10, 2024, 2.
302. Joint Statement between the People’s Republic of China and Solomon Islands,
July 12, 2024, 2; Joint Statement between the People’s Republic of China and the Re-
public of Vanuatu, July 12, 2024, 2; Joint Statement between the People’s Republic of
China and the Federated States of Micronesia, April 10, 2024, 2.
303. Joint Statement between the People’s Republic of China and Solomon Islands,
July 12, 2024, 2; Joint Statement between the People’s Republic of China and the Re-
public of Vanuatu, July 12, 2024, 2; Joint Statement between the People’s Republic of
China and the Federated States of Micronesia, April 10, 2024.
between the People’s Republic of China and the Republic of Vanuatu, July 12, 2024,
2; Joint Statement between the People’s Republic of China and the Federated States
of Micronesia, April 10, 2024.
the People’s Republic of China and Solomon Islands, July 12, 2024, 3–4; Joint State-
ment between the People’s Republic of China and the Republic of Vanuatu, July 12,
2024, 3; Joint Statement between the People’s Republic of China and the Federated
States of Micronesia, April 10, 2024, 3; Stella Chen, “Community of Common Destiny
for Mankind,” China Media Project, August 25, 2021.
162
3; Joint Statement Between the People’s Republic of China and the Federated States
of Micronesia, April 10, 2024, 3.
4; Richard Clark, “The Trouble with Micronesia’s New China Policy,” Diplomat, April
19, 2024; Joint Statement Between the People’s Republic of China and the Federated
States of Micronesia, April 10, 2024, 4.
308. Vietnam Law and Legal Forum, “Vietnam—China Joint Statement,” December
14, 2023; China’s Ministry of Foreign Affairs, Joint Statement of the People’s Republic
of China and the Socialist Republic of Vietnam on Further Deepening and Enhancing
the Comprehensive Strategic Cooperative Partnership and Building a China-Vietnam
Community of Common Destiny with Strategic Significance (中华人民共和国和越南社
会主义共和国关于进一步深化和提升全面战略合作伙伴关系,构建具有战略意义的中越命运
共同体的联合声明), December 13, 2023. Translation; Xinhua, “China, Vietnam Agree
to Build Community with Shared Future that Carries Strategic Significance,” State
Council Information Office of the People’s Republic of China, December 13, 2023.
共同体的联合声明), December 13, 2023. Translation.
共同体的联合声明), December 13, 2023. Translation.
311. Khang Vu, “Vietnam and China Announce Major Upgrade in Relations during
Xi Visit,” Diplomat, December 13, 2023; Xinhua, “China, Vietnam Agree to Build
Community with Shared Future That Carries Strategic Significance,” State Coun-
cil Information Office of the People’s Republic of China, December 13, 2023; China’s
Ministry of Foreign Affairs, Joint Statement of the People’s Republic of China and the
Socialist Republic of Vietnam on Further Deepening and Enhancing the Comprehen-
sive Strategic Cooperative Partnership and Building a China-Vietnam Community of
Common Destiny with Strategic Significance (中华人民共和国和越南社会主义共和国关
于进一步深化和提升全面战略合作伙伴关系,构建具有战略意义的中越命运共同体的联合声
明), December 13, 2023. Translation; Francesco Guarascio, Khanh Vu, and Phuong
Nguyen, “Vietnam Boosts China’s Ties as ‘Bamboo Diplomacy’ Follows US Upgrade,”
Reuters, December 12, 2023; Xinhua, “China, Vietnam Agree to Jointly Maintain
Peace, Stability at Sea,” December 12, 2023.
312. CGTN, “President Xi Advances China-Vietnam Relations under Six-Point Pro-
posal,” April 8, 2024.
313. China’s Ministry of Foreign Affairs, Xi Jinping Meets with Vietnam Prime
Minister Pham Minh Chinh (习近平会见越南总理范明政), June 26, 2024. Translation.
314. China’s Ministry of Foreign Affairs, Xi Jinping Meets with Vietnam Prime
Minister Pham Minh Chinh (习近平会见越南总理范明政), June 26, 2024. Translation.
315. Zack Cooper and Gregory Poling, “The South China Sea Dog That Hasn’t
Barked . . .Yet,” War on the Rocks, June 18, 2024.
316. Asia Maritime Transparency Initiative, “Hanoi in High Gear: Vietnam’s
Spratly Expansion Accelerates,” Center for Strategic and International Studies, June
7, 2024.
317. Xinhua, “China, Vietnam Agree to Jointly Maintain Peace, Stability at Sea,”
December 2, 2023.
318. China Military Online, “China, Vietnam Coast Guards Complete Joint Patrol
in Beibu Gulf,” April 30, 2024.
319. China Military Online, “China, Vietnam Coast Guards Complete Joint Patrol
in Beibu Gulf,” April 30, 2024.
163
320. Xinhua, “China, Vietnam Hold 8th Border Defense Friendship Exchange,”
China Military Online, April 13, 2024.
321. China Daily, “He Pingli | Properly Handle Maritime Disputes and Deepen
Maritime Cooperation” (和评理 |妥处涉海争议深化海上合作), April 16, 2024. Trans-
lation.
322. Derek Grossman, “Philippines and Vietnam’s South China Sea Strategies
Have Failed,” Nikkei Asia, July 15, 2024; Zack Cooper and Gregory Poling, “The South
China Sea Dog That Hasn’t Barked . . .Yet,” War on the Rocks, June 18, 2024.
323. Derek Grossman, “Philippines and Vietnam’s South China Sea Strategies
Have Failed,” Nikkei Asia, July 15, 2024; Zack Cooper and Gregory Poling, “The South
China Sea Dog That Hasn’t Barked . . .Yet,” War on the Rocks, June 18, 2024; China
Daily, “He Pingli | Properly Handle Maritime Disputes and Deepen Maritime Coop-
eration” (和评理 |妥处涉海争议深化海上合作), April 16, 2024. Translation.
324. Aaron-Matthew Lariosa, “Chinese Maritime Safety Officers Beat Vietnamese
Fishermen during South China Sea Interdiction, Say Officials,” USNI News, October
7, 2024.
325. Aaron-Matthew Lariosa, “Chinese Maritime Safety Officers Beat Vietnamese
Fishermen during South China Sea Interdiction, Say Officials,” USNI News, October
7, 2024.
326. Reuters, “Vietnamese Fishing Boat Attacked near Contested South China Sea
Islands, Newspapers Report,” October 1, 2024.
327. Reuters, “Vietnam Protests Chinese Force’s Attack on Fishermen in Contested
South China Sea Waters,” CNN, October 2, 2024; Viet Nam News, “Việt Nam Reso-
lutely Opposes Chinese Force’s Brutal Behaviours towards Vietnamese Fishermen:
Spokeswoman,” October 2, 2024.
328. Reuters, “US Defense Secretary Discusses Military Exchanges in Visit to Chi-
na Ally Cambodia,” June 4, 2024; Sui-Lee Wee, “A ‘Once-in-a-Lifetime’ Change in
Cambodia: A New Leader,” New York Times, August 21, 2023.
329. Xinhua, “China, Cambodia to Move Forward in Building High-Quality,
High-Level, High-Standard Community with Shared Future,” Belt and Road Portal,
April 23, 2024; China’s Ministry of Foreign Affairs, “China-Cambodia Intergovern-
mental Coordination Committee Holds Seventh Meeting” (中国柬埔寨政府间协调委员
会举行第七次会议), April 22, 2024. Translation; Xinhua, “China Will Always Be Cam-
bodia’s Most Trustworthy Partner, Strongest Supporter: Wang Yi,” State Council of
the People’s Republic of China, April 22, 2024.
330. Xinhua, “China, Cambodia to Move Forward in Building High-Quality,
High-Level, High-Standard Community with Shared Future,” Belt and Road Portal,
April 23, 2024; China’s Ministry of Foreign Affairs, “China-Cambodia Intergovern-
mental Coordination Committee Holds Seventh Meeting” (中国柬埔寨政府间协调委员
会举行第七次会议), April 22, 2024. Translation; Xinhua, “China Will Always Be Cam-
bodia’s Most Trustworthy Partner, Strongest Supporter: Wang Yi,” State Council of
the People’s Republic of China, April 22, 2024; China’s Ministry of Foreign Affairs,
“Joint Communiqué between the People’s Republic of China Government and King-
dom of Cambodia Government” (中华人民共和国政府和柬埔寨王国政府联合公报(全文)),
September 16, 2023, Translation; Xinhua, “Joint Statement of the People’s Republic
of China and the Kingdom of Cambodia on Building a China-Cambodia Community
of Common Destiny” (中华人民共和国和柬埔寨王国关于构建新时代中柬命运共同体的联
合声明(全文)), People’s Government of the People’s Republic of China, February 11,
2023. Translation.
331. China’s Ministry of Foreign Affairs, China-Cambodia Intergovernmental Co-
ordination Committee Holds Seventh Meeting (中国柬埔寨政府间协调委员会举行第七
次会议), April 22, 2024. Translation; Xinhua, “China, Cambodia to Move Forward in
Building High-Quality, High-Level, High-Standard Community with Shared Future,”
Belt and Road Portal, April 23, 2024.
332. China’s Ministry of Foreign Affairs, China-Cambodia Intergovernmental Coor-
dination Committee Holds Seventh Meeting (中国柬埔寨政府间协调委员会举行第七次会
议), April 22, 2024. Translation; China’s Ministry of Foreign Affairs, Joint Communi-
qué between the Government of the People’s Republic of China and the Government of
the Kingdom of Cambodia (Full Text) (中华人民共和国政府和柬埔寨王国政府联合公报(
全文)), September 16, 2023. Translation.
333. Associated Press, “China, Cambodia to Begin Annual Military Drills to
Strengthen Cooperation, Fight Terrorism,” Voice of America, May 13, 2024.
334. Agnes Chang and Hannah Beech, “The Chinese Base That Isn’t There,” New
York Times, July 14, 2024; Sopheng Chang and David Rising, “Chinese Warships
Have Been Docked in Cambodia for 5 Months, but Government Says Its Not Perma-
nent,” AP News, May 8, 2024; Asia Maritime Transparency Initiative, “First among
164
Piers: Chinese Ships Settle in at Cambodia’s Ream,” Center for Strategic and Inter-
national Studies, April 18, 2024.
York Times, July 14, 2024; Sopheng Chang and David Rising, “Chinese Warships
Have Been Docked in Cambodia for 5 Months, but Government Says Its Not Perma-
nent,” AP News, May 8, 2024.
York Times, July 14, 2024.
York Times, July 14, 2024; Reuters, “US Defense Secretary Discusses Military Ex-
changes in Visit to China Ally Cambodia,” June 4, 2024.
338. Christopher Woody, “China’s Newest Military Base Abroad Is Up and Run-
ning, and There are More on the Horizon,” Breaking Defense, July 12, 2024.
339. Associated Press, “US, Allies Clash with China and Russia over North Korea’s
Launches, Threats,” Voice of America, June 1, 2024.
340. Alan Suderman, “China Supported Sanctions on North Korea’s Nuclear Pro-
gram. It’s Also behind Their Failure,” AP News, November 3, 2023; Valerie Lincy, writ-
ten testimony for U.S.-China Economic and Security Review Commission, Hearing on
China’s Nuclear Forces, June 10, 2021, 2.
341. Michelle Nichols, “China to G7, EU: We ‘Strictly’ Implement UN Sanctions on
North Korea,” Reuters, July 24, 2023; Valerie Lincy, written testimony for U.S.-China
Economic and Security Review Commission, Hearing on China’s Nuclear Forces, June
10, 2021, 2.
342. Brad Lendon, “Chinese Military Harassed Dutch Warship Enforcing UN Sanc-
tions on North Korea, Netherlands Says,” CNN, June 10, 2024.
343. Kelsey Davenport, “North Korea, Russia Strengthen Military Ties,” Arms Con-
trol Association, July/August 2024; Sue Mi Terry and Stephen Sestanovich, “Russia
Struck a Defense Pact with North Korea. What Does It Mean?” Council on Foreign
Relations, June 19, 2024; Laurie Chen and Josh Smith, “China Keeps Its Distance
as Russia and North Korea Deepen Ties,” Reuters, June 19, 2024; U.S. Defense In-
telligence Agency, North Korea: Enabling Russian Missile Strikes against Ukraine,
May 2024; Reuters, “Debris from North Korean Missile Found in Karkiv, say UN
Sanctions Monitors,” Guardian, April 29, 2024; China’s Ministry of Foreign Affairs,
Foreign Ministry Spokesperson Wang Wenbin’s Regular Press Conference on January
5, 2024, January 5, 2024.
344. Kelsey Davenport, “North Korea, Russia Strengthen Military Ties,” Arms Con-
trol Association, July/August 2024.
345. Laurie Chen and Josh Smith, “China Keeps Its Distance as Russia and North
Korea Deepen Ties,” Reuters, June 19, 2024.
346. Grant Rumley, “Tracking Chinese Statements on the Hamas-Israel Conflict,”
Washington Institute for Near East Policy, September 22, 2024; Chun Han Wong,
“China Wants a Bigger Role in the Middle East. But Not Too Big.,” Wall Street Jour-
nal, June 1, 2024.
347. Reuters, “China Supports Iran in Defending Security, Says Foreign Minister,”
August 11, 2024; Reuters, “Xi Says China Wants to Work with Arab States to Resolve
Hot Spot Issues,” May 30, 2024.
348. Christina Lu, “How China Is Leveraging the Israel-Hamas War,” Foreign Poli-
cy, January 31, 2024; Simone Lipkind, “Fickle Friends: Sino-Israeli Ties Buckle Amid
War with Hamas,” Council on Foreign Relations, January 25, 2024; Mark Leonard,
“China’s Game in Gaza: How Beijing Is Exploiting Israel’s War to Win over the Global
South,” Foreign Affairs, January 8, 2024; Reuters, “Israel Says ‘Deeply Disappointed’
over Lack of China Condemnation of Hamas Attack,” October 13, 2023.
349. David Vergun, “Reckless Behavior by Iran-Backed Houthis Threatens Region-
al Security,” DOD News, June 17, 2024; Sam Dagher and Mohammed Hatem, “Ye-
men’s Houthis Tell China, Russia Their Ships Won’t Be Targeted,” Bloomberg, March
21, 2024; Jon B. Alterman, “What the Red Sea Crisis Reveals about China’s Middle
East Strategy,” Foreign Policy, February 14, 2024; Anthony J. Blinken, “Terrorist Des-
ignation of the Houthis,” U.S. Department of State, January 17, 2024; Mordechai
Chaziza, “China’s Response to the Houthi Attacks in the Red Sea,” Diplomat, Janu-
ary 16, 2024; China Military Online, “Chinese Naval Escort Task Force Safeguards
Vital International Waterways for 15 Years,” December 26, 2023; Ankit Panda, “The
Chinese Navy’s Djibouti Base: A ‘Support Facility’ or Something More?” Diplomat,
February 27, 2017.
350. Reuters, “China Supports Iran in Defending Security, Says Foreign Minister,”
August 11, 2024.
351. Forum on China-Africa Cooperation, “China Welcomes More ‘Made in Africa’
and Africa Looks Forward to More ‘Made in China’ ” (中国迎来更多“非洲产” 非洲期盼
165
更多“中国造”), January 23, 2024. Translation; Zhao Yusha, “Chinese FM’s Trips to
Africa, LatAm Highlight Beijing’s Ties with Global South,” Global Times, January
21, 2024; Xinhua, “Chinese FM to Visit Egypt, Tunisia, Togo, Code d’Ivoire, Brazil,
Jamaica,” January 11, 2024; China’s Ministry of Foreign Affairs, Wang Yi to Visit
Egypt, Tunisia, Togo, Côte d’Ivoire, Brazil, Jamaica (王毅将访问埃及,突尼斯,多哥,科特
迪瓦,巴西,牙买加), January 11, 2024. Translation; China’s Ministry of Foreign Affairs,
January 11, 2024 Foreign Ministry Spokesperson Mao Ning Hosts Regular Press Con-
ference (2024年1月11日外交部发言人毛宁主持例行记者会), January 11, 2024. Transla-
tion; China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Mao Ning’s
Regular Press Conference on January 11, 2024, January 11, 2024.
352. China’s Ministry of Foreign Affairs, Joint Press Communiqué of the Foreign
Ministers of China and Côte d’Ivoire (中国和科特迪瓦外长联合新闻公报), January 19,
2024. Translation; China’s Ministry of Foreign Affairs, President Ouattara of Côte
d’Ivoire meets with Wang Yi (科特迪瓦总统瓦塔拉会见王毅), January 18, 2024. Trans-
lation; Embassy of the People’s Republic of China in the United States of America,
Togolese President Faure Gnassingbe Meets with Wang Yi, January 17, 2024; China’s
Ministry of Foreign Affairs, Wang Yi Holds Talks with Togo Foreign Minister Diese (
王毅同多哥外长迪塞会谈), January 17, 2024. Translation; China’s Ministry of Foreign
Affairs, Wang Yi: True Friends Support Each Other at Critical Moments (王毅: 真朋友
就是在关键时刻相互支持), January 17, 2024. Translation; China’s Ministry of Foreign
Affairs, Tunisian President Saied Meets with Wang Yi (突尼斯总统赛义德会见王毅),
January 16, 2024. Translation; China’s Ministry of Foreign Affairs, Wang Yi Holds
Talks with Egyptian Foreign Minister Shoukry (王毅同埃及外长舒克里举行会谈), Janu-
ary 15, 2024. Translation; China’s Ministry of Foreign Affairs, Egyptian President Sisi
Meets with Wang Yi (埃及总统塞西会见王毅), January 14, 2024. Translation; Xinhua,
“Chinese FM to Visit Egypt, Tunisia, Togo, Cote d’Ivoire, Brazil, Jamaica,” January
11, 2024; China’s Ministry of Foreign Affairs, Wang Yi to visit Egypt, Tunisia, Togo,
Côte d’Ivoire, Brazil, Jamaica (王毅将访问埃及,突尼斯,多哥,科特迪瓦,巴西,牙买加), Jan-
uary 11, 2024. Translation; China’s Ministry of Foreign Affairs, January 11, 2024
Foreign Ministry Spokesperson Mao Ning Hosts Regular Press Conference (2024年1
月11日外交部发言人毛宁主持例行记者会), January 11, 2024. Translation; China’s Min-
istry of Foreign Affairs, Foreign Ministry Spokesperson Mao Ning’s Regular Press
Conference on January 11, 2024, January 11, 2024.
353. People’s Daily, “China Welcomes More ‘Made in Africa’ Products, while Africa
Looks Forward to More ‘Made in China’ Products” (中国迎来更多 “非洲产” 非洲期盼
更多 “中国造”) Forum on China Africa Cooperation, January 23, 2024. Translation;
China’s Ministry of Foreign Affairs, Tunisian President Saied Meets with Wang Yi (突
尼斯总统赛义德会见王毅), January 16, 2024. Translation; China’s Ministry of Foreign
Affairs, Tunis International Diplomatic Academy Holds Opening Ceremony (突尼斯国
际外交学院举行启用仪式), January 15, 2024. Translation; China’s Ministry of Foreign
Affairs, Wang Yi Holds Talks with Egyptian Foreign Minister Shoukry (王毅同埃及外
长舒克里举行会谈), January 15, 2024. Translation; China’s Ministry of Foreign Affairs,
Wang Yi Holds Talks with Egyptian Foreign Minister Shoukry (王毅同埃及外长舒克里
举行会谈), January 15, 2024. Translation; China’s Ministry of Foreign Affairs, Egyp-
tian President Sisi Meets with Wang Yi (埃及总统塞西会见王毅), January 14, 2024.
Translation.
354. CCP International Liaison Department, Liu Jianchao Meets with a Delegation
of the SWAPO Party of Namibia, May 15, 2024; CCP International Liaison Depart-
ment, Li Mingxiang Meets with a Delegation of the Democratic Party of Equatorial
Guinea, May 15, 2024; CCP International Liaison Department, Liu Jianchao Meets
Delegation of Burundi’s National Council for the Defense of Democracy-Forces for
the Defense of Democracy (刘建超会见布隆迪保卫民主全国委员会—保卫民主力量干部考
察团), March 22, 2024. Translation; CCP International Liaison Department, Liu Ji-
anchao Meets Delegation of Malawi Congress Party (刘建超会见马拉维大会党代表团),
January 31, 2024. Translation; CCP International Liaison Department, Liu Jianchao
Meets Delegation of the Lesotho Prosperity Revolution Party (刘建超会见莱索托繁荣革
命党代表团), January 31, 2024. Translation; CCP International Liaison Department,
Liu Jianchao Meets with a Cadre Delegation of the Rwanda Patriotic Front (刘建超会
见卢旺达爱国阵线干部考察团), January 29, 2024. Translation.
355. CCP International Liaison Department, Liu Jianchao Meets with a Delegation
of the SWAPO Party of Namibia May 15, 2024; CCP International Liaison Depart-
ment, Li Mingxiang Meets with a Delegation of the Democratic Party of Equatorial
Guinea, May 15, 2024; CCP International Liaison Department, Liu Jianchao Meets
Delegation of Burundi’s National Council for the Defense of Democracy-Forces for
the Defense of Democracy (刘建超会见布隆迪保卫民主全国委员会—保卫民主力量干部考
察团), March 22, 2024. Translation; CCP International Liaison Department, Liu Ji-
anchao Meets Delegation of Malawi Congress Party (刘建超会见马拉维大会党代表团),
166
January 31, 2024. Translation; CCP International Liaison Department, Liu Jianchao
Meets Delegation of the Lesotho Prosperity Revolution Party (刘建超会见莱索托繁荣革
命党代表团), January 31, 2024. Translation; CCP International Liaison Department,
Liu Jianchao Meets with a Cadre Delegation of the Rwanda Patriotic Front (刘建超会
见卢旺达爱国阵线干部考察团), January 29, 2024. Translation.
356. CK Tan, “Xi Says 2.8bn Chinese and Africans can Modernize Global South
Together,” Nikkei Asia, September 4, 2024; Taiwan’s Ministry of Foreign Affairs, Dip-
lomatic Allies.
357. Christian Shepherd and Vic Chiang, “China Pledges $50B and 1M Jobs in
Renewed Outreach to Africa,” Washington Post, September 5, 2024; China’s Ministry
of Foreign Affairs, Forum on China Africa Cooperation—Beijing Action Plan (2025–
2027) (中非合作论坛—北京行动计划 [2025–2027]), September 5, 2024. Translation.
358. Oyintarelado Moses et al., “A New State of Lending: Chinese Loans to Africa,”
Boston University Global Policy Development Center, September 2023, 3.
359. Elizabeth Economy, “China’s Alternative Order: And What America Should
Learn from It,” Foreign Affairs, May/June 2024; “China’s Global Development Initia-
tive Is Not as Innocent As It Seems,” Economist, June 9, 2022.
360. China’s Ministry of Foreign Affairs, Forum on China Africa Cooperation—Bei-
jing Action Plan (2025–2027) (中非合作论坛—北京行动计划 [2025–2027]), September
5, 2024. Translation; Njenga Hakeenah, “China Commits $49 Million for Burkina
Faso’s Donsin Airport Solar Power Plant,” China Global South Project, May 6, 2024.
361. Economist, “China’s Relationship with Africa is Growing Murkier,” September
4, 2024.
362. Economist, “China’s Relationship with Africa is Growing Murkier,” September
4, 2024; China’s Ministry of Foreign Affairs, Forum on China Africa Cooperation—
Beijing Action Plan (2025–2027) (中非合作论坛—北京行动计划 [2025–2027]), Septem-
363. China’s Ministry of Foreign Affairs, Beijing Declaration on Jointly Building
an All-Weather China-Africa Community with a Shared Future for the New Era, Sep-
tember 5, 2024.
366. CK Tan, “China Pledges Billions in Fresh Africa Aid despite Debt Concerns,”
Nikkei Asia, September 5, 2024.
367. Xinhua, “Xi Jinping Attends the Opening Ceremony of the Eighth Ministerial
Conference of the Forum on China-Africa Cooperation and Delivers Keynote Speech”
(习近平出席中非合作论坛第八届部长级会议开幕式并发表主旨演讲), November 29, 2021.
Translation.
368. Xinhua, “Xi Jinping Attends the Opening Ceremony of the Forum on Chi-
na-Africa Cooperation Beijing Summit and Delivers Keynote Address” (习近平出席中
非合作论坛北京峰会开幕式并发表主旨讲话), September 5, 2024.
369. Pan Deng, “Wang Yi’s First Annual Latin America Visit Holds Landmark
Significance,” CGTN, January 22, 2024; Zhao Yusha, “Chinese FM’s Trips to Africa,
LatAm Highlight Beijing’s Ties with Global South,” Global Times, January 21, 2024;
Xinhua, “Chinese FM to Visit Egypt, Tunisia, Togo, Cote d’Ivoire, Brazil, Jamaica,”
January 11, 2024; China’s Ministry of Foreign Affairs, Wang Yi to Visit Egypt, Tuni-
sia, Togo, Côte d’Ivoire, Brazil, Jamaica (王毅将访问埃及,突尼斯,多哥,科特迪瓦,巴西,牙
买加), January 11, 2024. Translation; China’s Ministry of Foreign Affairs, January 11,
2024 Foreign Ministry Spokesperson Mao Ning Hosts Regular Press Conference (2024
年1月11日外交部发言人毛宁主持例行记者会), January 11, 2024. Translation; China’s
Ministry of Foreign Affairs, January 11, 2024 Foreign Ministry Spokesperson Mao
Ning’s Regular Press Conference on January 11, 2024, January 11, 2024.
370. CCP International Liaison Department, Liu Jianchao Meets with Eduardo
Saboia, Deputy Foreign Minister of Brazil, May 15, 2024; CCP International Liaison
Department, Liu Jianchao Meets Brazil’s Deputy Foreign Minister Saboia (刘建超会
见巴西副外长萨博亚), May 15, 2024. Translation; Xinhua, “Chinese FM Holds Talks
with Bolivian Counterpart,” State Council of the People’s Republic of China, April 29,
2024; CCP International Liaison Department, Liu Jianchao Meets a Delegation of El
Salvador New Ideas Party Senior Officials (刘建超会见萨尔瓦多新思想党高级干部考察
团), April 8, 2024. Translation; CCP International Liaison Department, Liu Jianchao
Meets a Mexican Multi-Party Parliamentary Delegation (刘建超会见墨西哥多党议员考
察团), January 25, 2024. Translation; Xinhua, “China, Brazil Applauds Bilateral Stra-
tegic Partnership: Chinese FM,” January 20, 2024; China’s Embassy in the United
167
States of America, Brazilian President Luiz Inácio Lula da Silva Meets with Wang
Yi, January 20, 2024.
371. CCP International Liaison Department, Liu Jianchao Meets Cuban Presi-
dent’s Special Envoy, Cuban Communist Party Central Committee Politburo Member
and Minister of Foreign Affairs Rodriguez (刘建超会见古巴国家主席特使.古共中央政
治局委员,外交部长罗德里格斯), June 7, 2024. Translation; CCP International Liaison
Department, Liu Jianchao Meets a Delegation of El Salvador New Ideas Party Se-
nior Officials (刘建超会见萨尔瓦多新思想党高级干部考察团), April 8, 2024. Translation;
CCP International Liaison Department, Liu Jianchao Meets Cuba’s Ambassador to
China Pablo Bai (刘建超会见古巴驻华大使白诗德), February 20, 2024. Translation;
Marcos Alemán and Megan Janetsky, “El Salvador’s Bukele Wins Supermajority in
Congress after Painstaking Vote Count,” AP News, February 19, 2024; CCP Interna-
tional Liaison Department, Liu Jianchao Meets a Mexican Multi-Party Parliamentary
Delegation (刘建超会见墨西哥多党议员考察团), January 25, 2024. Translation.
372. China’s Embassy in the United States of America, Brazilian President Luiz
Inácio Lula da Silva Meets with Wang Yi, January 20, 2024.
373. China’s Embassy in the United States of America, Brazilian President Luiz
Inácio Lula da Silva Meets with Wang Yi, January 20, 2024; China’s Ministry of For-
eign Affairs, Wang Yi: China and Brazil Will Work Together for Next Golden 50 Years
in Bilateral Relations, January 20, 2024; Xinhua, “China, Brazil Applauds Bilateral
Strategic Partnership: Chinese FM,” January 20, 2024.
374. CCP International Liaison Department, Chinese Communist Party and Bra-
zilian Workers Party Seventh Theoretical Seminar Is Held (中国共产党和巴西劳工党第
七届理论研讨会举行), April 9, 2024. Translation.
375. CCP International Liaison Department, Liu Jianchao Meets with Eduardo
Saboia, Deputy Foreign Minister of Brazil, May 15, 2024; CCP International Liaison
Department, Liu Jianchao Meets Brazil’s Deputy Foreign Minister Saboia (刘建超会
见巴西副外长萨博亚), May 15, 2024. Translation.
376. Government of Brazil, Brazil and China Present Joint Proposal for Peace Ne-
gotiations with the Participation of Russia and Ukraine, May 23, 2024.
377. Government of Brazil, Brazil and China Present Joint Proposal for Peace Ne-
gotiations with the Participation of Russia and Ukraine, May 23, 2024.
378. Margaret Myers, “China’s EV Drive Accelerates in Latin America,” East Asia
Forum, June 21, 2024; Leonardo Lara, “Waves of Chinese Electric Vehicles Are Pour-
ing into Brazil,” Bloomberg, June 3, 2024; Yifan Yu, Lauly Li and Ryohtaroh Satoh,
“China EV Makers Rush Cars to Mexico and Brazil amid Tariff Concerns,” Nikkei
Asia, May 16, 2024; Reuters, “Brazil Imports of Chinese Electric Vehicles Surge ahead
of New Tariff,” April 5, 2024; Juan Pablo Spinetto, “China Is Recalibrating Its Latin
America Strategy,” Bloomberg, January 22, 2024; Margaret Myers, Ángel Melguizo,
and Yifang Wang, “ ‘New Infrastructure’ Emerging Trends in Chinese Foreign Direct
Investment in Latin America and the Caribbean,” Dialogue, January 2024, 5–9.
379. Yifan Yu, Lauly Li and Ryohtaroh Satoh, “China EV Makers Rush Cars to
Mexico and Brazil amid Tariff Concerns,” Nikkei Asia, May 16, 2024; Reuters, “Brazil
Imports of Chinese Electric Vehicles Surge ahead of New Tariff,” April 5, 2024.
380. Yifan Yu, Lauly Li and Ryohtaroh Satoh, “China EV Makers Rush Cars to
Mexico and Brazil amid Tariff Concerns,” Nikkei Asia, May 16, 2024; Kavipriya, “Mex-
ico Halts Incentives for Chinese EV Makers,” Telematics Wire, April 21, 2024.
381. David Lawder, “US, Mexico Move to Thwart China Circumvention of Tariffs,”
Reuters, July 10, 2024.
PART II
TECHNOLOGY AND CONSUMER
PRODUCT OPPORTUNITIES AND RISKS
CHAPTER 3: U.S.-CHINA COMPETITION IN
EMERGING TECHNOLOGIES
Abstract
The United States is locked in a long-term strategic competition
with China to shape the rapidly evolving global technological land-
scape. Innovation in emerging technologies could transform society,
create new industries, foster new dependencies, and alter the char-
acter of warfare. Whichever country secures a lead in key technol-
ogies—particularly those with first mover advantages—will tip the
balance of power in its favor and reap economic benefits far into the
21st century. China under General Secretary of the Chinese Commu-
nist Party (CCP) Xi Jinping has recognized the potential advantages
of seizing the innovation “high ground” in this competition and has
aggressively designed, implemented, and funded programs to domi-
nate technologies of the future. In doing so, Beijing hopes its efforts
will underpin national rejuvenation, making the country powerful,
self-sufficient, and impervious to perceived technological “contain-
ment” from the United States and its allies and partners. China
has focused on developing emerging technologies such as artificial
intelligence (AI), quantum technologies, biotechnology, and battery
energy storage systems. The United States has similarly realized
the importance of technology competition with China and has sig-
nificantly altered the policy environment around key technologies,
particularly semiconductors, advanced computing, and clean energy.
China faces many challenges, including these U.S. policies, a falter-
ing domestic economy, and inefficiencies inherent in its state-direct-
ed innovation system. However, if China manages to overcome these
challenges, its rapid technological progress threatens U.S. economic
and military leadership and may erode deterrence and stability in
the Pacific, as well as tip the global balance of power.
Key Findings
• The CCP is prioritizing research in key emerging technolo-
gy areas such as AI, quantum technology, biotechnology, and
batteries with the goal of becoming a world leader in science
and technology. Xi is placing a bet that China’s investments
in high-tech industries will unleash “new quality productive
forces,” transcend an old growth model reliant on infrastruc-
ture and lower-technology exports, and help China to achieve
(169)
170
its goal of becoming a superpower in the 21st century. Chi-

na’s focus on emerging technologies is also motivated by its
desire to attain self-sufficiency in what its leaders describe as
“chokepoint” technologies amid an international environment
they perceive as increasingly hostile and to better prepare for
a potential conflict with the United States over Taiwan or in
other contingencies.
• China’s state-centric approach and heavy investments in do-
mestic innovation reflect similar techno-nationalist initiatives
dating back to the Mao Zedong era. Under Xi, these efforts have
intensified as the Party has sought to impose tighter top-down
control in the innovation ecosystem to make breaking depen-
dencies on foreign technologies a focal point.
• The United States and China are neck-and-neck, with one being
ahead or behind depending on the specific critical and emerging
technology. On certain manufacturing-intensive technologies,
like advanced batteries and electric vehicles (EVs), China’s var-
ious efforts have enabled its companies to obtain a clear advan-
tage.
• Artificial intelligence: China is making rapid advancements
and noteworthy investments in its AI capabilities. It is devel-
oping AI not only to advance China’s economic growth more
broadly but also for military applications, such as autonomous
unmanned systems, data processing, decision-making, and cog-
nitive warfare. Across key aspects of AI competition, however,
China is having mixed success.
○ Advanced semiconductors: The United States and
like-minded countries currently have an advantage in the ad-
vanced semiconductors needed to power AI technologies. Chi-
na is aggressively working to address this deficit.
○ Compute and cloud: The United States leads in total com-
pute and cloud, but several Chinese companies have notable
cloud capabilities. Further, the nature of cloud computing cre-
ates a heightened threat of “leakage” into China of advanced
compute capabilities located outside of China.
○ AI models: The United States currently leads the world in
developing robust AI models, but China is pursuing numer-
ous government-led and ostensibly private efforts to develop
advanced AI models.
○ Data: Data are critical to AI capabilities. Each country has
certain advantages in terms of collection, use, and availability
of data for AI systems. China understands the value of data
to AI and has taken active measures to increase the availabil-
ity of quality data within its AI ecosystem.
• Quantum technologies: Both the United States and China are
heavily funding research in quantum computing, sensing, and
communications, the three subdomains that together make up
quantum information science (QIS). While QIS is still in an ear-
ly stage of development, it will have significant competitive and
military impacts if it becomes commercially viable. China’s Par-
171
ty-state drives quantum research through support to a major

state laboratory in Anhui Province as well as a growing roster
of state-backed startup companies. China appears to be an early
leader in quantum communications, launching the world’s first
quantum communications satellite and connecting two ground
stations with quantum key distribution. In other areas, Chi-
na appears to be lagging behind the United States, though its
scientists have claimed breakthroughs in cracking encrypted
communications systems and developing advanced radar tech-
nology, claims that are difficult to confirm.
• Biotechnology: Biotechnology is another key emerging technol-
ogy with the potential for transforming many industries. Chi-
na aims to use biotechnologies to make itself less dependent
on U.S. agriculture while embedding Chinese firms in U.S. food
production and supply chains in genomic, pharmaceutical, and
other biotechnologies. The major research and market presence
of Chinese genomic and biotech services companies in the Unit-
ed States gives these companies access to key technologies and
data.
• Advanced batteries: China has attained a sizable advantage
at each stage of the battery supply chain, ushering in rapid
global market share increases for Chinese EV and battery mak-
ers. China’s near monopoly on battery manufacturing creates
dependencies for U.S. auto manufacturers reliant on upstream
suppliers as well as potential latent threats to U.S. critical in-
frastructure from the ongoing installation of Chinese-made bat-
tery energy storage systems throughout U.S. electrical grids and
backup systems for industrial users.
Recommendations
• Congress establish and fund a Manhattan Project-like program
dedicated to racing to and acquiring an Artificial General In-
telligence (AGI) capability. AGI is generally defined as systems
that are as good as or better than human capabilities across
all cognitive domains and would surpass the sharpest human
minds at every task. Among the specific actions the Commission
recommends for Congress:
○ Provide broad multiyear contracting authority to the execu-
tive branch and associated funding for leading artificial in-
telligence, cloud, and data center companies and others to
advance the stated policy at a pace and scale consistent with
the goal of U.S. AGI leadership; and
○ Direct the U.S. secretary of defense to provide a Defense Pri-
orities and Allocations System “DX Rating” to items in the
artificial intelligence ecosystem to ensure this project receives
national priority.
• Congress consider legislation to:
○ Require prior approval and ongoing oversight of Chinese in-
volvement in biotechnology companies engaged in operations
172
in the United States, including research or other related

transactions. Such approval and oversight operations shall
be conducted by the U.S. Department of Health and Human
Services in consultation with other appropriate governmental
entities. In identifying the involvement of Chinese entities or
interests in the U.S. biotechnology sector, Congress should in-
clude firms and persons:
Engaged in genomic research;
Evaluating and/or reporting on genetic data, including for
medical or therapeutic purposes or ancestral documenta-
tion;
Participating in pharmaceutical development;
Involved with U.S. colleges and universities; and
Involved with federal, state, or local governments or agen-
cies and departments.
○ Support significant Federal Government investments in bio-
technology in the United States and with U.S. entities at
chain, from basic research through product development and
market deployment, including investments in intermediate
services capacity and equipment manufacturing capacity.
• To protect U.S. economic and national security interests, Con-
certain technologies and services controlled by Chinese entities,
including:
○ Autonomous humanoid robots with advanced capabilities of
○ Energy infrastructure products that involve remote servic-
ing, maintenance, or monitoring capabilities, such as load
balancing and other batteries supporting the electrical
grid, batteries used as backup systems for industrial facil-
ities and/or critical infrastructure, and transformers and
associated equipment.
• Congress encourage the Administration’s ongoing rulemaking
efforts regarding “connected vehicles” to cover industrial ma-
chinery, Internet of Things devices, appliances, and other con-
nected devices produced by Chinese entities or including Chi-
nese technologies that can be accessed, serviced, maintained, or
updated remotely or through physical updates.
• Congress enact legislation prohibiting granting seats on boards
of directors and information rights to China-based investors in
strategic technology sectors. Allowing foreign investors to hold
seats and observer seats on the boards of U.S. technology start-
ups provides them with sensitive strategic information, which
could be leveraged to gain competitive advantages. Prohibiting
this practice would protect intellectual property and ensure that
U.S. technological advances are not compromised. It would also
reduce the risk of corporate espionage, safeguarding America’s
leadership in emerging technologies.
173
• Congress establish that:

○ The U.S. government will unilaterally or with key interna-
tional partners seek to vertically integrate in the develop-
ment and commercialization of quantum technology.
○ Federal Government investments in quantum technology sup-
port every level of the technology development cycle and sup-
ply chain from basic research through product development
and market deployment, including investments in intermedi-
ate services capacity.
○ The Office of Science and Technology Policy, in consultation
with appropriate agencies and experts, develop a Quantum
Technology Supply Chain Roadmap to ensure that the United
States coordinates outbound investment, U.S. critical supply
chain assessments, the activities of the Committee on Foreign
Investment in the United States (CFIUS), and federally sup-
ported research activities to ensure that the United States,
along with key allies and partners, will lead in this critical
technology and not advance Chinese capabilities and devel-
opment.
Introduction
This chapter examines U.S.-China technology competition from
the standpoint of economic and national security. Beijing hopes its
efforts to gain leadership in emerging technology will underpin na-
tional rejuvenation, making the country powerful, self-sufficient,
and impervious to perceived technological “containment” from the
United States and its allies and partners.1 This chapter first pro-
vides context, noting a recent shift in U.S. policy across multiple
administrations to address the challenges of technology competition
with China and China’s efforts to lead in key technologies. It then
focuses on U.S.-China technology competition in four key emerging
technology areas: AI, QIS, biotechnology, and advanced battery tech-
nology. For each technology, the chapter highlights commercial and
national security implications of the technology, compares relative
capabilities of China and the United States, examines China’s poli-
cies and investments, and analyzes China’s exploration of such tech-
nologies for military and national security uses. Lastly, the chapter
discusses the implications of U.S.-China technology competition for
the national security and economic prosperity of the United States.
The chapter draws on the Commission’s February 2024 hearing on
“Current and Emerging Technologies in U.S.-China Economic and
National Security Competition,” consultations with experts, and
open source research and analysis.
Securing U.S. Advantage in Emerging Technologies
The policy environment around U.S.-China technology compe-
tition has shifted significantly. For years, Chinese companies and
the Party-state have sought to acquire U.S. cutting-edge technolo-
gy, intellectual property (IP), and know-how through licit and illicit
means. For much of that time, outside of narrow export controls and
occasional foreign investment reviews, U.S. policy was inadequate-
ly responsive to China’s technology policies and ambitions. A large
174
constraint on technology transfer to China in many areas came from

the reluctance of U.S. companies to transfer their best technology to
China out of concerns over IP theft rather than U.S. law.2 In recent
years, however, successive administrations and Congress have iden-
tified emerging technologies as central to the U.S.-China strategic
competition.
As attitudes in the United States have shifted, the United States
has taken a number of steps in recent years to better protect U.S.
national security and shore up U.S. advantages in the development,
production, and protection of these technologies. U.S. policymakers
have identified certain “critical and emerging technologies” or “foun-
dational” technologies as vital to economic and national security,
including advanced semiconductors, quantum information systems,
and AI; biotechnologies and biomanufacturing; and clean energy
generation and storage technology.3 Each of these families of tech-
nologies carries the potential to be a “force multiplier” across the
various fields of technology, accelerating the broader pace of innova-
tion and adoption, and serving as a bedrock upon which to ground
future industries.4 Each also has significant national security im-
plications.
U.S. policy has begun to shift to recognize the importance of com-
petition with China over these critical technologies. In recent years,
the United States has made investments to help ensure it retains
an edge in key foundational technologies; it has also expanded use
of export controls relating to advanced semiconductors and AI and
tightened up other avenues that adversaries use to gain access to
sensitive U.S. technology. Now that U.S. policymakers have realized
the stakes, U.S.-China technology competition will continue to be a
key issue in the U.S.-China economic and security policy space for
years to come.
China Has Long Sought Dominance in Emerging
Technologies
China has long sought to spur domestic science and technology
innovation to enhance its military and commercial progress, but it
is intensifying its efforts in light of disruptive global events and
heightened competition with the United States. China is seeking
to dominate emerging technology industries to sustain economic
growth as traditional sectors atrophy and to exert greater global
influence via the trade and economic leverage that come with these
technologies.
The CCP has clearly articulated and publicly stated its priorities
in emerging technologies, and it leverages a variety of assets to di-
rect attention, effort, and resources toward these priorities. In con-
trast to the more market-oriented innovation landscape in the Unit-
ed States, the state takes on a much more prominent role in China’s
technology ecosystem, with the government strategically allocating
funding and resources to industries and research areas deemed a
priority.5 The results of abundant and sustained state support have
been mixed, creating expected inefficiencies commonly associated
with centrally planned economies and yet also enabling tremendous
returns to scale for fledgling industries that have resulted in clear
comparative advantages for Chinese producers of certain technolo-
175
gies.6 Despite the traction of some of these efforts, China faces chal-
lenges, including a shortage of highly skilled workers and economic
headwinds.7 Additionally, while China has increased its scientific
research and patent output, translating these findings into ground-
breaking innovations and economic benefits remains a hurdle.8
China under the CCP has a long history of techno-nationalism, of-
ten rooted in fear of being dominated by technologically superior for-
eign powers.9 For example, China successfully developed the atomic
bomb in 1964 through “Project 596,” a national initiative that aimed
to build nuclear weapons.10 Similar national innovation programs
have been used to achieve advancement in targeted technology ar-
eas, such as the National High-Tech R&D Program (863 Program)
established in 1986 and the National Basic Research Program (973
Program) established in 1997.11 These large government-funded
initiatives channeled financing and resources to scientists and en-
trepreneurs credited with producing the world’s first quantum tele-
phone network, improved solar technology, and the Tianhe-1A su-
percomputer, which for a time was the world’s fastest computer.12
In the mid-2000s, China made explicit its intention to use technol-
ogy policy to move up the value chain of global production, increase
its indigenous capacity, and become a global leader in certain tech-
nology areas. The 2006 Medium- to Long-Term Program (MLP) for
the Development of Science and Technology articulated the need to
facilitate indigenous innovation and set specific goals to be achieved
by 2020. These included targets in research and development (R&D)
spending, patent filing, and publication of academic articles.13 Chi-
na implemented numerous policies under the MLP in the ensuing
years, many of which ran counter to the letter and spirit of WTO
rules.14
Techno-Nationalism Accelerates under Xi
General Secretary Xi has continued—and in recent years, accel-
erated—these techno-nationalist policies, focusing efforts on tech-
nologies he believes are transformative and can propel China into
dominance this century by leapfrogging the United States. Seek-
ing to accelerate progress under the MLP, in 2015, China rolled
out “Made in China (MIC) 2025,” a more comprehensive industri-
al policy intended to improve manufacturing processes and achieve
breakthroughs in ten high-value sectors.* 15 MIC set ambitious do-
mestic market share targets in the identified priority sectors for
Chinese-made products, including 80 percent for EVs and batteries,
70 percent for industrial robotics, and 40 percent for mobile phone
chips.16 The South China Morning Post claimed in April 2024 that
86 percent of these targets had been met or exceeded.17
Xi has doubled down on the state-centric approach in order to
seize the “high ground” of innovation, rhetorically highlighting its
importance and promulgating further iterations to industrial poli-
cy.18 In speeches and policy documents, Xi and other top Chinese
* The ten high-value sectors highlighted in Made in China 2025 are advanced railway trans-
portation equipment, aerospace, agricultural machines, biopharma and high-tech medical devices,
energy equipment, high-end computerized machines and robots, maritime equipment and high-
tech ships, new energy and energy-saving vehicles, new generation information technology, and
new materials. Karen M. Sutter, “ ‘Made in China 2025’ Industrial Policies: Issues for Congress,”
Congressional Research Service IF10964, March 10, 2023.
176
leaders have emphasized the need to reduce reliance on so-called

“chokepoint” technologies, particularly those controlled by Western
countries, by achieving breakthroughs in domestic innovation and
developing alternative sources of supply.* 19 In March 2023, the
State Council asserted that global competition and external “con-
tainment” necessitated the acceleration of “high-level scientific and
technological self-reliance and self-improvement.” 20
China’s 14th Five-Year Plan (2021–2025) built on previous ini-
tiatives to advance high-priority sectors like AI, QIS, biotechnolo-
gy, and advanced batteries.21 It also indicated a response to what
the CCP perceives as an increasingly hostile and disruptive global
environment by incorporating the “dual-circulation” † development
model and placing an emphasis on obtaining foreign technologies
through pathways that remain open, such as research partnerships,
establishing R&D centers abroad, and providing incentives for tech-
nological talent to work in China.22
More recently, Xi has introduced the concept of “new quality pro-
ductive forces,” which the National People’s Congress elevated as
its top policy priority during its annual meeting in March 2024 and
adopted at the Third Plenum held a few months later in July.23
This slogan, now being widely disseminated in Chinese political
discourse, indicates that China is focusing its state-led economic ef-
forts to enhance competitiveness in emerging technologies like AI
and clean energy to ensure continued economic growth and global
economic leverage through dominance in key technologies of the fu-
ture.24 In doing so, China hopes to eclipse the United States across
the full spectrum of national power.25
Under Xi, the CCP regime has also moved to assert greater con-
trol over science and technology innovation efforts, aiming to en-
hance Party control and ensure alignment with Party priorities.26
After the reform and opening up era in the 1980s, China facilitat-
ed research and capital linkages through a system of hundreds of
publicly funded laboratories—often integrated into universities and
private companies—and by clustering research facilities and busi-
nesses in development zones.27 This decentralized approach was
intended to harness private efforts and allow for localized policy
experimentation.28 In 2016, the Party under Xi moved to reform
the system of state labs and development zones under the “Innova-
* While publicly available official policy documents describe “key and core technologies” con-
trolled by “others” as an area of concern, Chinese leadership rarely delineates these technologies.
In a 2021 speech before the Chinese Academy of Sciences, Xi called on the scientific community
to “resolutely win the battle over key core technologies” by focusing efforts on basic research that
can “break through bottlenecks” and “understand the basic theories and technical principles of
‘chokepoint’ technologies.” In 2018, the Chinese state media newspaper Science and Technology
Daily published a list of 35 chokepoint technologies reviewed and approved by the Ministry of
Science and Technology, among them machinery to fabricate semiconductors such as photo-li-
thography machines and vacuum evaporators, specialized steel alloys, and aviation software. Ben
Murphy, “Chokepoints: China’s Self-Identified Strategic Technology Import Dependencies,” Center
for Security and Emerging Technology, May 2022, 1, 3; Xi Jinping, “Accelerate the Construction of
a Scientific and Technological Power to Achieve High-Level Scientific and Technological Self-Re-
liance and Self Improvement” (习近平:加快建设科技强国实现高水平科技自立自强), Qiushi, April
† Dual circulation consists of achieving a largely self-reliant domestic economy by relying on the
production base and massive consumer market to vertically integrate important industries, while
simultaneously deepening dependencies on Chinese high-quality exports around the world. Karen
M. Sutter and Michael D. Sutherland, “China’s 14th Five-Year Plan: A First Look,” Congressional
Research Service IF11684, January 5, 2021; Center for Strategic and International Studies, “Will
the Dual Circulation Strategy Enable China to Compete in a Post-Pandemic World?” December
15, 2021.
177
tion-Driven Development Strategy.” 29 A key objective of this strat-

egy is to consolidate what was determined to be a fragmented in-
novation landscape with an overabundance of research funding for
underperforming efforts into higher-performing equivalent institu-
tions more directly controlled by the CCP and focused on achieving
self-sufficiency in key “bottleneck” technologies.30 In March 2023,
China also announced plans to restructure its Ministry of Science
and Technology to reduce its responsibilities and centralize Party
control through the establishment of a decision-making body called
the Central Commission on Science and Technology.31
Funding Mechanisms Buttress China’s Science and
Technology Ambitions
The United States has long led the world in both public and pri-
vate sector funding for R&D,* though China is closing the gap. The
Chinese government has prioritized R&D funding to accelerate its
ambitions to innovate in science and technology and better compete
with the United States.32 According to data from the Organisation
for Economic Co-operation and Development (OECD) that compare
R&D spending across countries using purchasing power parity, in
2021 the United States continues to outpace China on total R&D,
spending $806 billion (3.46 percent of gross domestic product [GDP])
compared to China’s $667.6 billion (2.43 percent of GDP).33 In this
dataset, government funding represented roughly 20 percent of to-
tal R&D spending in both countries.34 However, a 2023 estimate
from Rhodium Group found that approximately 60 percent of all fi-
nancing within China’s science and technology ecosystem came from
government-related sources of funding after accounting for tax in-
centives and off-budget financing, distinguishing it from other large
and technologically advanced economies.35 In total dollars spent,
U.S. multinational enterprises in high-tech industries spent 240
percent more on R&D than Chinese firms in 2021, spending $529
billion and $154 billion, respectively.36 However, when adjusted for
wage differences, U.S. companies only spent 80 percent more than
their Chinese counterparts.37 In her written testimony before the
Commission, Ngor Luong, a senior research analyst at the Center
for Security and Emerging Technology (CSET), noted that in 2022
the Chinese National Bureau of Statistics reported that the coun-
try’s R&D investment increased by 10 percent from 2021, outpacing
its goal of 7 percent annual increases outlined in the 14th Five-Year
Plan.38
In addition to direct government funding, traditionally, China
has utilized an array of state-owned enterprises (SOEs) to direct
* R&D is typically subdivided into three components: (1) basic research, which is experimental
or theoretical and attempts to generate new knowledge devoid of a particular application; (2)
applied research, which seeks to acquire new knowledge that can be directed toward a practical
objective; and (3) experimental development, which is the systematic approach to utilize knowl-
edge gained through research to produce new products or services or improve existing products
or services. Together, basic research and applied research comprise “fundamental research.” In
medical and life sciences, the more common term “translational research,” sometimes used syn-
onymously with applied research, is the process of moving discoveries from basic research into
medical applications for patients and populations. National Institutes of Health, “About Trans-
lational Science,” April 19, 2024; Organisation for Economic Co-operation and Development, “Re-
search and Development (R&D),” 2024; Marco Zarbin, “What Constitutes Translational Research?
Implications for the Scope of Translational Vision Science and Technology,” Translational Vision
Science & Technology, July 14, 2020; U.S. Department of Defense, Defense Advanced Research
Projects Agency, Fundamental Research.
178
capital to key sectors and advance national innovation goals. Chi-

na’s Minister of Science and Technology Wang Zhigang has called
on SOEs to be “pillars” in the country’s whole-of-nation approach
to achieve self-sufficiency and high-technology innovation.39 China’s
state-owned banks have been instrumental in directing capital to
national priorities, exemplified by six state-owned investors together
providing one-third of the investment in the latest $47 billion semi-
conductor fund alongside other SOEs and the Ministry of Finance.40
China’s central government is expected to continue to provide robust
support to SOEs involved in national security priorities, including
aerospace and defense and policy banks, while support for those in
disfavored sectors, such as real estate and even consumer goods, is
less assured.41 Beyond providing funding, SOEs have been directed
to increase their own levels of R&D spending and seek opportunities
to integrate more agile high-tech small and medium enterprises into
their supply chains.42
Beijing also uses government guidance funds—public-private
funding mechanisms that blend state capital with Chinese private
equity and venture capital—to steer capital toward strategic indus-
tries such as AI.43 However, Ms. Luong, along with research fellow
Zachary Arnold and Chinese translation manager Ben Murphy at
CSET, find that in practice “most guidance funds fail to live up to
their ambitions, weakened by unrealistic goals, bureaucratic con-
straints, incompetent management, risk aversion, and a lack of mar-
ket discipline.” 44
The Reshaping of Beijing’s Innovation Drive to Utilize Small
and Medium-Sized Enterprises
Over the past decade, China has pivoted its innovation-oriented
policies to refocus on supporting small and medium-sized (SMEs),
developing a whole-of-nation approach to fostering small but highly
innovative firms. As emphasized in 2023 by Premier Li Qiang, Bei-
jing now believes that “supporting early tech startups should be a
top priority.” 45 This shift reflects both Beijing’s acknowledgement
of the success of “hidden” champions * in China’s startup ecosystem
and its desire to curtail the “disorderly expansion of capital,” seek-
ing to avoid what the Party-state viewed as an excessive concen-
tration of investment in e-platforms, including services like video
gaming and online tutoring.46
The Little Giants program, officially launched in 2018, forms
the core of Beijing’s efforts to develop a multi-tiered system to
help SMEs compete in emerging technologies or occupy niche but
critical segments of global supply chains.47 The Ministry of Indus-
try and Information Technology (MIIT) certified the first batch of
companies as “Little Giants” in 2019, and tens of thousands of
SMEs have since received support from the initiative.48 This sys-
tem encompasses a broad array of tools to foster innovation, from
direct subsidies to initiatives enhancing SME-university collabo-
ration.49 However, the most important element is the broadened
* Technology analyst Dan Wang argues that many outside observers underestimate China’s
innovation capacity in part due to China’s innovative firms being concentrated in “less flashy”
manufacturing capabilities and products sold at lower price points in lower-income countries.
Dan Wang, “China’s Hidden Tech Revolution: How Beijing Threatens U.S. Dominance,” Foreign
Affairs, February 28, 2023.
179
access to capital markets for Little Giants.50 SMEs have histori-

cally struggled to access financing within China’s bank-dominat-
ed financial system where lenders prioritize credit to SOEs and
large non-state firms.51 This acts as a barrier to innovation for
many non-state enterprises, one that Beijing aims to ameliorate
through the Little Giants program.52
China has created a series of new financing mechanisms over
the past several years for small firms operating in priority in-
dustries, with varying degrees of success. In 2019, the Shang-
hai-based Science and Technology Innovation Board, or STAR
Market, was launched to expand equity investment in smaller
Chinese technology companies.53 The exchange hosts over 500
companies with a combined market cap of $716.7 billion as of
June 2024, and it predominately fast-tracks initial public of-
ferings (IPOs) for companies in high-tech fields, including new
materials, biomedicine, and information technology.54 The STAR
Market initially outperformed China’s other major indices, but
as of August 2024 it has fallen 59.7 percent since its peak in
July 2020.55 Following lackluster performance of the index in
recent years, the China Securities Regulatory Commission has
since raised the requirements for companies seeking to list.56 The
Beijing Stock Exchange also opened in 2021 for even smaller en-
terprises (with a minimum market value of $30 million, relative
to the $140 million required to list on the STAR Market).57 Little
Giants accounted for around 40 percent of listings across all stock
exchanges in China in 2022.58
Additionally, China is guiding its banking sector to provide easy
access to credit, with the People’s Bank of China (PBOC) creating
a special purpose lending facility that enables innovative SMEs in
science and technology areas to refinance loans well below market
rates.59 At the end of 2023, total lending to sci-tech SMEs reached
$340 billion (renminbi [RMB] 2.45 trillion),* an increase of 21.9
percent relative to 2022 and outpacing overall loan growth by 11.8
percentage points.60 Leaderdrive, a non-state SME that produces
components for industrial robots, is an illustrative example of the
financial support firms gain access to under the program.61 After
it was awarded the Little Giant title in 2019, Leaderdrive benefit-
ed from both government guidance fund investments and a listing
on the STAR Market in 2020.62 Large domestic industrial robotics
manufacturers also provide a source of ongoing demand for Leader-
drive’s production.63
Case Studies in U.S.-China Technology Competition

Both the United States and China view AI, QIS, biotechnology, and
advanced battery technology as some of the key strategic emerging
industries of the future.64 As outlined in the 14th Five Year Plan
(2021–2025), China views these technologies as integral to strength-
ening its national defense in tandem with driving innovation.65 The
following sections will assess U.S.-China technology competition in
these four technologies.
* Unless noted otherwise, this section uses the following exchange rate throughout: $1 = RMB
7.25.
180
Artificial Intelligence: A Revolutionary Technology with

Significant Military Implications
In the broader geostrategic competition between the United States
and China, leadership in Artificial Intelligence (AI) has the potential
to reshape the global balance of power.66 AI is the science and engi-
neering of machines that use complex “algorithms, modeled after the
decision-making processes of the human brain, that can ‘learn’ from
available data and make increasingly more accurate classifications
and predictions over time.” * 67 In recent years, AI has been used to
solve complex problems, provide predictive analytics, recognize and
interpret visual information, engage in natural language processing
to create high-quality content and “understand” and analyze written
and verbal language, and speed the development of robotics.68 The
country that leads in AI has the potential to reap economic bene-
fits including productivity enhancement and the ability to innovate
new products and services and enable insights for business leaders
through data analysis.69 The full extent to which AI will transform
and underpin various industries is still unfolding, but its estimated
impact is massive. McKinsey & Company estimates that AI could
add up to $4.4 trillion annually to the global economy.70 As dis-
cussed below, AI also has numerous military applications that may
provide a strategic advantage to the United States or China in an
Indo-Pacific conflict.71
The United States and China Vie for AI Supremacy
China recognizes the transformational potential of AI and is
positioning itself to capitalize on technological breakthroughs.
Chinese commentators point to the defeat of the top Chinese
player in the boardgame Go by Google’s AlphaGo in May 2017 as
a “Sputnik moment” for the country, which kicked off an effort to
channel attention and resources from entrepreneurs, tech talent,
and policymakers.72 Two months later, the State Council issued
an AI strategy titled the “New Generation Artificial Intelligence
Development Plan,” which called for increased funding and sup-
port to make China a leader in AI theory, technology, applica-
tion, and innovation by 2030.73 Then, in late 2022, the powerful
demonstration of OpenAI’s generative model ChatGPT-3 again
surprised China’s AI industry, exemplifying a clear advantage
for the United States.74 At the annual meeting of China’s rub-
ber-stamp legislature, Premier Li announced an “AI+” initiative
in his work report intended to “actively develop the digital in-
dustry, transform traditional industries with digital technologies,
and fully integrate digital technology into the real economy.” 75
Beijing is making noteworthy investments in its AI capabilities,
utilizing government funding mechanisms and leveraging the
non-state sector for its economic development and efforts to “leap-
frog” the United States militarily.76
* There are numerous subtypes of AI that serve various uses. One of the major types of AI is
machine learning, in which a computer algorithm is developed to analyze and make predictions
from data that are provided in a system. Deep learning, a form of machine learning, uses com-
plex layers of computation to form a deep neural network, which is capable of learning from
large amounts of unstructured data. IBM, “Understanding the Different Types of Artificial Intelli-
gence,” October 12, 2023; National Institute of Biomedical Imaging and Bioengineering, Artificial
Intelligence (AI).
181
The race for superior AI across industries relies on successfully

bringing together enabling technologies and building blocks, includ-
ing advanced chips; computational power, including cloud services;
well-designed algorithmic models; and vast and rich data to train
models. Currently, the United States has a lead in most of these
technologies and building blocks.
Semiconductors Underpin U.S.-China AI Competition
Semiconductors are integral to U.S.-China competition in AI. Ad-
vanced semiconductors are key to AI capabilities due to their role
in accelerating processing speeds and harnessing the computation-
al power needed for complicated AI-related computing tasks.77 The
United States currently has a lead in advanced semiconductors.78
According to an August 2024 report by the Information Technol-
ogy and Innovation Foundation, Chinese competitors are around
“five years behind global leaders in high-volume manufacturing of
leading-edge logic semiconductor chips” and trail in memory chips
and semiconductor manufacturing equipment.79 U.S. companies like
NVIDIA and AMD dominate the design of advanced chips, and they
are fabricated almost exclusively by Taiwan Semiconductor Manu-
facturing Company (TSMC).80 The United States has sought to pro-
tect that lead through export controls and domestic investments.81
The U.S. government and its partners and allies have introduced
targeted export controls that have undercut China’s ability to access
high-end chips and to fabricate them domestically.82 At the same
time, the United States has made substantial investments in grow-
ing domestic production capacity through the CHIPS and Science
Act.83
China has been investing heavily in its domestic semiconductor
industry to boost its AI capabilities and overcome its dependence
on global supply chains, but it still faces numerous hurdles to over-
taking the United States. The export controls by the United States
and its allies against China, coupled with China’s desire to boost
its AI capacities, have spurred China’s domestic chip industry to
develop more rapidly, leading to significant additional spending and
experimentation.84 In March 2024, the Economist Intelligence Unit
estimated that since 2014, China’s state-led investment into its
semiconductor industry exceeded $150 billion, including central and
provincial government support.85 That estimate came prior to the
May 2024 announcement that the third phase of the Chinese gov-
ernment-supported Integrated Circuit Industry Investment Fund
(often called “the Big Fund”) had raised $47.5 billion of investment
to support China’s semiconductor industry.86 If this is all new mon-
ey, it would bring the total since 2014 to $197.5 billion. At the local
level, there are numerous provinces and municipalities that have
issued subsidies for local semiconductor-related firms or to support
the buildout of the local semiconductor industry.* 87 Specific to AI-fo-
cused chips, Beijing’s municipal government has also provided new
subsidies for firms that purchase domestically produced AI chips.88
In April 2024, the Beijing Municipal Bureau of Economy and Infor-
* Other instances where subsidies at the local level have been provided include Beijing, Shang-
hai, Suzhou, Nanjing, Shenzhen, Qingdao, Hefei, Tianjin, Changsha, Wuhan, Chengdu, Wuxi, Hu-
nan Province, Jiangsu Province, and Guangdong Province. See endnote 87 for sourcing.
182
mation Technology announced that it would give companies a per-

centage of their investment for purchases of domestically controlled
graphic processing unit (GPU) chips used in intelligent computing
services, with the city seeking to become fully self-reliant in smart
computing infrastructure hardware and software by 2027 under the
initiative.89
China has made some strides in closing the gap on cutting-edge
GPU semiconductors used to train AI models. Wang Tao, Huawei’s
chief operating officer of its Ascend and Kunpeng ecosystem, claims
that Huawei’s Ascend 910B AI chip is capable of up to 80 percent
of the performance of NVIDIA’s A100 GPU when training large lan-
guage models (LLMs), and in “some other tests” surpasses the A100
by 20 percent.90 Analysts and sources quoted by Reuters claim that
the 910B chips are comparable to NVIDIA’s in terms of raw comput-
ing power but lag in performance.* 91 According to a detailed analy-
sis by CSET, “the performance increase is smaller than advertised;
only 75 percent of the theoretical maximum performance increase
can be attributed to an actual increase in hardware performance”
and “Huawei reduced the number of active AI cores between the
910 and 910B series—likely either due to poor yields or limited ca-
pacity on SMIC’s 7nm fabrication process.” 92 In August 2024, the
Wall Street Journal reported that Huawei is close to introducing a
new chip for AI use, the Ascend 910C, which the company claims is
comparable to NVIDIA’s H100.93 However, it has faced production
delays with these chips, and further U.S. restrictions may prevent
access to machine components and memory chips for its AI hard-
ware.94 Additionally, some experts have argued that the underlying
technology being used to produce Huawei’s chips has significantly
lower “yield,” meaning that a significant portion of the chips pro-
duced are flawed and do not function effectively, resulting in appre-
ciably higher total costs to manufacture at scale.95
It’s Not Just Chips: How Huawei Seeks to Compete

across the AI “Stack”
To date, U.S. concerns around AI and China have focused large-
ly on access to advanced semiconductors. Similar to many other
advanced technologies, however, AI is powered by a “stack” of en-
abling hardware, software, and services. Policymakers have paid
much less attention to other elements of the AI stack.
NVIDIA is a leader in the AI space not only because of GPUs
but also its CUDA software.† Known as its “secret sauce” or
“moat,” CUDA is NVIDIA’s closed-source “AI software ecosystem”
that allows programmers to utilize the parallel computing power
* According to a report by AI Now Institute, a New York-based policy institute, computational pow-
er, also known as compute, is measured in floating point operations, or FLOP, which is a mathemat-
ical operation that enables the representation of extremely large numbers with greater precision.
Compute performance, on the other hand, is measured in floating point operations per second, or
FLOP/s. This is essentially the number of computations a given resource can carry out in a second. Jai
Vipra and Sarah Myers West, “Computational Power and AI,” AI Now Institute, September 27, 2023.
† CUDA stands for Compute Unified Device Architecture. Related to CUDA is cuDNN (CUDA
deep neural network), a library built on top of CUDA containing tools and routines specific to
deep neural networks such as AI. 1kg, “cuDNN: What Is cuDNN?” Medium, May 4, 2024; Rakesh
Rajpurohit, “Understanding CUDA for GPU Computing,” Medium, August 15, 2023; Deep Lizard,
“CUDA Explained - Why Deep Learning Uses GPUs,” September 9, 2018; Fred Oh, “What is
Cuda?” NVIDIA, September 10, 2012; NVIDIA, “NVIDIA cuDNN.”
183

across the AI “Stack”—Continued
of NVIDIA’s GPUs for building AI applications.* 96 As NVIDIA
has been developing CUDA since 2004, it has a lead over both do-
mestic and foreign AI chip design firms in the resources it can of-
fer AI programmers.† 97 The symbiosis within NVIDIA’s AI stack
has led to a “flywheel effect” that makes the company essential
for many AI developers. As companies purchase more NVIDIA
GPUs for AI development, more developers use CUDA; as more
developers use CUDA, they increase their dependency on NVID-
IA’s GPUs.98
Figure 1: A Comparison of NVIDIA and Huawei’s AI Tech Stacks
HUAWEI AI TECH STACK NVIDIA
Zidong Taichu, Pangu AI Models and ChatGPT, Tesla FSD

Applications
Mindspore (open-source) AI Frameworks PyTorch (open-source)
Chip/GPU
CANN Enablement CUDA
Software
9XX Ascend AI chips Hardware A100, H100 GPUs
Note: The diagram indicates the various software technologies (mid-to-upper layers) that
are either directly controlled or best optimized for NVIDIA or Huawei’s chip-based hardware
(bottom layer), respectively. CANN and CUDA are Huawei and NVIDIA’s respective propri-
etary software frameworks required to manage the parallel processing power of their chips.
MindSpore (Huawei) and PyTorch (PyTorch Foundation) are open source AI frameworks that
rely on or are best optimized for CANN and CUDA, respectively. Finally, Pangu (Huawei) and
ChatGPT (OpenAI) are examples of technologies built or iterated using these AI frameworks.
Source: Various.99
* CUDA allows for the optimization, speeding up, and programming of NVIDIA GPU’s CUDA core
and machine learning-focused Tensor core sub-processing units necessary for parallel computing and
the deep learning associated with building AI models. For more, see 1kg, “cuDNN: Common Chal-
lenges and Their Practical Solutions,” Medium, June 26, 2024; Jeremy Appleyard and Scott Yokim,
“Programming Tensor Cores in CUDA 9,” NVIDIA Developer, October 17, 2017; Ravi Rao, “Tensor
Cores vs CUDA Cores: The Powerhouses of GPU Computing from NVIDIA,” Wevolver, July 25, 2024.
† PyTorch and TensorFlow are the most popular AI frameworks for building AI models (though
PyTorch is more widely used). This is evolving slightly as Google (which designed and oversees
TensorFlow) continues building out its Tensor Processing Unit (TPU) hardware/software AI stack.
For now, CUDA is widely seen as the de facto choice for AI frameworks. As the cofounder of Py-
Torch Soumith Chintala put it in 2023, “The CUDA monopoly is nowhere close to being broken
and CUDA will continue to be the key dependency for PyTorch.” For more, see Soumith Chintala,
X.com, Jan 17, 2023. For more on PyTorch popularity compared to TensorFlow, see Valantis K,
“Battle of the Giants: TensorFlow vs PyTorch 2023,” Medium, January 28, 2023. For possible fu-
ture domestic challenges to NVIDIA and CUDA, see Dylan Patel, “How Nvidia’s CUDA Monopoly
in Machine Learning Is Breaking - OpenAI Triton and PyTorch 2.0,” SemiAnalysis, January 16,
2023; Kevin Jackson and Doug Eadline, “Spelunking the HPC and AI GPU Software Stacks,”
HPC Wire, June 21, 2024.
184

Huawei is not just targeting advanced semiconductors but is
also seeking to establish its own “flywheel” to displace NVID-
IA’s dominance.100 Like NVIDIA, Huawei’s AI “tech stack” starts
with its hardware (the Ascend family of AI chips) atop of which
is a CUDA-like layer of software known as CANN (Compute Ar-
chitecture for Neural Networks).101 Atop of CANN, Huawei has
also released MindSpore, an open source AI framework of soft-
ware similar to the popular PyTorch and TensorFlow AI frame-
work software used to create LLMs and other AI technologies.102
Though PyTorch and TensorFlow are also open source, Huawei
needs an alternative because PyTorch and TensorFlow are largely
integrated with CUDA and as a contingency should the U.S. gov-
ernment ever block access to PyTorch and Tensorflow.* 103
In the short term, Huawei still trails NVIDIA and its AI hard-
ware/software “stack.” NVIDIA alone has developed 600 AI mod-
els; and four million developers currently use CUDA software for
training AI.104 Programmers in China also have concerns about
Huawei’s CANN, reporting large-scale issues with bugs, software
glitches, and general inferiority to NVIDIA’s CUDA.† 105 Mind-
Spore also trails more popular open source AI frameworks such
as PyTorch. While the Chinese Academy of Information and Com-
munications Technology (CAICT) has noted that MindSpore is the
most popular AI framework domestically within China, it admits
that PyTorch and TensorFlow are a “duopoly” internationally.106
However, in the long run, Huawei’s attempts to recreate NVID-
IA’s “flywheel” via an integrated AI hardware/software stack bears
close attention. As of July 2023, Huawei claimed that the number
of Ascend and CANN developers had doubled from a year prior
and reached 1.8 million.107 Huawei has also stated that nearly
half of all large language models in China are currently trained
on its Ascend (hardware)/CANN (software) AI ecosystem.‡ 108
Mobile technology provides an instructive example of how
Huawei has leveraged privileged access to China’s massive do-
mestic market and various types of state support to overcome
technological hurdles, accelerate adoption, and continue to pur-
* Though there are other layers of the AI stack, the relationship between hardware (chips) and
software (CUDA/CANN) to AI frameworks (PyTorch/MindSpore) that rely on them is critical for
understanding NVIDIA and Huawei’s “flywheels”.
† China’s own developers are still heavily reliant on CUDA, with prominent Chinese chip
startups like Moore Threads and Denglin using or accessing CUDA. Jeff Pao, “‘China’s NVIDIA’
Collapsing in a Heated Funding Dispute,” Asia Times, September 3, 2024; Che Pan, “Tech War:
NVIDIA’s Move to Curb Use of CUDA Exposes China’s Weak Link in Chip Software,” South
China Morning Post, March 6, 2024; Simon Sharwood, “China’s GPU Contender Moore Threads
Reveals Card That Can Cope with NVIDIA’s CUDA,” Register, December 20, 2023.
‡ Based on the most recent filings from the Cyberspace Administration of China’s Algorithmic
Registry, as of August 5, there are 487 algorithms registered within China. This includes a mix
of generative AI models, recommendation engines, and other algorithm/AI applications. Cyber-
space Administration of China, Announcement of the Cyberspace Administration of China on the
Release of the Seventh Batch of Deep Synthesis Service Algorithm Registration Information (国
家互联网信息办公室关于发布第七批深度合成服务算法备案信息的公告), August 5, 2024. Translation;
Qiheng Chen, “China’s Emerging Approach to Regulating General-Purpose Artificial Intelligence:
Balancing Innovation and Control,” Asia Society Policy Institute, February 7, 2024; Matt Sheehan,
“What China’s Algorithm Registry Reveals about AI Governance,” Carnegie Endowment for Peace,
December 8, 2022.
185

sue technological leadership.* The United States added Huawei
to the Entity List in May 2019, restricting access of Huawei to
various products and technologies, including semiconductors, the
licensed version of Android (which was the operating system [OS]
underlying Huawei’s handsets), Android OS updates, and access
to Google apps and services.109 Leading U.S. tech publications
that saw Huawei as a leading manufacturer of low-cost hardware
were concerned that the Android ban, in particular, would irrep-
arably harm the company moving forward.110 Huawei’s domestic
Android alternative, Harmony OS (HongMeng), was dismissed by
Western critics as a glorified “fork” that relied on Android’s open
source software, which would face myriad challenges in becoming
a viable rival to Android.111
Five years later, however, the pairing of Harmony OS with
China’s export control-defying hardware (the Kirin 9000 chip)
has been a key reason Huawei has continued to remain com-
petitive in the handset space.112 Harmony OS currently is used
on over 900 million devices globally; 2.5 million developers are
working on apps for the Harmony OS platform, and Huawei
targets one million apps for the OS in the near future.113 The
company’s next mobile operating system, HarmonyOS NEXT,
scheduled to debut October 2024, will remove its Android open
source code, making it a fully independent mobile operating
system.114
China has made progress in expanding “legacy” or “mature

node” semiconductor production. Semiconductor Manufactur-
ing International Corporation (SMIC) has become the world’s
third-largest foundry and is prominent in “mature node,” or 28
nm and above chip production.115 These chips are less demand-
ing in wafer production and are made with older-generation deep
ultraviolet lithography equipment.116 China is rapidly expanding
production capacity for these semiconductors, which are crucial to
a wide range of commercial products. According to one estimate,
China is on pace to add more than 18 new chip fabs in 2024
alone.117 The Information Technology and Innovation Foundation
estimates that between 2022 and 2026, China will bring 26 new
fabs online, a majority of which will build legacy chips.118 Ac-
cording to Silverado Policy Accelerator, “China has the most fabs
expected to come online during 2022–26, which will result in it
having the most both 200 mm and 300 mm wafer capacity in the
world” and “as of March 2023, [China] accounted for 32 percent
[the world’s largest share] of current and planned capacity for 20
to 180 nm semiconductors (excluding memory).” 119
* On a related point, Huawei’s continued status as the global leader in 5G technology—as of

2023 it is still the number one provider globally—suggests limits to U.S. technology controls and
related efforts to limit the spread of national security-sensitive Chinese technology. 5G has some
important differences, however, given that Huawei was already the global leader in this technolo-
gy before the imposition of U.S. controls. Daniel Chiang and Vyra Wu, “Huawei vs. Samsung: Who
Leads the Global Communication Equipment Race?” DigiTimes, April 17, 2024.
186
The Silverado production capacity estimates were made in Oc-

tober 2023; since then, China’s imports of semiconductor manu-
facturing equipment surged to new highs for calendar year 2023
and are on pace to surpass that in 2024. In 2023, China was the
largest global importer of semiconductor manufacturing equipment,
importing $42.5 billion, almost $15 billion more than Taiwan, the
second-largest importer.120 According to data from China’s General
Administration of Customs, Chinese imports of chip equipment in
the first seven months of 2024 hit a new high, totaling $26 bil-
lion.121 Lithography tools, in particular, are a key piece of semicon-
ductor manufacturing equipment for which China currently has no
significant domestic alternative, with only an estimated 1 to 1.2 per-
cent of lithography tools manufactured domestically.122 In the past
five years, China has imported 444 lithography machines from EU
trading partners (predominantly the Netherlands) and $27.4 billion
dollars’ worth of semiconductor manufacturing equipment in 2023,
an increase of nearly 50 percent from the prior year.* 123
Given limitations on advanced semiconductor manufacturing
equipment sales, China is constantly pursuing legal and illegal
means to acquire semiconductor manufacturing equipment.124 On
its own, China is not likely to catch up at scale on high-end AI
chips, at least not using current technology.125 SMIC and Yangtze
Memory Technologies Corp (YMTC) are still dependent on Western
equipment, especially for making more high-end semiconductors.126
Unless China can solve the “yield” problem inherent in using older
equipment to produce more advanced semiconductors, it is not likely
to be able to produce AI-caliber chips in quantities needed for the
massive expansion in AI demand that is projected.127 It is worth
noting, though, that total AI infrastructure demands for national
security uses are likely a fraction of those needed for the broader
commercial market.
Legacy Semiconductors Underpin Wide Variety of

Modern Technologies; Significant Risk of Overcapacity
Glut from China
Although the world’s most cutting-edge semiconductors are at
the forefront of advancements in AI, “legacy” semiconductors are
critical for a whole host of other technologies.† Legacy chips are
pervasive and essential, as they can be found in nearly every elec-
tronic device ranging from automobiles, fighter jets, drones, med-
ical devices, smartphones, computers, industrial equipment, sci-
entific equipment, communications devices, sensors, and more.128
* The complexity of these machines cannot be overstated. The latest extreme ultraviolet lithog-
raphy machines produced by ASML are “the size of a bus, but so accurate they could direct a laser
to hit a golf ball as far away as the Moon.” Lucy Rodgers et al., “Inside the Miracle of Modern
Chip Manufacturing,” Financial Times, February 28, 2024,
† Chips are categorized based on their function. Analog chips are used to capture real-world
wave signals such as those used in sound amplification, energy regulation, some sensors, and
surveillance equipment. The most sophisticated category is logic chips, which process data and
conduct computing functions, with applications in smartphones, AI and advanced computing, and
the automotive industry. Logic chips are differentiated further based on performance, which is
related to the distance between circuits, or nodes. Generally, chips below the 10-nanometer node
threshold are considered advanced, with smaller nodes allowing for more transistors to be packed
onto a chip to increase computational speed and power. Lin Jones et al., “U.S. Exposure to the
Taiwanese Semiconductor Industry,” U.S. International Trade Commission, November 2023, 5.
187
Legacy Semiconductors Underpin Wide Variety of

Modern Technologies; Significant Risk of Overcapacity
Glut from China—Continued
In some cases, mature node chips are used alongside leading-edge
processors to power these technologies; in others, only “legacy”
chips are needed.129
Currently, the legacy semiconductor supply chain is fairly di-
versified, but China already plays an important role in it. China
accounted for 31 percent of global legacy chip production at the
end of 2023, and in a few years it is projected to become the
leading global producer of 200 mm to 300 mm semiconductors.130
According to a May 2024 report by Rhodium Group, China not
only has more capacity than any other country in analog, discrete,
mixed-signal, and power chips, it is also expanding production
capacity in those chips faster and at a larger scale than any other
country.131
Legacy chips have also been an important source of techno-
logical power bolstering Russia’s war against Ukraine. According
to a June 2024 New York Times report, an expansive network of
illicit exporters operating in China and several other countries
has managed to ship an estimated $4 billion worth of restricted
integrated circuits to Russia since its invasion of Ukraine. Many
of these come from Chinese companies shipping via shell com-
panies in Hong Kong, helping “China emerg[e] as the dominant
chip supplier to Russia.” 132 Despite not being suitable for ad-
vanced military technologies such as AI, legacy semiconductors
have been found in a host of Russian weapons and are a critical
dual-use technology for Russia’s war efforts. (For more informa-
tion on China’s sales of integrated circuits to Russia, see Chapter
1, “U.S.-China Economic and Trade Relations (Year in Review).”)
If past is prologue, once China’s massive new semiconductor
fabrication capacity comes online, China may flood the world with
cheap legacy semiconductors, forcing prices down.133 In turn, this
could threaten the viability of other countries’ legacy semicon-
ductor industries and provide China significant global econom-
ic leverage.134 According to Jimmy Goodrich, nonresident fellow
at the University of California’s Institute on Global Conflict and
Cooperation, “Already, Chinese foundries are engaged in a price
war with their domestic competitors that has spilled over to im-
pact similar firms in Taiwan and South Korea.” 135 This scenario
echoes the first “China shock” and highlights rising concerns that
China’s economic model is premised on investing in excess capac-
ity and relying on global markets to absorb the exports.136
China Seeks to Close the Gap with the United States in Total
Compute Power
The rise in demand for AI has come with a corresponding need
for greater compute power, as training models require a substan-
tial amount of data and compute-intensive resources provided by
188
advanced semiconductors.* 137 In this context, compute power, com-

puting power, or “compute” generally refers to national-level or
company-level infrastructure, capabilities, and resources dedicated
to computational power and data processing.138 These may include
the development and use of computing systems, data centers, cloud
computing facilities, and networks that support high-end computa-
tional tasks.139 The United States currently has a lead in compute
power over China. Experts assess that one of the factors contribut-
ing to the status of U.S.-based companies—including OpenAI, Goo-
gle, and Meta—as some of the dominant players in the global AI
landscape is their preferential access to compute.140 In particular,
these three companies are building compute infrastructure using
tens or even hundreds of thousands of advanced NVIDIA GPUs,
including the cutting-edge GH100.141 According to Paul Triolo, the
senior vice president for China and technology policy lead at Al-
bright Stonebridge Group, and Kendra Schaefer, a partner at Triv-
ium China and nonresident fellow at the National Bureau of Asian
Research, “Amassing so many advanced GPUs is largely out of reach
for Chinese technology platforms and start-ups,” and in contrast to
their U.S. counterparts, many Chinese AI players struggle to find
access to investment and compute.142 The U.S. export controls on
advanced semiconductors will help the United States maintain its
compute power lead because such semiconductors allow for new sys-
tems with significantly faster and larger total compute loads nec-
essary for the demands of AI. As such, U.S. export controls have
complicated China’s long-term capacity to keep up with the United
States in compute.143
Chinese government efforts to expand national computing pow-
er networks and optimize resource efficiency are key to China’s AI
self-reliance drive, and Beijing has taken multiple policy actions in
recent years to improve its computing capabilities. In 2021, China’s
National Development and Reform Commission announced plans
to optimize and integrate computing resources across the country
through the (still under construction) National Integrated Comput-
ing Power Network.† 144 Chinese government departments set a tar-
get in October 2023 to increase the country’s aggregate computing
power from 197 EFLOPs (a measure of computing speed equal to
1 quintillion floating-point operations per second) to 300 EFLOPs
between 2023 and 2025, constituting a 50 percent increase.145 MIIT
claimed in October 2023 that China’s compute power ranked second
behind the United States, but it did not provide a number for its
estimate of U.S. computing power.146 In May 2024, China launched
a three-year action plan to strengthen standards in cutting-edge
* Technologies like high bandwidth memory also allow for faster transfers of data within chips.
China has also acknowledged that it lacks a fully indigenous high-bandwidth memory supply
chain. Aside from two U.S.-sanctioned companies, China does not have any large-scale high-band-
width memory producers. Boston Consulting Group, “The Race for Advanced AI Chips,” April 17,
2024; Brocade, “The War for AI National Power: GPUs Are the Obvious Thread, but HBM Is the
Hidden Thread” (AI国力战争:GPU是明线，HBM是暗线), CSET Emerging Technology Observatory,
March 28, 2024. Translation.
† The National Integrated Computing Power Network is an integrated and optimized network
of computing resources, such as data centers, that aims to boost China’s overall computing power
and broaden access to computing power nationwide for a variety of applications. For more, see
“The EDWC and China’s Data Center Buildout” textbox below. Global Times, “China Vows to
Establish Integrated Computing Power Network, Boosting Digital Economy: NDB Chief,” March
25, 2024.
189
technologies, including national computing power, which will in part

focus on enhancing computing power infrastructure standards and
strengthening basic standards for data resources.147
A critical aspect of compute is cloud computing. The United States
leads on cloud computing, but China has made it a priority to catch
up. Cloud computing allows computing power to be made available
to a wider range of users remotely.* It is a “crucial behind-the-scenes
engine of the digital economy . . . allowing companies to run artificial
intelligence programs.” 148 It is also a major driver of economic ac-
tivity and technological innovation in both the United States and
China. Domestically, the United States is the world’s largest cloud
market, with its public cloud market expected to exceed $430 billion
in 2024.† 149 U.S. companies currently lead the global cloud comput-
ing market, with Amazon (32 percent), Microsoft (23 percent), and
Google (12 percent) on their own making up a 67 percent global
market share.150
Within China, Alibaba, Huawei, and Tencent control 72 percent
of China’s protected domestic cloud market.‡ 151 China’s cloud mar-
ket is the world’s second-largest market, with the Chinese govern-
ment-backed think tank CAICT calculating China’s 2023 domestic
cloud market size at $85 billion and predicting it will reach $293
billion by 2027.152 Currently, both Microsoft and Amazon AWS op-
erate cloud services in China, with Microsoft offering services un-
der a wholly owned subsidiary of local company 21Vianet and AWS
China partnering with local companies Sinnet and NWCD to offer
data center services.153 An Amazon executive for Greater China re-
portedly stated in June 2024 that AWS “is committed to long-term
investments in China, and will focus on offering generative artificial
intelligence technology and helping Chinese enterprises in their dig-
ital transformation.” 154
In terms of international presence, China’s cloud providers cur-
rently trail U.S. firms by a significant margin. China’s big three cloud
companies only make up roughly 8 percent of global cloud market
share, led by Alibaba (4 percent global market share), Tencent (2
percent), and Huawei (2 percent).155 Chinese companies are seeking
to make significant inroads, however, in expanding cloud presence
in developing and lower-income countries. Though Chinese compa-
nies do not publish their total data center figures, China’s three
largest cloud providers have listed their international (non-China)
“availability zones”: clusters of data centers offering cloud service.
Between Huawei (33), Alibaba (28), and Tencent (22), China’s cloud
leaders operate 81 data center cluster “availability zones” outside of
China.156 Southeast Asia is currently where Alibaba (10) and Ten-
cent (8) have the most availability zones, with Huawei’s leading con-
* The National Institute of Standards and Technology defines cloud computing as “a model for
enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable com-
puting resources (e.g., networks, servers, storage, applications, and services) that can be rapidly
provisioned and released with minimal management effort or service provider interaction.” Peter
Mell and Tim Grance, “SP 800-145: The NIST Definition of Cloud Computing,” U.S. Department
of Commerce National Institute of Standards and Technology, September 2011.
† The term “public cloud” is an industry term generally defined as “computing services offered
by third-party providers over the public Internet, making them available to anyone who wants to
use or purchase them.” Microsoft Azure, “What Is a Public Cloud?”.
‡ Alibaba controls 37 percent, Huawei controls 19 percent, and Tencent controls 16 percent of
China’s total domestic cloud market. Canalys, “Mainland China’s Cloud Service Spend Grew by
20% in Q1 2024—Canalys,” June 27, 2024.
190
centration of availability zones in Mexico and South America (12),

followed closely by Southeast Asia (10).* 157 With Southeast Asia’s
cloud computing market predicted to hit $40.3 billion by 2025, U.S.
and Chinese cloud firms are positioning to battle over market share
throughout the region.158 As Bridge Song, the VP of Alibaba Cloud
Intelligence International, publicly stated September 2024, “The pri-
mary strategic market of Alibaba Cloud has always been Southeast
Asia.” 159 China tech analyst Kevin Xu pointed out in July 2023 that
in this “battle,” the data center buildout of Chinese companies at
that time far outpaced U.S. cloud providers, with Amazon having
data centers only in Indonesia and Malaysia; Google only offering
data centers in Singapore and Indonesia; and Microsoft offering
cloud services only in Singapore, with plans to build data centers in
Indonesia and Malaysia.160
Data storage will be increasingly important as both the United States
and China are set to produce more and more data. By 2025, China is
predicted to generate more data than the United States, producing 48.6
zettabytes to an estimated 30.6 zettabytes for the United States.161
Managing and storing this amount of data for both the United States
and China will require an enormous amount of physical infrastructure
and energy. China is seeking to address these challenges by simulta-
neously building out data storage and optimizing electrical infrastruc-
ture layout for data centers. (For more on this, please see the textbox
on “The Eastern Data Western Computing (EDWC) and China’s Data
Center Buildout” later in this chapter.)
This growth coincides with a Party-state push that sees cloud as
essential to China’s national security, technological, and economic
goals. Leading government organizations such as the State Council
and MIIT have highlighted cloud adoption as a key component of
strategic “five-year plans” involving the long-term direction of tech-
nology and the economy.† 162 Cloud is also crucial to state-led goals
for increasing compute through infrastructure as a service (IaaS),
with the construction of cloud facilities and data center nodes as
the backbone of China’s massive “Eastern Data Western Computing”
(EDWC) project.163 Besides the EDWC, China’s state asset manager,
the State-Owned Assets Supervision and Administration Commis-
sion of the State Council (SASAC), has launched a “national cloud”
available for use by China’s state-owned enterprises.164 Finally, at
the provincial level, companies like Alicloud have been partnering
with key municipalities such as Hangzhou, Tianjin, and Shenzhen
in efforts to strengthen their local cloud computing infrastructure
for data exchanges that China sees as essential to its “new digital
economy.” ‡ 165
* Until recently, Alibaba also operated cloud data centers in Australia and India (two zones
each for four zones total); however, as of 2024, these plants are planning to cease operation. Mu-
hammad Zulhusni, “Alibaba Cloud Shutters Australian and Indian Data Centres, Contradicting
Earlier Claims,” CloudTech, July 2, 2024.
† China’s tech firms are not the only players in its cloud computing market; as of July 2024, at
least 16 local governments in China have offered companies coupons to access processing power
at subsidized prices at large state-run data centers where scarce supplies of advanced chips have
been pooled. Also, U.S. tech companies like Amazon and Microsoft continue to provide cloud ser-
vices in China. Liza Lin, “China Puts Power of State behind AI—and Risks Strangling It,” Wall
Street Journal, July 16, 2024; Reuters, “List of Chinese Entities Who Have Turned to the Cloud
for Access to Restricted US Tech,” August 23, 2024.
‡ China’s data exchanges are state-supervised sites for the purchase, sale, or “exchange” of data
across a wide variety of state and economic sectors. China sees them as critical for utilizing data
as a “new factor of production” and strengthening its digital economy. Qiheng Chen, “China Wants
191
Eastern Data Western Computing (EDWC) and China’s

Data Center Buildout
China is reshaping a significant part of its domestic develop-
ment program in order to create the infrastructure for the com-
pute, data center capacity, and electrical power requirements nec-
essary for advanced technologies such as AI. Current estimates
indicate China’s domestic data centers consume roughly 200 ter-
awatt hours (TWh) of electricity now, set to grow to roughly 300
TWh by 2025 and 380 TWh by 2030.* 166 China’s Ministry of Ecol-
ogy and Environment has estimated that the share of national
energy consumption by data centers will rise from 1.5–1.9 percent
circa 2020 to over 5 percent by 2030.167
China has developed a plan to meet the growing demand for
data center compute while potentially contributing to regional
development needs. China’s eastern regions, where current data
centers are concentrated, already face high electricity prices and
strained electrical grids.† 168 These problems in Eastern China
contrast sharply to the situation of Western China, which has
severely underdeveloped data center infrastructure but abundant
and cheap energy as well as land.169 (For more on China’s energy
needs and constraints, see Chapter 7, “China’s New Measures for
Control, Mobilization, and Resilience.”)
To solve this imbalance of data center power needs and relative
cost structures, China has spent the past several years imple-
menting a grand realignment plan for its digital infrastructure:
the Eastern Data Western Computing (EDWC) project. The EDWC
envisions a massive buildout of data centers and cloud facilities
in western provinces with abundant (green, low-carbon) energy
resources, such as Inner Mongolia, Ningxia, and Guizhou.‡ 170
Since being formally codified as national-level policy in 2021, the
National Development Reform Commission issued a joint order
along with numerous other government entities to accelerate the
EDWC implementation and buildout.171
The EDWC also is intended to advance China’s long-term goal
of increasing the availability of computing power through a “na-
tionally integrated computing power network,” or NICPN, that is
to Put Data to Work as an Economic Resource—But How?” Digichina, February 9, 2022; Julia Lu,
“China’s Data Exchanges, Explained,” Technode, August 17, 2021.
* A terrawatt hour is the amount of power generated by a 1-terawatt generator (or multiple
lower-power generators equivalent to a 1-terawatt generator) for one hour. To put these terms on
a human scale, 1 gigawatt is enough to power approximately 750,000 U.S. homes for one year.
1,000 Gigawatts = 1 Terrawatt. Zach Stein, “What Is a Terawatt Hour (TWh)?,” Carbon Collective,
October 1, 2024; Caleb Harding and Lily Ottinger, “Powering China’s Data Centers: Batteries or
Nukes?” ChinaTalk, September 12, 2024.
† Power consumption is a major concern for data center operators, with some academics placing
power consumption at 70 percent of a data center’s operational expenses. For a general sense of
China’s power consumption and generation at a national level, a useful comparison comes from
Reuter’s market analyst John Kemp: “Ten provincial-level areas in the east and south (Liaoning,
Hebei, Beijing, Tianjin, Shandong, Jiangsu, Shanghai, Zhejiang, Fujian and Guangdong) account-
ed for 50% of national consumption but only 40% of generation in 2022. By contrast, six remote
and sparsely populated northern and western areas (Inner Mongolia, Xinjiang, Shanxi, Shaanxi,
Gansu and Ningxia) accounted for 18% of consumption but 25% of generation.” Ning Zhang et
al., “The ‘Eastern Data and Western Computing’ Initiative in China Contributes to Its Net-Zero
Target,” Engineering, August, 2024; John Kemp, “China’s Rapid Renewables Rollout Hits Grid
Limits,” Reuters, July 4, 2024.
‡ There are several translations of the project’s name with slight variants. We have chosen to
use “Eastern Data Western Computing,” as it is one of the most widely reported translations.
192
Eastern Data Western Computing (EDWC) and China’s

Data Center Buildout—Continued
currently under construction.172 The NICPN seeks to pool and
allocate compute from the EDWC’s interconnected data centers
as well as existing data centers in order to boost China’s overall
computing power and increase the effectiveness of how it is allo-
cated.173 Newly appointed head of the National Data Administra-
tion (NDA) Liu Liehong cites the NICPN as crucial for meeting
the computing power needs of advanced technologies like gener-
ative AI.174
As of June 2024, Liu Liehong announced that China’s govern-
ment had invested roughly $6.2 billion in the project, with ad-
ditional funding of more than $28.4 billion from other sources,
including the private sector.175 Early analysis reveals the data
centers’ “primary operators” will be China’s big three state-owned
telecoms, with China Mobile investing $6.4 billion, China Telecom
investing $4.9 billion, and China Unicom investing $3 billion.176
China tech champions Huawei and Alibaba have also made major
investments in the project, with estimated financing of $4.7 bil-
lion and $3 billion, respectively.177
While the EDWC program faces some challenges over demand,
cost, and latency, China’s government believes the EDWC and
NICPN can boost China’s capacity in data center technology, com-
puting power, and the digital economy, particularly as energy de-
mands from data centers for AI increase.178 The United States is
now making efforts to ensure that it maintains a strategic lead
in compute by meeting with leading AI, AI GPU, and data center
companies to discuss how the United States can rapidly build
out its data center infrastructure and provide energy resources
to meet the needs of these technologies.179
Access to compute via cloud computing complicates and inter-

nationalizes U.S.-China AI-related competition. Cloud computing
can be an effective way to circumvent export controls on advanced
chips, as it allows remote access to the computing power enabled
by such chips.* Since the chips themselves are not exported in a
cloud computing service, export controls are not necessarily impli-
cated at all.180 For example, Chinese companies targeted by U.S.
sanctions have found workarounds to obtain access to restricted
U.S. AI technology by using third-party cloud providers and rental
arrangements.181 iFlytek, a state-backed voice recognition compa-
ny blacklisted by Washington in 2019, has been renting access to
NVIDIA’s A100 chips.182 According to an investigative report by Re-
uters in August 2024, Chinese state-linked entities were accessing
* Remote access to compute power is also a potential issue for quantum computing. According to
Edward Parker with RAND Corporation, “Many quantum computing companies do not sell hard-
ware but instead operate under a cloud-access model whereby customers submit tasks remotely
and the companies perform the actual computations in-house. Any export controls on quantum
computing should clearly address the permissibility of selling computing services to foreign cus-
tomers, even if no physical hardware ever leaves the United States.” Edward Parker, written
response to question for the record for U.S.-China Economic and Security Review Commission,
Hearing on Current and Emerging Technologies in U.S.-China Economic and National Security
Competition, February 1, 2024.
193
controlled NVIDIA chips for AI training via AWS and other cloud
providers.183 Also in August 2024, the Wall Street Journal reported
on a company in Australia which, with the help of investors from
Dubai and the United States, set up a cloud service powered by
NVIDIA’s advanced H100 chips at least in part to process AI algo-
rithms for Chinese-based companies.184 An executive at the compa-
ny explained the decision to target China: “There is demand. There
is profit. Naturally someone will provide the supply.” 185
The United States has begun to explore how to combat China’s
use of cloud computing for access to AI technologies, but solutions
to date all have significant limitations. First, to prevent Chinese
companies from simply setting up AI infrastructure outside of China
and using it there (or making it available in China), existing ex-
port controls on advanced semiconductors apply to Chinese entities
even when they are operating overseas.186 Second, so-called “U.S.
persons” authority would prevent U.S. cloud providers from know-
ingly providing services that contribute to certain specified national
security risks, including helping Chinese entities obtain access to
advanced semiconductor technology.* 187 Third, on an ad hoc basis,
the U.S. government appears to be using various points of leverage
to persuade domestic technology providers and their potential for-
eign partners that want access to the most advanced semiconductor
technology to take measures to exclude Chinese entities.188 Fourth,
the United States has proposed “know your customer” rules and re-
porting requirements for domestic cloud providers when their ser-
vices are used by foreign entities to train large AI models.189 Each
of these rules or proposals, however, has some limitations in scope,
coverage, and/or comprehensiveness—for example, applying only to
Chinese companies, only to U.S. companies, or only on an ad hoc
basis.† There is currently no comprehensive authority akin to export
controls for broadly restricting access to cloud services reliant on
U.S. technology.
* Originally, the “U.S persons” authority only applied to limit activities of U.S. persons that
contribute to proliferation of weapons of mass destruction. ECRA expanded the coverage to in-
clude support for “foreign military intelligence services.” Congress significantly expanded this
authority again in 2022 to allow BIS to prohibit U.S. persons from knowingly providing support
to adversarial foreign military services, intelligence services, and security services. In July 2024,
BIS proposed a rule to implement the new authority that would significantly expand the scope
of “U.S. persons” restrictions to cover a broad class of “foreign security end users.” According to
Gibson, Dunn, & Crutcher LLP, a multinational law firm, the breadth of the restrictions will likely
necessitate the enhancement of company diligence efforts to better understand end users, with
cloud service providers potentially needing to ensure that U.S. persons are not providing prohib-
ited services or support for restricted parties. U.S. Department of Commerce Bureau of Industry
and Security, “Export Administration Regulations: Crime Controls and Expansion/Update of U.S.
Persons Controls,” Federal Register 89:145 (July 29, 2024); Restrictions on Specific Activities of
“U.S. Persons,” 15 C.F.R. § 744.6, 2024; National Defense Authorization Act for 2023, Pub. L. No.
117-263, 2023; 50 U.S.C. § 4812(a)(2)(F); Gibson, Dunn, and Crutcher LLP, “Proposed Rules Call
for Significant Restrictions on Facial Recognition Technologies, Defense Services, U.S. Persons
Activities, and New Classes of Foreign End-Users,” August 13, 2024; Export Control Reform Act
(ECRA) §1741(2), Pub. L. No. 115-232, August 13, 2018, codified as amended at 50 U.S.C. §4801(2).
† The United States has used sanctions as a tool to limit certain types of technology-related
transactions with an adversary, including the provision of certain cloud services. Specifically, in
response to Russia’s war of aggression against Ukraine, the U.S. Department of the Treasury’s
Office of Foreign Assets Control prohibited “U.S. persons” located anywhere in the world from
exportation, reexportation, sale, or supply, directly or indirectly, of quantum computing services
to any person located in Russia. This action prohibits U.S. cloud services companies from sup-
porting Russia’s quantum computing sector. Stefan H. Reisinger and Mikkaela Salamatin, “New
US Sanctions and Export Restrictions on Russia and Belarus,” Norton Rose Fulbright, September
2022; U.S. Department of the Treasury, Office of Foreign Assets Control, Determination Pursuant
to Section 1(a)(ii) of Executive Order 14071: Prohibitions Related to Certain Quantum Computing
Services, September 15, 2022.
194
CCP Control and Xi Jinping Thought May Constrain

China’s AI Models
China risks inhibiting its AI ambitions by its tight regulations
on LLMs. Heavily censored datasets can lead to biases in AI
models and limit their ability to handle certain tasks.190 In April
2023, the Cyberspace Administration of China (CAC) unveiled its
draft measures on generative AI services.191 The CAC will require
companies to go through a government security review process
and make companies responsible for the content their AI services
generate, such as prohibiting content the CCP views as politically
sensitive, including arbitrary and broad definitions of subverting
state power, inciting secession, or disrupting social order.192 Addi-
tionally, the CAC requires companies to test whether the models
can provide “safe” answers to users by preparing between 20,000
and 70,000 questions.193 Companies must also submit a dataset
of 5,000 to 10,000 questions the model will decline to answer,
roughly half of which relate to political ideology and criticism of
the Communist Party.194 Xu Chenggang, a senior research schol-
ar at the Stanford Center on China’s Economy and Institutions,
has asserted that China’s strict censorship rules could inhibit the
quality of data and the development of chatbots, stating that “if
there are restrictions everywhere in the setup of your algorithms,
of course its ability will be restricted.” 195
China is also developing a closed-source LLM based on Xi Jin-
ping’s political philosophy in a move that demonstrates the CCP’s
desire to experiment with centralized control over AI as a strate-
gic asset. The machine learning language model was launched by
the China Cyberspace Research Institute, which operates under
the CAC.196 Answers are sourced from a fixed pool of Chinese
official documents and outlets.197 The model is still undergoing
internal testing and was not yet available for public use, but it is
open to “designated users by invitation,” according to the CAC.198
China Seeks to Create Advanced Generative AI Models to Outcompete

the United States
The third element of AI competition is the quality of generative
AI models. Generative AI models can transmit algorithms into text,
images, audio, video, and code, enabling the creation of new con-
tent.199 Although assessing AI models “is an art, not a science . . .
making it difficult to compare Chinese models with global leaders,”
most experts believe the United States currently leads China in this
space.200 China’s demonstrations of its generative AI models in early
2023 failed to outperform U.S. models like ChatGPT.201 Baidu’s ER-
NIE Bot launch, which relied on prerecorded examples rather than
a live demonstration, was largely seen as a flop.202 Erniebot and
Alibaba’s Tongyi Qianwen also both performed worse than ChatGPT
in writing computer code.* 203 More than a dozen tech industry in-
* For example, Robin Li, Baidu’s chief executive, admitted halfway through a “live” demonstra-
tion of Ernie that it was prerecorded. In June 2023, however, Baidu claimed that its Ernie 3.5
model outperformed OpenAI’s ChatGPT and GPT-4 across numerous metrics, such as answering
over 13,000 multiple-choice questions across 50 different subjects in Chinese more correctly. How-
ever, when the model took a separate test that was developed by a group of U.S. universities, the
195
siders and leading engineers interviewed by the New York Times in

February 2024 said the generative AI capabilities of Chinese compa-
nies still lag behind those of U.S. companies by at least a year, with
the article claiming that Chinese companies rely almost entirely on
underlying systems from the United States.204 In April 2024, Aliba-
ba chairman Joe Tsai said that Chinese firms lag behind U.S. peers
in AI development by at least two years.205
Chinese companies are making a concerted effort to develop gen-
erative AI models similar in sophistication to those of U.S. compa-
nies.206 China’s AI development landscape is diverse, with approxi-
mately 50 Chinese companies developing AI models as of June 2024,
compared to the relatively small number of large companies in the
United States that focus on developing models such as OpenAI, Goo-
gle, and others.207 As of late September 2023, China accounted for
40 percent of all LLMs in the world (while the United States has 50
percent), according to brokerage and investment group CLSA.208 By
June 2024, analysts asserted that by some metrics, Baidu’s ERNIE
Bot and Zhipu AI’s GLM-4 had reached a similar level of quality as
Open AI’s GPT-4 model. Due to the evolution of leading-edge mod-
els and soon-to-be-released models like GPT-5, these analysts assert
that benchmarking remains a moving target, which may also pose
challenges for Chinese AI firms in developing metrics to assess their
own capabilities.209 Baidu’s CEO Robin Li said in July 2024 that
there are “too many” LLMs in China, which he says have resulted
in a “significant waste of resources, particularly computing power”;
he also questioned how many of these have provided real-world ap-
plications that are beneficial.210
The Open vs. Closed Debate and U.S.-China Competition

As the United States and China compete for technological lead-
ership in AI, there have been concerns raised as to whether open
source AI models may be providing Chinese companies access to
advanced AI capabilities that would not otherwise be available,
allowing them to catch up to the United States more quickly.
The debate surrounding the use of open source models and
closed source models is a vigorous one within the industry, even
apart from issues around China’s access to the technology. Advo-
cates of the open source approach argue that it promotes fast-
Ernie 3.5 model performed behind ChatGPT and GPT-4. Yasheng Huang, a professor of manage-
ment at the Massachusetts Institute of Technology, said of China’s efforts to build ChatGPT-level
chatbots that “China is incredibly good at scaling an existing invention, but it is not very good
at making breakthroughs.” The Ernie bot has still become a popular option for generative AI
use, as Baidu claimed in April 2024 that its platform has over 200 million users. Additionally,
the Beijing Academy of Artificial Intelligence’s WuDao 2.0, released in the summer of 2021, was
touted by Forbes as a “bigger, stronger, faster AI” due to having ten times more parameters (the
numbers inside an AI model that determine how it processes information) than GPT-3. However,
AI experts Helen Toner, Jenny Xiao, and Jeffrey Ding assert that having more parameters “does
not make one AI system better than another” if it is not matched with corresponding increases in
data and computing power, and they also argue that the Chinese researchers who posed questions
to the model helped boost its performance to appear stronger. Tracy Qu, “Baidu Says Ernie AI
Chatbot Now Has 200 Million Users,” Wall Street Journal, April 16, 2024; Arjun Kharpal, “Chi-
na’s Baidu Claims Its Ernie Bot Beats ChatGPT on Key Tests as A.I. Race Heats Up,” CNBC,
June 27, 2023; Helen Toner, Jenny Xiao, and Jeffrey Ding, “The Illusion of China’s AI Prowess,”
Foreign Affairs, June 2, 2023; Cheyenne Dong, “Alibaba Rolls Out ChatGPT Alternative Tongyi
Qianwen,” Technode, April 10, 2023; Chang Che and John Liu, “China’s Answer to ChatGPT Gets
an Artificial Debut and Disappoints,” New York Times, March 16, 2023; Alex Zhavoronkov, “Wu
Dao 2.0 - Bigger, Stronger, Faster AI from China,” Forbes, July 19, 2021.
196
The Open vs. Closed Debate and U.S.-China Competition—

Continued
er innovation by allowing a wider range of users to customize
it, build upon it, and integrate it with third-party software and
hardware.211 Open model advocates further argue that such mod-
els reduce market concentration; increase transparency to help
evaluate bias, data quality, and security risks; and create more
benefits for society by expanding access to the technology.212 Ad-
vocates of the closed source approach argue that such models are
better able to protect safety and prevent abuse, to ensure faster
development cycles, and to help enterprises maintain an edge in
commercializing their innovations.213
From the standpoint of U.S.-China technology competition, how-
ever, there is one key distinction: open models allow China and
Chinese AI companies access to key U.S. AI technology and make
it easier for Chinese companies to build on top of U.S. technology.
In July 2024, OpenAI, a closed model, cut off China’s access to
its services.214 This move would not have been possible with an
open model; open models, by their nature, remain open to Chi-
nese entities to use, explore, learn from, and build upon.215 And,
indeed, early gains in China’s AI models have been built on the
foundations of U.S. technology—as the New York Times report-
ed in February 2024, “Even as [China] races to build generative
A.I., Chinese companies are relying almost entirely on underlying
[open model] systems from the United States.” 216 In July 2024,
at the World Artificial Intelligence Conference in Shanghai, Chi-
nese entities unveiled AI models they claimed rivaled leading U.S.
models.217 At the event, “a dozen technologists and researchers at
Chinese tech companies said open-source technologies were a key
reason that China’s A.I. development has advanced so quickly.
They saw open-source A.I. as an opportunity for the country to
take a lead.” 218
China Leverages Data for AI and Technological Supremacy

The U.S.-China competition in AI technology is dependent on who
can procure and compile large-scale, high-quality datasets and cre-
ate economic incentives and frameworks for sharing data. Access to
proprietary data in different sectors can be an increasingly import-
ant source of competitive advantage because better results can be
acquired by more relevant, real-world data that can be used to train
the AI models, which has a net impact on the cycle and speed of in-
novation.219 With the rising importance of data to governments, cor-
porations, and next-generation technologies like generative AI and
large models, data are quickly becoming the “new oil” that power AI
and the global economy.220
The Importance of Data to China’s Policymakers
Since Xi’s 2012 appointment as China’s President, Party leaders
have swiftly identified data as a critical component for developing
China’s economic and technological capacity.221 This was formalized
as policy in the 2016 State Council National 13th Five-Year Plan
197
for the Development of Strategic Emerging Industries, which called

for the construction of a “digital China” based upon the integration
and leveraging of data, data technology, data standards, and data
connectivity throughout China’s economic and technological infra-
structure.222 The importance of data was further highlighted by Xi
in subsequent Party speeches and study sessions, where he empha-
sized to policymakers that China must “build a digital economy with
data as a key enabler” and “promote the deepened integration of In-
ternet, big data, and artificial intelligence with the real economy.” 223
Building off these policies and presidential directives, in 2020, Chi-
na’s State Council named data “factor[s] of production,” codifying
data—along with land, labor, capital, and technology—as crucial to
China’s economic development and requiring Party supervision to
ensure economic development and avoid market distortions.* 224
Efforts to Turn Data into a Factor of Production
Alongside Xi’s directives and official policies mandating the im-
portance of data, in March 2023, China established a new govern-
ment administration: the National Data Administration (NDA).† 225
Since its formation, the NDA has been given economic portfolio re-
sponsibilities that were previously held by domestic and national
security-minded government organs, chiefly the Cyberspace Admin-
istration of China.226 So far, the economic mandate of the NDA has
been to establish the economic value of data assets, increase data
circulation throughout China, and develop data market ecosystems
for key industrial fields such as smart manufacturing.227 The NDA’s
newly appointed leader, Liu Liehong, has also made it a point of em-
phasis to meet with China’s leading tech companies, such as iFlytek
and Didi, to discuss how best to share, monetize, and ensure data
property rights on the vast amounts of data they hold.228
China’s data exchanges will be critical to the NDA’s efforts to turn
data into a factor of production. Broadly speaking, data exchanges
are centralized markets for buying and selling data, data products,
and data services.229 China’s first data exchange was set up in Gui-
yang in 2015; since that time, 48 data exchanges are now active in
the country.230 While in the United States these take the form of
private third-party data brokers who aggregate public or private
data for sale, China’s data exchanges are state-managed by local
governments, with the goal of building a cohesive national “data
economy.” ‡ 231 Alongside data exchanges, China has also experi-
mented with using its 21 free trade zones to facilitate companies
that wish to export “cross-border data.” 232 While still in the early
stages, the development of China’s data exchanges and free trade
zones is part of a larger goal of constructing a “big data industry,”
* The term “factors of production” is generally seen as a key economic resource to be managed
by the Party in order to avoid market distortions. Rebecca Arcesati, “China Activates Data in the
National Interest,” Mercator Institute for China Studies, July 4, 2022; Lillian Li, “Abridged: Data
as a Factor of Production,” Chinese Characteristics: Substack, November 4, 2021.
† The NDA sits under China’s macroeconomic planner, the National Development and Reform
Commission. Rebecca Arcesati and Jeroen Groenewegen-lau, “China’s Data Management: Putting
the Party-State in Charge,” Mercator Institute for China Studies, 2023.
‡ The United States and China have different models for data exchanges. Amba Kak and Samm
Sacks, “Shifting Narratives and Emergent Trends in Data-Governance Policy,” Paul Tsai China
Center, AI Now, New America, August 2021; Julia Lu, “China’s Data Exchanges, Explained,” Tech-
node, August 17, 2021.
198
promoting international digital trade, and developing China’s digital

economy.233
China’s Authoritarian Practices May Provide an Edge in Certain
Types of Data
China’s efforts to create a national data economy has significant
implications for both its leading technology firms and the develop-
ment of AI itself. Experts have debated the general advantages that
the United States and China have regarding data and how these
advantages may affect their AI capabilities. According to Matt Shee-
han, a fellow at the Carnegie Endowment for International Peace,
in terms of quantity, China’s advantage mainly lies in the fact that
its leading tech companies have many more windows into a user’s
online and offline behaviors.234 China also holds an advantage in
terms of compiling data from public spaces, gathered from the coun-
try’s vast public surveillance network, which has given China’s fa-
cial recognition AI firms some advantages.235 Prominent scholars
have also raised concerns that China’s “AI-Surveillance symbiosis”
could lead to a “feedback loop” with data derived from surveillance
leading to iterative improvements in AI innovation.236 Furthermore,
China’s broad government collection of data could be used to en-
hance the datasets of Chinese firms across a variety of other import-
ant domains, including healthcare, education, and basic science.237
The prevalence of Chinese companies in genomics, agricultural, and
certain health-related biotechnology supply chains could provide a
significant data advantage in generative AI models geared toward
those technologies. (For more information on recent developments in
China allowing local government entities to treat data as a financial
asset, please see Chapter 1, “U.S.-China Economic and Trade Rela-
tions (Year in Review).”)
U.S. companies and bureaucracies have a lead regarding the quali-
ty of data.238 China has not invested as much in enterprise software
or digitizing data, although this may change over time as Beijing
is incentivizing localities to digitize records and adopt AI-powered
analytical tools.239 Regarding diversity of data, the United States
holds a clear advantage because of its diverse domestic population
and the global user base of many Silicon Valley companies.240
Other Aspects of AI Competition: Workforce and Research Output
China is attempting to advance its AI workforce in order to
compete with the United States. China has developed AI talent
partly because it invested heavily in AI education.* 241 China has
created over 2,000 undergraduate-level AI programs at more than
300 of the country’s most elite universities since 2018.242 Data
regarding global AI talent published by the think tank Macro-
Polo revealed that in 2022, 57 percent of “elite” AI researchers
(i.e., the top 2 percent) worked in the United States as opposed
to 12 percent in China, compared to 65 percent and less than 3
* CSET reported in February 2023 that collectively, at least $40.2 billion in announced invest-
ments into 251 Chinese AI companies involved U.S. investors, though it was not clear what exact
portion of the $40.2 billion came from U.S. investors (e.g., an announcement may list multiple
investors and a headline number, without breaking down the contribution of each). Emily S.
Weinstein and Ngor Luong, “U.S. Outbound Investment into Chinese AI Companies,” Center for
Security and Emerging Technology, February 2023.
199
percent in 2019, respectively.243 For “top-tier” talent (i.e., the top

20 percent), 42 percent worked in the United States in 2022 and
28 percent in China, compared to 59 percent and 11 percent in
2019.244 According to a November 2023 report by CSET, 78 per-
cent of China’s AI-related job postings are geographically concen-
trated in three economically and technologically developed hubs
with large population centers, including the Yangtze River Delta
region, the Pearl River Delta, and the Beijing-Tianjin-Hebei area,
while other provinces with relatively high demand for AI talent
include Hubei, Shandong, and Hunan.245
Regarding AI research, the comparison between the United States
and China depends on the metric chosen. China leads the United
States based on sheer volume of research published—with 575,258
articles to the United States’ 359,415 articles.246 The Commission’s
2023 Annual Report to Congress examined at length, however, why
publication volume is a flawed metric at best for measuring the
progress of Chinese academia in advanced technologies like AI.247
Plagiarism, error, and fraud have long plagued Chinese higher ed-
ucation, with China having the largest retraction rate globally of
submitted research papers, exceeding 20 per 10,000 papers submit-
ted.248 The number of citations and number of international research
collaborations may be better indicators of a country’s progress in AI
research. In these areas, the United States is still the global leader
as of September 2024, with U.S. AI papers receiving 13,296,404 cita-
tions compared to China’s 8,830,282 citations.249 The United States
also leads in global AI research collaboration with 132,672 articles
published with international collaborators, though China is not far
behind with 114,333 such articles.250 A recent study also points to a
large “diffusion deficit” between the United States and China in AI,
with China struggling to adopt AI innovations at scale in academia
and industry.251
China Engages on AI Safety Talks but Shuns Military

AI Policy
Beijing has taken limited steps to engage with the United
States on the issue of global AI risks and safety. In November
2023, Beijing attended the UK AI Safety Summit and agreed to
share a common approach to identifying and mitigating AI risks
with the EU, the United States, and 26 other countries.252 The
same month, President Joe Biden and General Secretary Xi met
and agreed to hold talks regarding the risks of advanced AI sys-
tems and efforts to improve AI safety.253 In March 2024, Beijing
supported a U.S.-led, nonbinding UN resolution on the protection
of data and monitoring of AI risks.254 Chinese and U.S. officials
also met behind closed doors in Geneva in May 2024 to discuss
how each side views AI risks and safety.255
Despite its surface-level engagement in AI safety talks, China
has shown little willingness to make firm commitments on lim-
iting the military applications of AI. In December 2021, China
submitted a position paper to the UN calling on all countries to
refrain from using AI to “seek absolute military advantage” or
“pursue hegemony,” but it did not rule out its use for “legitimate
200
China Engages on AI Safety Talks but Shuns Military

AI Policy—Continued
national defense capabilities.” 256 This caveat regarding the use
of AI for “legitimate national defense capabilities” could suggest
Beijing envisions using AI-enabled weapons and processes in
military operations to defend what it regards as its “core inter-
ests,” including the forcible unification of Taiwan.257 China did
not support a U.S.-led declaration on the responsible military use
of AI during November 2023.258 Chinese officials did not publicly
respond to a statement made by Principal Deputy Assistant Sec-
retary of State Paul Dean in May 2024 that the United States
welcomed a clear and strong commitment from both China and
Russia to ensure that only humans, not AI, would control nuclear
weapons.259
China Pursues AI for Military Applications

AI will serve as a core part of China’s future military strategy,
underpinning the PLA’s efforts to exploit vulnerabilities in the tech-
nology systems the United States deploys on the battlefield and to
make operational decisions more quickly than U.S. warfighters.260
(For more on the PLA’s approach to informationized warfare, see
Chapter 8, “China’s Evolving Counter-Intervention Capabilities and
the Role of Indo-Pacific Allies.”) Procurement records and writings
by Chinese military experts in recent years suggest the People’s
Liberation Army (PLA) is already procuring AI systems for inte-
gration into its weapons platforms and capabilities.261 One report
by CSET comparing U.S. and Chinese military procurement of AI
systems found that both militaries are focusing on similar applica-
tions, with most contracts being awarded for autonomous vehicles
and intelligence, surveillance, and reconnaissance (ISR).262 Of the
almost 2,000 military contracts awarded by the PLA between April
and November 2020, 119 contracts appeared to be directly related
to AI, the majority of which were related to AI-enabled autonomous
vehicles (38 percent), followed by ISR systems (17 percent), predic-
tive maintenance and logistics systems (16 percent), information
and electronic warfare (7 percent), simulation and training (4 per-
cent), automatic target recognition (4 percent), and command and
control (4 percent).* 263 This analysis reflects only a dated snapshot
of unclassified procurement and precedes the significant increase
in awareness around AI since the public release of ChatGPT—so it
should be treated accordingly.264 In any event, it is clear China is
actively pursuing AI for military applications to enhance its capabil-
ities, complement its current approach to informationized warfare,
and facilitate the PLA’s longstanding efforts to leapfrog the United
States militarily and shift the global balance of power.265
* CSET categorized the remaining 10 percent of contracts as “other.” Margarita Konaev et al.,
“U.S. and Chinese Military AI Purchases: An Assessment of Military Procurement Data between
April and November 2020,” Center for Security and Emerging Technology, August 2023, 8.
201
AI as the Eyes and Ears of the PLA

AI-enabled ISR systems appear to be a priority for the PLA.266
The PLA sees value in leveraging AI capabilities for ISR to help
speed up the processing of imagery, signals, and other kinds of intel-
ligence across the land, air, sea, and space domains.267 PLA experts
have recognized that ISR improved by AI can be useful in detect-
ing the movements of an adversary’s conventional military assets
as well as tracking its submarine and land-based nuclear forces.268
China’s incorporation of effective AI into its ISR capabilities could
allow the PLA to rapidly locate U.S. military forces during a conflict
over Taiwan or the South China Sea and help it combine joint forces
across domains to launch precision strikes.269
According to the CSET report, most of the PLA’s known contracts
for AI-enabled ISR are awarded by the PLA Navy, and many focus
on geospatial imagery tasks such as equipping satellites with image
collection, polarized surface detection, and multi-source data fusion
tools powered by machine learning.270 A December 2023 article in
Chinese state media provided one example of a platform that may
integrate AI into ISR, noting that the Aviation Industry Corporation
of China planned to incorporate AI into the Wing Loong unmanned
aerial vehicle platform to improve the drone’s ability to perform
tasks like topographic mapping, among other things.271 Other PLA
contracts appear to focus on incorporating AI into air defense. For
example, the Hebei Xintu Technology Company was awarded a con-
tract by the PLA for a “drone aircraft detector” to be used in air
defense.272
AI in Battlefield Decision-Making
Beijing is researching how AI can be utilized in decision-making
to enhance wargaming and command and control. At least based on
the relatively small percentage of procurements reflected in CSET’s
data snapshot, the PLA does not appear to be prioritizing these uses
as much as other applications.* 273 Chinese experts note that AI
can shorten the “observe-orient-decide-act” † loop, raise situational
awareness, and assist PLA commanders in formulating judgments,
planning missions, and controlling operations within increasingly
complex warfare environments.274 These include:
• Reluctance to cede political control over military decision-mak-
ing: The Central Military Commission exercises the Party’s
political control over all military affairs and has historically
maintained a tight grip on the use of the PLA’s strategic as-
* As noted, this was a limited study, based on a 2020 subset of 119 PLA contracts for AI
systems. The study found that only 4 percent of these contracts were related to battlefield deci-
sion-making systems and that China awarded just five contracts for command and control appli-
cation systems between April and November 2020. It is not clear if the short “snapshot” reflects
overall PLA priorities and spending patterns. Margarita Konaev et al., “U.S. and Chinese Military
AI Purchases: An Assessment of Military Procurement Data between April and November 2020,”
Center for Security and Emerging Technology, August 2023, 14; Ryan Fedasiuk, Jennifer Melot,
and Ben Murphy, “Harnessed Lightning: How the Chinese Military Is Adopting Artificial Intelli-
gence,” Center for Security and Emerging Technology, October 2021, 24–26.
† The observe-orient-decide-act (OODA) loop is a decision-making concept developed by U.S.
Air Force Colonel John Boyd. The concept is designed to provide a disciplined means of thinking
about events that are unfolding before military decision-makers. The concept is intended to help
the military gain a decisive advantage in the decision-making process by dealing with situations
in a more expedited fashion. Kimberly Wright, “OODA Loop Makes Its Mark on Maxwell,” Air
University Public Affairs, August 25, 2010.
202
sets, such as nuclear weapons and cyber capabilities.275 While

advances in AI will give Chinese leaders new technologies to as-
sist decision-making, Chinese officials may be reticent to defer
to AI-generated recommendations for military decision-making.
Yang Zi, a PhD candidate at the S. Rajaratnam School of In-
ternational Studies, argues that Xi’s personal preferences are
still likely to overshadow AI-generated recommendations and
that such a dynamic could handicap the PLA’s AI-enabled deci-
sion-making in a crisis scenario.276 Tong Zhao, a senior fellow
in the nuclear policy program at Carnegie China, has observed
that China’s policy community also supports keeping humans
“in the loop” and limiting the use of AI in nuclear weapon sys-
tems for safety reasons.277
• Concerns that limited data training and visibility into AI al-
gorithms could distort military decision-making: One challenge
for the PLA going forward will be training AI algorithms to ac-
count for complex battlefield scenarios, in part because the PLA
lacks data from real wars.278 Without adequate data based on
actual combat scenarios gained while fighting an adversary, AI
models could potentially provide false assessments or erroneous
recommendations to military officials.279 In order to maximize
performance, the PLA will also need to train its AI algorithms
to analyze variables in realistic natural environments, such as
the weather or atmospheric conditions, and in artificial envi-
ronments, like defensive networks or battle lines.280 The PLA
likely recognizes the problems associated with this data deficit,
but it is unclear what steps it is taking to rectify it. For exam-
ple, it is not clear if China and Russia are using Russia’s war
of aggression in Ukraine as a data source.
• Concerns that AI-enabled decision-making could exacerbate
risks in conflict with the United States: Experts from both the
United States and China have recognized that the integration
of AI into military decision-making systems could accelerate a
crisis by facilitating hasty decision-making.281 Furthermore, ex-
perts from both countries have assessed that the adversary may
deliberately “poison” the data used by the other side, which may
degrade the performance and judgments of their AI systems.282
These concerns may make Chinese leaders more reticent to rely
on AI to make high-stakes military judgments.
AI to Enhance Combat Performance and Lethality
The PLA is exploring the use of AI to enable autonomous sys-
tems for battlefield support and to increase the lethality of military
units by carrying out warfighting tasks traditionally conducted by
humans.283 China is researching and developing AI technologies
that seek to enhance the target recognition and coordination of
lethal autonomous weapons, which are weapons systems that use
sensor suites and computer algorithms to identify targets and sub-
sequently engage and destroy the target without manual human
control.284 Lethal autonomous weapons systems are not yet in wide-
spread development, but they could someday enable military oper-
ations in communications-degraded or -denied environments where
traditional systems may not be able to operate.285 Platforms that
203
are classified as lethal autonomous weapons systems include mis-

sile defense systems, sentry systems, and loitering munitions.286 AI
systems performing automatic target recognition made up only 4
percent of PLA contracts in the limited CSET snapshot of public
contracts examined, but there are early signs that Chinese defense
manufacturers are designing systems that could someday actualize
the lethal autonomous weapons concept.* 287 For example, one Chi-
nese manufacturer of intelligent unmanned aerial systems known
as Zhuhai Ziyan UAS has produced the Blowfish A2, an unmanned
helicopter equipped with guns, bombs, radar technology, and jam-
ming devices.288 The Blowfish A2 reportedly uses an AI module to
automatically identify multiple targets such as ships, vehicles, and
personnel to assist PLA combat units in carrying out attacks and
reconnaissance missions.289
AI in Disinformation and Cognitive Warfare Operations
A major area of U.S.-China competition within AI is large lan-
guage models, or LLMs,† which China could deploy against the
United States in cognitive warfare operations.‡ 290 China has en-
gaged in online influence operations against the United States for
years and appeared to escalate large-scale online influence opera-
tions on U.S.-based social media platforms since 2019, when Meta
and X (formerly known as Twitter) first attributed inauthentic ac-
counts originating from China.§ 291 Nathan Beauchamp-Mustafaga,
a senior policy researcher at the RAND Corporation, testified before
the Commission that AI could significantly enhance China’s existing
cyber-enabled influence operations.292 Mr. Beauchamp-Mustafaga
argued that generative AI could dramatically improve the authen-
ticity, cost effectiveness, and scale of state-sponsored influence oper-
* An automatic target recognition system is not necessarily a lethal autonomous weapon sys-
tem, as human intervention could still be a necessary step in the decision to use lethal force
against the recognized target.
† LLMs are mathematical representations of patterns found in natural language that can cre-
ate text, answer questions, and hold conversations by making inferences about subsequent words
in sentences. LLMs power generative AI tools such as OpenAI’s ChatGPT and Google’s Bard.
Generative AI refers to algorithms that can be used to create new content, including audio, im-
ages, text, simulations, and videos. McKinsey and Company, “What Is Generative AI?” McKinsey
and Company, April 2, 2024; Katrina Manson, “The US Military Is Taking Generative AI Out for
a Spin,” Bloomberg, July 5, 2023; William Marcellino et al., “The Rise of Generative AI and the
Coming Era of Social Media Manipulation 3.0: Next-Generation Chinese Astroturfing and Coping
with Ubiquitous AI,” RAND Corporation, 2023, 5–6.
‡ Cognitive warfare consists of influencing international public opinion, shocking and demor-
alizing enemy soldiers and citizens through psychological operations, and conducting influence
campaigns to shape international law in Beijing’s favor. LLMs and text-to-image models are
also well suited to social media manipulation due to their ability to produce convincing text and
images—with little effort by the user—that can then be disseminated online. William Marcel-
lino et al., “The Rise of Generative AI and the Coming Era of Social Media Manipulation 3.0:
Next-Generation Chinese Astroturfing and Coping with Ubiquitous AI,” RAND Corporation, 2023,
7; Koichiro Takagi, “The Future of China’s Cognitive Warfare: Lessons from the War in Ukraine,”
War on the Rocks, July 22, 2022.
§ For example, in March 2020, China-linked accounts disseminated false warnings about a
nationwide COVID-19 lockdown to allegedly incite public panic within the United States and
decrease trust with the U.S. government. A September 2023 report by the U.S. Department of
State’s Global Engagement Center noted that aside from narratives on COVID-19, China has also
carried out disinformation campaigns about the AUKUS partnership as well as echoing Russia’s
false accusations that the United States is escalating the war in Ukraine. U.S. Department of
State, How the People’s Republic of China Seeks to Reshape the Global Information Environment,
September 28, 2023, 26, 38; Edward Wong, Matthew Rosenberg, and Julian E. Barnes, “Chinese
Agents Helped Spread Messages That Sowed Virus Panic in U.S., Officials Say,” New York Times,
January 5, 2021; Sarah Cook, “Welcome to the New Era of Chinese Government Disinformation,”
Diplomat, May 11, 2020.
204
ations by malign actors while reducing human labor requirements

and the probability of detection.293
Similarly, reporting by Microsoft has established that an actor af-
filiated with China’s domestic security services has used AI to spread
disinformation in democracies such as the United States and Tai-
wan.294 In April 2024, Microsoft reported that the CCP-linked actor
Storm-1376 (also known as “Dragonbridge” or “Spamouflage”) has
used AI-generated content to conduct influence operations spanning
175 websites and 58 languages.295 Storm-1376 was reportedly re-
sponsible for spreading conspiratorial narratives on multiple social
media platforms, alleging that the U.S. government had deliberately
initiated the wildfires on the northwest coast of Maui, Hawaii.296
Storm-1376 also targeted Taiwan’s 2024 presidential and legisla-
tive elections, attempting to undermine the legitimacy of multiple
candidates, including now president William Lai, in what Microsoft
claimed was the first time AI had been used to influence a foreign
election.* 297 (For more information on China’s attempts to influence
Taiwan’s elections, see Chapter 9, “Taiwan.”)
In their writings, PLA researchers have shown interest in using
generative AI for future cognitive warfare operations.298 In 2020, for
example, two PLA researchers argued in the China Military Science
journal that deepfakes using AI are cheap and easy to create and
require less time than other methods, asserting that improvements
in machine learning will lead to their prevalence.299 There is also
evidence that PLA-affiliated researchers at Base 311, a Chinese mil-
itary unit headquartered in Fuzhou Province that conducts cogni-
tive warfare, have explored how the Chinese military can use AI to
automatically generate authentic-looking content.300
China Developing Humanoid and Quadruped Robots

One of the areas AI is helping revolutionize is robotics. AI is
helping accelerate the development of humanoid and quadruped
robots, both in their ability to respond to human commands and
in their capacity for fine and gross movement for expanded ver-
satility.301 For instance, China’s state media has said that the
application of LLMs can make humanoid robots more capable of
possessing decision-making capabilities, although the connection
between the robot’s “brain” and its “limbs” is still awaiting new
technological breakthroughs.302 China’s MIIT announced in Octo-
ber 2023 that the country would establish a world-class human-
oid robot innovation system by 2025 and deploy humanoid robots
in “real economy” industries such as manufacturing, build an in-
* In December 2023, Storm-1376 also promoted a series of AI-generated memes of Taiwan’s then
Democratic Progressive Party candidate William Lai with a countdown theme noting “X days” to
take the Democratic Progressive Party out of power, as well as an AI-generated video of a woman
claiming to “reveal” Mr. Lai’s mistresses and illegitimate children and an AI-generated audio file
claiming Mr. Lai was an informant in the 1980s. On election day in January, Storm-1376 posted
suspected AI-generated audio clips of Foxconn owner Terry Gou, an independent candidate in
the presidential race. The audio manipulated Mr. Gou’s voice to make it sound as though he was
endorsing another candidate in the presidential race, even though he never formally endorsed
any presidential candidate in the race. During the same month, Storm-1376 also created and
amplified a defamatory video series about then President Tsai Ing-wen using AI-generated news
anchors and ByteDance’s CapCut video editing app. Microsoft Threat Intelligence, “Same Targets,
New Playbooks: East Asia Threat Actors Employ Unique Methods,” April 2024, 6–8.
205
China Developing Humanoid and Quadruped Robots—

Continued
ternationally competitive industrial industry, and expand the use
of humanoid robots throughout society by 2027.303
The realistic timing for the wide-scale availability of fully func-
tional humanoid and quadruped robots within China is not clear.
Humanoid robot firms globally face technical obstacles, including
the limited storage capacity of batteries that power the robots
and the current technical limitations of components like actu-
ators that allow the robot to move itself and manipulate other
objects.304 Far more progress is needed before humanoid robots
will be able to reason through an unexpected situation and then
act on it.305 While China’s capacity to achieve its goals in the
stated time frames may be doubtful, if their overall efforts are
successful, humanoid robots could have transformative impli-
cations across commercial industries, including manufacturing,
agriculture, and healthcare and potentially for military and law
enforcement as well.306
When sufficiently advanced, these rapidly developing humanoid
robot technologies have serious implications for China’s military
capabilities. China’s policy of military-civil fusion, which leverages
commercial technologies for the advancement of China’s military,
blurs the boundaries of what would constitute a commercial or
military product.307 Chinese military analysts have put forth new
theories of human-robot cooperation if the technology advances,
such as replacing front-line soldiers with humanoid robots while
humans maintain control of command and decision-making.308
Chinese state media outlets claim that humanoid robots will
change the organization and use of combat forces, since they can
theoretically be mixed with humans and grouped separately ac-
cording to combat missions and objectives; they can also be used
for logistical support such as carrying equipment, for heavy con-
struction tasks, or for planting and removing mines.* 309
One example of military applications emerged in May 2024
during China’s Golden Dragon-2024 joint military exercise with
Cambodia, when the PLA unveiled a modified version of a quad-
ruped robot “dog,” the B1, made by Chinese robot maker Uni-
tree.† 310 Equipped with a mounted assault rifle on its back,
the quadruped can jump as well as follow and lead an infantry
team.311 One PLA soldier told Chinese state media that the quad-
ruped robot could engage a target upon discovery, asserting that
the technology will serve as a “new team member for our urban
* Former PLA officer and military commentator Fu Qianshao wrote in an online commentary in
April 2024 that humanoid robots could aid the PLA in an invasion of Taiwan by replacing actual
troops on the battlefield, which would reduce the risk of human casualties. Fu Qianshao, “The
Rise of China’s Humanoid Robot Industry Will Replace the People’s Liberation Army in Perform-
ing Tasks, Making the Reunification Easier,” (中国人形机器人产业崛起，代替解放军执行任务，让统
一大业更), Gaze into the Sky [NetEase Blog], April 15, 2024. Translation. https://web.archive.org/
web/20240430181509/https:/www.163.com/dy/article/IVQR04OO0535T18G.html.
† According to Unitree’s company website, a commercial version of the B1, which can be used
for inspecting power plants, is equipped with AI capabilities that enable it to avoid collisions in
real time, control switches, press buttons, and carry out other tasks. Unitree, “Recognition Devices
+ AI Algorithm Bring Unitree Power Robotic Inspectors to the Posts.” https://web.archive.org/
web/20240601021926/https://shop.unitree.com/blogs/news/recognition-devices-ai-algorithm-
bring-unitree-power-robotic-inspectors-to-the-posts.
206
China Developing Humanoid and Quadruped Robots—

Continued
attack and defense operations.” 312 Unitree has claimed that it
does not sell its products to the PLA, but the use of its product
in a formal military exercise underscores the ease with which the
PLA can potentially acquire products from civilian companies.313
In the future, China’s demographic decline could lead to human-
oid robots as replacements for an aging, shrinking workforce.314
In the present, Chinese researchers are also exploring the use of
humanoid robots for economic and commercial purposes. Human-
oid robots in China are undergoing limited deployment in various
sectors but are primarily being used for research, and reports in-
dicate humanoid robot firms are not generating commercial sales
yet.315 However, rapidly declining costs of producing humanoid
robots could allow for more widespread adoption.316 A Goldman
Sachs report from February 2024 estimates that the humanoid
robot market could reach $38 billion by 2035, with 1.4 million
units shipped, primarily for industrial settings.317 The Goldman
Sachs report also notes that the viability of “mass-produced, gen-
eral-purpose humanoid robots . . . hasn’t been proven yet.” 318
Quantum Information Science: The Next Frontier of U.S.-

China Technology Competition
Quantum information science (QIS) * may eventually become a
paradigm-shifting technology enabling computation and sensing at
a speed and scale heretofore impossible. Quantum technology will
enable a significant performance boost in processing that will poten-
tially help solve complex problems more efficiently. Advancements
in quantum technology could potentially revolutionize global supply
chains by refining production processes, streamlining logistics, and
optimizing resource allocation.319 QIS also has significant military
and national security implications. QIS can enable a state to decrypt
an adversary’s communications, improve the ability to locate and
track an adversary’s military assets, and process battlefield data
faster than an opponent.320 Arthur Herman, a senior fellow and di-
rector of the Quantum Alliance Initiative at the Hudson Institute,
asserts that “the nation that enjoys quantum supremacy, will dom-
inate the future of the global system,” as the technology will offer
significant advantages for business and national security.321
QIS can be grouped into three primary categories, each of which
can be used for military and civilian-commercial applications: com-
munications, sensing, and computing.322 Quantum communications
uses qubits, or photons of light that transmit data along optical ca-
bles, making communications extremely secure against eavesdrop-
ping and interception.323
* According to the Pacific Northwest National Laboratory, QIS seeks to understand how infor-
mation is processed and transmitted using quantum principles, merging quantum mechanics, and
information/computation theory. Quantum computers process information in the form of qubits,
which may occupy intermediate values rather than using bits with a 1 or 0 value (like classi-
cal computers). Qubits operate cooperatively through quantum entanglement, which multiply
interactions over billions of switches to create a powerful computer that can tackle computation-
al challenges that classical computers cannot. Pacific Northwest National Laboratory, “What Is
Quantum Information Science?”
207
Quantum sensing technologies analyze data at the atomic level,

making them significantly more sensitive and accurate compared to
conventional sensors.324 In military applications, quantum sensing
is used to help enhance imaging, radar, sub-surface sensing, and
navigation capabilities (including in GPS-denied environments).325
Lastly, where a classical computer can solve a problem with mul-
tiple variables along a single path, quantum computers can explore
multiple paths in parallel to scale their operations exponentially.326
Quantum computing could enable countries to break through en-
cryption methods used by adversarial governments and militaries,
improve military logistics, enhance modeling and simulation, and
rapidly increase the pace of scientific research.327
Experts differ on the likely timeframe over which the potential of
QIS can be realized, and it varies across the three categories. While
the field of quantum mechanics has been studied for over a century,
applications in advanced technologies have entered or approached
practical development only in recent years.* 328 Some experts assert
that we are on the cusp of a new revolution in quantum technolo-
gy, as experimental concepts are being actualized into technological
breakthroughs.329 The U.S. Defense Science Board has estimated
that quantum sensing technology, which is generally considered by
experts to be the closest to useful deployment, will have “operational
utility” in the 2024 to 2029 timeframe.330 In a response to a ques-
tion for the record before the Commission, Edward Parker, physical
scientist with the RAND Corporation, agreed with this assessment,
stating that broadly speaking, quantum sensing is the most tech-
nically mature of the three subfields of QIS.331 Dr. Parker noted
that within quantum computing, technical approaches based on
superconducting, trapped-ion, or neutral-atom qubits are more ad-
vanced than quantum computers based on photonic, silicon-spin, or
topological qubits.332 Furthermore, Dr. Parker stated that the high-
est-impact applications of quantum computing, such as decryption,
are unlikely to arrive prior to 2030.333 Boston Consulting Group
reports that between 2025 and 2030, new quantum communications
technologies will be adopted by private companies, and a growing
number of quantum random number generator chips will become
more prevalent in Internet of Things (IoT) infrastructure, while new
quantum communications repeaters, memories, and error-correction
algorithms will be adopted from 2030 onward.334
Because of its potential importance, both the United States and
China are investing heavily into QIS and are the two leading coun-
tries by most relevant metrics.335 In October 2020, Xi himself em-
phasized the importance of quantum technology, telling the CCP’s
Central Committee that the development of quantum science and
technology “is of great scientific significance and strategic value”
and that it is a “major disruptive technological innovation.” 336 More
recently, in August 2024, the United States said that QIS “holds the
potential to drive innovations across the American economy, from
* Dr. Parker asserts that broadly speaking, the field of quantum technology “is still very na-
scent,” with atomic clocks being the only quantum technology publicly known to be deployed by
any nation’s military. Edward Parker, written testimony for U.S.-China Economic and Security
Review Commission, Hearing on Current and Emerging Technologies in U.S.-China Economic and
National Security Competition, February 1, 2024, 4.
208
fields as diverse as materials science and pharmaceuticals to finance

and energy.” 337
The United States and China are competing heavily to outpace
each other in QIS research.338 China’s quantum R&D is largely
carried out in Hefei, Anhui Province, at state-funded laborato-
ries, with additional support from several startups.339 The He-
fei National Laboratory for Physical Sciences at the Microscale
(HFNL), affiliated with the University of Science and Technology
of China, received $1.06 billion in laboratory funding in 2017, ac-
cording to Chinese media reporting, with an additional (although
not confirmed) funding package of $2.95 billion per year planned
between 2017 and 2022.340 Assuming this funding was provid-
ed as described, the figure for this single laboratory far exceeds
the estimated annual R&D spending on quantum research for
the entire country, listed in the 13th Five-Year Plan (2016–2020)
at approximately $84 million, illustrating its importance as the
center for China’s development of quantum technologies.341 In
addition to this state laboratory, Hefei is also home to three of the
eight major quantum startups in China, including Ciqtek, Origin
Quantum, and QuantumCtek.* 342 Outside of Hefei, other major
quantum startups include Kunfeng, Qasky, QuDoor, Shenzhou
Quantum Communication Technology, and SpinQ.343 Although
other large Chinese technology companies—including Alibaba,
Baidu, Huawei, Tencent, and ZTE—had invested in quantum
technology R&D, Dr. Parker notes they appear to have reduced
their investment in the field, with both Baidu and Alibaba closing
their quantum research labs since November 2023.† 344
The U.S. government is a primary funder of open QIS research
domestically, growing significantly every year since the 2018 Na-
tional Quantum Initiative.‡ 345 The National Quantum Initiative
Act authorized eight initiatives in QIS for sustained multiyear
* Dr. Parker et al. assert that the largest difference between Chinese startups and their U.S.
counterparts is that the Chinese companies have announced far less capital funding, with only
$44 million in publicly identified capital for Chinese quantum startups compared to $1.28 billion
for U.S. startups. Edward Parker et al., “An Assessment of the U.S. and Chinese Industrial Bases
in Quantum Technology,” RAND Corporation, February 2, 2022, 84.
† According to Dr. Parker, several of the large Chinese companies, such as Baidu and Ten-
cent, had shut down their quantum computing efforts. He noted that Baidu announced it was
selling all of its quantum computing hardware to a national lab, assessing that the concentra-
tion to national labs appeared to be consolidating even more in the six months prior to Febru-
ary 2024. Although Dr. Parker said he did not have great visibility into why Baidu made this
decision, he speculated that the company assessed it would not be technically competitive in
this field, as they were “far behind U.S. companies, did not seem to be catching up, and did not
see it as a revenue generator.” Dr. Parker argues that when discussing China as a whole, the
country appeared to be doubling down on national laboratories, as none of the Chinese quan-
tum technology companies seemed to be globally competitive. In Baidu’s 2023 annual report
to the U.S. Securities and Exchange Commission, the company acknowledges the impact of
the Biden Administration’s August 2023 executive order directing the Treasury Department
to create an outbound foreign direct investment review program that will require reporting
on (or in more narrow circumstances prohibit) investments by U.S. persons involving “covered
national security technologies and products,” including quantum information technologies, as
well as the Treasury Department’s Advanced Notice of Proposed Rulemaking. Baidu claims
that “uncertainties on whether the outbound foreign direct investment review program will
have a material impact on our business, results of operations, financial condition, and pros-
pects.” U.S. Securities and Exchange Commission, Form 20-F, March 15, 2024. 45–46; Edward
Parker, oral testimony for U.S.-China Economic and Security Review Commission, Hearing on
Current and Emerging Technologies in U.S.-China Economic and National Security Competi-
tion, February 1, 2024, 167.
‡ The National Quantum Initiative is authorized through 2029, but certain programs within it
had specific authorized appropriations levels only through FY 2023. National Quantum Initiative
Advisory Committee, “Renewing the National Quantum Initiative: Recommendations for Sustain-
ing American Leadership in Quantum Information Science,” June 1, 2023.
209
funding, such as the National Science Foundation-led Institute

for Hybrid Quantum Architectures and Networks and the Depart-
ment of Energy’s Co-design Center for Quantum Advantage.346
The U.S. government provided actual budget expenditures for
QIS R&D of $449 million in fiscal year (FY) 2019, $672 million
in FY 2020, $855 million in FY 2021, and $1.03 billion in FY
2022, followed by $932 million of enacted budget authority for
FY 2023 and a requested budget authority of $968 million for FY
2024.347 Some of these expenditures have resulted in additional
government support at the state level. For example, the U.S. De-
partment of Commerce’s Economic Development Administration
announced $41 million in funding on July 2, 2024, for Elevate
Quantum (“Elevate”), a private-public consortium seeking to ad-
vance quantum research in the Mountain West, which unlocked
$77 million in funding for Elevate from Colorado and $10 mil-
lion from New Mexico.348 The United States also has a strong
private industry in QIS with at least 182 firms, a majority of
which (139 companies) are part of Quantum Economic Develop-
ment Consortium (QED-C), established by the National Quantum
Initiative.349 As of 2021, 55 of these QED-C companies focus on
computing, 20 focus on sensing, 12 focus on communications, and
40 deal with cross-cutting sectors of QIS.350 The venture capital
(VC) industry has been a significant source of funding for quan-
tum in the United States, with sources indicating over $2.5 bil-
lion invested through 2022, though perhaps echoing the private
sector investment decline in China, 2023 saw a significant decline
of 80 percent in VC funding for quantum computing in the United
States.351
Overall, Dr. Parker assesses that China’s progress across the
three main subdomains of QIS has made the country “impres-
sively fast followers across many quantum technology areas” and
that some experts regard China as the world leader in quantum
communications.352 A 2022 research report by Dr. Parker et al.
comparing the quantum industrial bases of China and the United
States found that the United States is the overall top producer of
high-impact * scientific publications in QIS, most notably in the
fields of quantum computing and sensing.353 By contrast, China
leads in high-impact quantum communications research.354 In
terms of institutional research capacity, as of 2020, China actu-
ally had a greater number of institutions working on quantum
research across the three primary subdomains of QIS than did
the United States, though the qualitative edge this may provide
remains unclear (see Table 1).355
* RAND Corporation defines “high-impact” by the number of academic citations a publica-

tion receives. The authors of the report argue that “if a nation is a global leader in developing
new quantum technologies, then its research activity will strongly impact the rest of the
world’s R&D as well.” The report notes that a “widely accepted metric of research impact” is
the number of citations a publication receives. Edward Parker et al., “An Assessment of the
U.S. and Chinese Industrial Bases in Quantum Technology,” RAND Corporation, February 2,
2022, 19.
210
Table 1: Number of U.S. and Chinese QIS Publishing Research Institutions
United States China

# of % of # of % of
Metric Labs * Pubs † H-index ‡ Labs Pubs H-Index
Computing 1,236 21.5 104 1,592 22.4 61
Communications 581 12.2 39 1,288 38.6 51
Sensing 376 15.3 67 535 26.1 59

Note: The covered time period for the number of labs working on quantum technology is 2011–
2020, while the percentage of publications and H-index scores cover 2019–2023.
Source: Edward Parker et al., “An Assessment of the U.S. and Chinese Industrial Bases in
Quantum Technology,” RAND Corporation, February 2, 2022, 34, 74; Jamie Gaida, Jenny Wong-
Leung, and Stephan Robin, “Critical Technology Tracker,” Australian Strategic Policy Institute,
2023.
However, these U.S. and Chinese leads in particular quantum ar-

eas may change, given the long timelines for implementation.
Below is a brief discussion of some areas of apparent progress in
China on QIS. There may be a basis for skepticism regarding some
of the claimed breakthroughs announced by Chinese researchers;
when these have been questioned by U.S. scientists and experts, it
is noted.356
• Potential progress in computing: Recent developments illus-
trate China’s potential progress in quantum computing capa-
bilities.
○ In September 2024, the South China Morning Post (SCMP)
reported that Chinese scientists at Shanghai University
had demonstrated the first effective attack using a quan-
tum computer on the class of algorithms used in pass-
word-protection and encryption mechanisms common in
military and financial networks.357 The researchers used a
quantum computer produced by Canadian company D-Wave
Systems.358 According to the authors, this study did not
produce a passcode for the best available military-grade
encryption like Advanced Encryption Standard (AES-256),
but such a breakthrough may be closer than ever before.359
The authors of the study did note that underdeveloped
hardware and the incapability of a single attack algorithm
to target multiple cryptographic systems presented practi-
cal constraints.360
○ Quantum experts agree that the study indicates “incremen-
tal advances in quantum computing” but also note that the
SCMP article was misleading, as the study itself applied only
to RSA encryption,§ not military-grade AES (Advanced En-
* Number of research institutions with at least one publication in each subfield from 2011 to
2020.
† Percentage of total global published research by Chinese researchers and institutions.
‡ H-index (Hirsch Index) is commonly used to assess both the breadth and impact of research
and is considered the best single metric for measuring research quality of a corpus of publica-
tions.
§ The Rivest-Shamir Adleman (RSA) algorithm is a basic key encryption that is widely used
to secure sensitive data. Michael Cobb, “RSA Algorithm (Rivest-Shamir Adleman),” Tech Target.
211
cryption Standard) encryption, and did not render current

cryptographic systems obsolete.361
○ In January 2023, a group of Chinese scientists claimed they
used a combination of classical and quantum computing
techniques to breach the RSA encryption algorithm used in
military, banking, and communications systems.362 Notably,
the paper summarizing their findings asserts that the RSA
algorithm could be broken with a quantum machine using
only 372 qubits (which is less than IBM’s world-class Osprey,
operating with 433 qubits), potentially illustrating the effi-
ciency of the Chinese quantum computer if the findings are
true.363 However, quantum researchers and scientists have
offered mixed reviews of the paper, with Massachusetts In-
stitute of Technology (MIT) scientist Peter Shor stating, “As
far as I can tell, the paper isn’t wrong” but that the Chinese
researchers failed to demonstrate the speed with which the
quantum algorithm would run, leaving questions regarding
the degree of improvement.364 At the time of the announce-
ment, the SCMP noted that the paper had not been officially
peer reviewed, and Scott Aaronson, director of the Quantum
Information Center at the University of Texas at Austin, said
the article was “one of the most actively misleading quantum
computing papers I’ve seen in 25 years.” 365
○ In June 2024, the Anhui Quantum Computing Engineering
Research Center and QuantumCTek (the latter of which is a
quantum company currently on the Commerce Department’s
Entity List) * jointly announced that their quantum computer
dilution refrigerator is the first equipment of its kind commer-
cially available for mass production in China.† 366 According
to an article published by the Anhui Daily, the dilution re-
frigeration products were delivered to two scientific research
units, and “after many months of testing by customers, the
equipment has been operating continuously and stably for a
long time.” 367 (For more on the importance of certain refrig-
eration technology to QIS, see “The Global Quantum Supply
Chain and Relevant U.S. Export Controls” below.)
○ Origin Quantum ‡ announced in May 2024 that it had suc-
cessfully developed a high-density microwave interconnect
module that domestic media has described as a “neural net-
* QuantumCTek also appears under the aliases of HKUST National Shield Quantum Technol-
ogy Co., Ltd.; HKUST Guodun Quantum Technology Co., Ltd.; National Shield Quantum; and
Anhui Quantum Communication Technology Co., Ltd. in the Commerce Department’s Entity List.
U.S. Department of Commerce, Addition of Entities and Revision of Entries on the Entity List; and
Addition of Entity to the Military End-User (MEU) List, November 26, 2021.
† Heat causes errors in qubits that serve as the building blocks of quantum computers, neces-
sitating the use of refrigerators that keep the temperature just above absolute zero. In Dr. Park-
er’s oral testimony before the Commission, he asserted that “a surprising amount of quantum
supply chain revolves around extremely powerful refrigerators.” Edward Parker, oral testimony
for U.S.-China Economic and Security Review Commission, Hearing on Current and Emerging
Technologies in U.S.-China Economic and National Security Competition, February 1, 2024, 165;
Adam Zewe, “A New Way for Quantum Computing Systems to Keep Their Cool,” MIT News Office,
February 21, 2023.
‡ Origin Quantum was established in 2017 in Hefei, Anhui Province, by Guo Guancan, an ac-
ademician of the Chinese Academy of Sciences, and Guo Guoping, who serves as deputy director
of the Chinese Academy of Sciences Key Laboratory of Quantum Information and associate dean
of the School of Microelectronics and the Institute of Advanced Technology at the University of
Science and Technology of China.
212
work” for quantum computers.* 368 A major obstacle to the

module’s domestic production in China has been sourcing an
ultra-low-temperature specialized high-frequency coaxial ca-
ble, which was previously imported from Japan.369 This new
device can allegedly provide microwave signal transmission
channels for quantum chips with more than 100 bits and can
achieve stable signal transmission across temperature zones
in cool environments.370 According to Kong Weicheng, a re-
searcher at Origin Quantum, the module will allow quantum
chips to exert “more powerful computational capabilities,”
which enable quantum computers to operate efficiently.371
• Potential progress in sensing: There are signs of progress
in China’s prototype quantum radars, which could advance the
PLA’s capability to detect foreign military assets.372 In 2018, for
example, the 14th Institute of the defense SOE China Electron-
ics Technology Group Corporation announced that its quantum
radar technology had successfully tested detecting targets up
to 62 miles away, asserting that the technology is expected to
solve bottleneck issues associated with traditional radars, such
as low-visibility target detection, survival under electronic war-
fare conditions, and other challenges.373 In 2021, a laboratory
at Tsinghua University also tested a quantum radar that its
researchers claimed was capable of increasing the probability of
detecting stealth aircraft by generating a small electromagnetic
storm.374
○ However, MIT professor Jeffrey Shapiro, one of the technolo-
gy’s inventors, has previously argued that there are problems
with this approach that make it unfeasible.375
• Potential progress in communications: China has sought to
create secure communications links through both ground-based
stations and satellites.376 Dr. Parker notes that Beijing may be
seeking to build an internal communications system without
any Western technologies, which reflects the Chinese leader-
ship’s anxiety about vulnerability to foreign espionage.377 Chi-
nese scientists have primarily focused their quantum communi-
cations R&D on a method known as quantum key distribution
(QKD), which may improve communications security against
enemy interception.378 In 2021, China successfully tested the
world’s first integrated QKD network, combining a satellite link
through the Mozi (Micius) satellite that connects two ground
stations approximately 1,616 miles apart (which achieved QKD
in 2016) as well as an optical fiber network stretching around
1,243 miles from Beijing to Shanghai (completed in 2017),
providing a total distance of roughly 2,858 miles of coverage
across China.379 China launched its second QKD satellite in
July 2022—known as Jinan 1—for additional experimentation
* This breakthrough was announced shortly after BIS added Origin Quantum and 21 other
Chinese quantum organizations to its Entity List for “acquiring [and/or] attempting to acquire
U.S.-origin items in support of advancing China’s quantum technology capabilities.” It is too early
to assess the impact of BIS action on China’s continuing ability to make quantum advancements.
U.S. Department of Commerce Bureau of Industry and Security, “Additions of Entities to the Enti-
ty List,” Federal Register 89 FR 41886 (May 14, 2024); Origin Quantum, “About Origin Quantum.”
213
in low Earth orbit.380 The Mozi satellite was used to establish

a secure communications link with Russia in March 2022.* 381
U.S. Response to Quantum National Security Risks
Unlike the broad, country-based controls imposed by the United
States in the advanced semiconductor space, until September 2024,
the U.S. policy response to QIS national security risks had been more
limited perhaps due to the earlier stage of the technology and the
possibility that many QIS uses are not military. Until that time, the
United States had primarily taken an entity-based approach with
respect to QIS-related export controls against China.† 382 In No-
vember 2021, the Commerce Department’s Bureau of Industry and
Security (BIS) added eight Chinese entities to the Entity List, in-
cluding QuantumCTek, “to prevent U.S. emerging technologies from
being used for the PRC’s quantum computing efforts that support
military applications” and citing potential uses in counter-stealth
and anti-submarine applications as well for breaking encryption
and developing unbreakable encryption.383 In May 2024, BIS added
another 22 Chinese institutes and firms to the Entity List, including
Origin Quantum, for aiding China’s quantum development.384
In September 2024, BIS issued a new interim final rule imposing
worldwide export controls on “quantum computers, related equip-
ment, components, materials, software, and technology that can
be used in the development and maintenance of quantum comput-
ers.” 385 BIS notes that the controls had been aligned with inter-
national partners; they are similar to those put in place this year
by the UK, France, Spain, the Netherlands, and Canada, which
some reporting suggests resulted from “Wassenaar minus 1” discus-
sions.386 The new BIS quantum controls also include provisions cre-
ating a licensing exception for countries that implement “equivalent
national controls,” thus incentivizing countries to adopt similar con-
trols to ease their access to U.S. technology and ability to engage in
cooperative research.387 Finally, the new controls include limited ex-
ceptions, so as not to disrupt ongoing R&D efforts across borders or
with foreign persons engaged in QIS research in the United States,
and annual reporting requirements to provide greater visibility into
the types of such activities.388
* According to the South China Morning Post, China launched Mozi, or Micius, the world’s first
quantum communications satellite, in 2016. A team of Russian scientists began working with
the Mozi team in 2020 to help them set up systems to begin conducting experiments with the
satellite, according to Alexey Fedorov, one of the paper’s coauthors. Speaking on the results of
the experiment, the Russian scientists said the results help account for the imperfections of QKD
protocols, such as the problem of detector efficient mismatch, which they say are “important in
the context of their practical security.” The Russian scientists who wrote the paper are affiliated
with six different Moscow-based institutions, including the Russian Quantum Center, Moscow
Institute of Physics and Technology, QSpace Technologies, HSE University, National University
of Science and Technology MISIS, and the Steklov Mathematical Institute of the Russian Acad-
emy of Sciences. In the acknowledgements section of the paper, the Russian authors thanked
“our colleagues from the University of Science and Technology of China” for their assistance and
recommendations during the joint experiment. Victoria Bela, “China and Russia Test ‘Hack-Proof’
Quantum Communication Link for Brics Countries,” South China Morning Post, December 30,
2023; Aleksandr V. Khmelev et al., “Eurasian-Scale Experimental Satellite-Based Quantum Key
Distribution with Detector Efficiency Mismatch Analysis,” Optics Express 32:7 (March 2023): 1, 8.
† The United States did impose a broader technology-based ban relating to quantum computing
against Russia and Belarus in September 2022. U.S. Department of Commerce Bureau of Indus-
try and Security, “Implementation of Additional Sanctions against Russia and Belarus under
the Export Administration Regulations (EAR) and Refinements to Existing Controls,” Federal
Register 87:179 (September 16, 2022).
214
The Global Quantum Supply Chain and Relevant U.S. Export

Controls *
The nature of the QIS supply chains have made a U.S. policy
response more challenging than the more concentrated semicon-
ductor supply chain.389 Additionally, some argue that the early
stage of the technology and the uncertainty surrounding which
QIS applications will be national security-sensitive necessitate
a nuanced approach to export controls to ensure they do not in-
terfere with the research and collaboration needed to develop
the technology.390 Dr. Parker argues that export controls should
primarily be applied to systems with operational military capa-
bilities instead of more broadly.391 Under a capability-focused ap-
proach, U.S. export controls would only target specific quantum
technology when it becomes capable of delivering qualitatively
new capabilities like decryption.392 To illustrate this approach, in
his February 2024 testimony to the Commission, Dr. Parker pro-
vided the example of “quantum sensors” as a category, where at
that point there were no general export controls on the technology
as a whole, but instead there were export controls applicable to
certain highly sensitive sensors (e.g., high-sensitivity magnetom-
eters, gravimeters, and superconducting electromagnetic sensors)
that would cover certain quantum sensors if they are successfully
developed.393 Such an approach is different than the broad-based
approach currently taken for advanced semiconductors, which
seek to deny China’s access to a key foundational technology for
AI given the inherent risks, rather than just limiting access to
specific military applications.
A more broad-based approach to export controls for QIS could
be more complicated than the similar approach used for advanced
semiconductors and semiconductor manufacturing equipment giv-
en that the QIS supply chain is more varied. As Dr. Parker notes,
“there are currently a wide variety of technical approaches [to QIS]
being researched in parallel, which require very different critical
components.” 394 A May 2024 report by Sam Howell, an associate fel-
low at CNAS, noted that the quantum computing sector has several
different modalities under development that each require a differ-
ent and evolving set of inputs with very little overlap.395 Further,
the inputs could change as the technology matures, so the quantum
technology supply chain could remain in flux for the next several
years or even decades.396
BIS has identified a number of quantum computing-related tech-
nologies for export controls. In September, 2022, BIS prohibited ex-
port of quantum computing-related technology to Russia and Belar-
us, including quantum computers and certain components, cryogenic
refrigeration systems and components, ultra-high vacuum (UHV)
equipment, high quantum efficiency photodetectors and sources, and
software and technology related to each the development, production,
* Please note that the new BIS quantum controls announced in September 2024 likely overtake
some of the analysis in this subsection. Due to the timing of the release of these new controls rel-
ative to finalization of this report, their length (31 Federal Register pages), and the complexity of
both the Export Control Classification Number system and QIS-related technology supply chains,
a full analysis of the policy implications of those controls is beyond the scope of this report. U.S.
Department of Commerce, Department of Commerce Implements Controls on Quantum Comput-
ing and Other Advanced Technologies alongside International Partners, September 5, 2024, 3.
215
or use of the foregoing.* 397 In its September 2024 QIS-focused con-

trols, BIS took a broader approach, imposing controls on a variety of
new Export Control Classification Number (ECCN) product catego-
ries and amending the scope of other existing ECCNs.† 398 The BIS
quantum controls cover extremely powerful cooling systems, which
are needed to reduce heat that causes errors in qubits that serve
as the building blocks of quantum computers.399 Although the Unit-
ed States produces some of its own quantum cryogenic products,
it is allied or partner countries—not China—that largely make up
the remainder of the supply chain for the refrigeration technologies
needed in quantum devices.400 A September 2022 report by Sandia
National Laboratories notes that aside from two U.S.-based man-
ufacturers of the technology, there are manufacturers in Canada,
France, Finland, the Netherlands, and the UK.401
Other potential key “chokepoint” components have been more dif-
ficult to identify.‡ A 2022 Hyperion Research survey of 47 respon-
dents across the U.S. quantum computing supply base listed various
materials and products that respondents identified as the most like-
ly potential causes of quantum computing supply chain disruption
in the coming years: helium-3 gas, silicon-28, copper, aluminum,
gold, high-performance cryocoolers, pumps, valves, compressors,
power supplies, RF generators, superconducting wiring assemblies,
dilution fridge components, fiber and coaxial cables, low-noise lasers
at relevant atomic wavelengths, and key manufacturing equipment
useful for quantum and classical chip manufacturing and testing.402
Some of those materials and components are likely to have multiple
sources of availability outside of the United States and allied coun-
tries. The September 2024 BIS quantum controls do apply to certain
QIS-related components.403 It is beyond the scope of this chapter to
further analyze these supply chains.
Biotechnology: State-Backed Firms Build Global Imprint
Biotechnology is an emerging field with wide-ranging commercial
and military applications and the potential to revolutionize various
key sectors of the economy.404 A deeper understanding of natural
systems, biochemistry, and genetics paired with increasingly power-
ful tools for manipulating cell structures has resulted in improved
medicines and therapeutics, increased crop yields, new biofuels and
bioenergetics, inorganic substances, and advancements in materi-
al science and manufacturing processes.405 The application of AI
* At the same time as the noted BIS action relating to QIS and Russia, U.S. Department of the
Treasury, Office of Foreign Assets Control imposed sanctions that prohibited “U.S. persons” locat-
ed anywhere in the world from exportation, reexportation, sale, or supply, directly or indirectly,
of quantum computing services to any person located in Russia. U.S. Department of the Treasury,
Office of Foreign Assets Control, Determination Pursuant to Section 1(a)(ii) of Executive Order
14071: Prohibitions Related to Certain Quantum Computing Services, September 15, 2022.
† The various ECCNs applicable to quantum include certain cryogenic CMOS integrated cir-
cuits, certain cryogenic cooling systems and components, certain cryogenic wafer probing equip-
ment, certain silicon, silicon oxides, germanium or germanium oxides, certain quantum comput-
ers, quantum computing-related electronic assemblies and components, and related software. U.S.
Department of Commerce Bureau of Industry and Security, “Commerce Control List Additions
and Revisions; Implementation of Controls on Advanced Technologies Consistent with Controls
Implemented,” Federal Register 89:173 (September 6, 2024).
‡ Dr. Parker et al. note in a 2022 publication that pieces of the quantum supply chain sourced
from China are generally low-cost, off-the-shelf products like electronics and optics as well as
some raw materials such as nonlinear crystals. Edward Parker et al., “An Assessment of the U.S.
and Chinese Industrial Bases in Quantum Technology,” RAND Corporation, February 2, 2022,
53, 150.
216
in biotechnology holds potential to be an accelerant on the pace of

discovery, for example by rapidly filling in gaps in researchers’ un-
derstanding of gene sequences.406 Though the full extent to which
fast-advancing subfields like synthetic biology and gene editing will
reshape the realm of possibilities using living organisms is not yet
clear, former Google CEO and Chairman and current Commission-
er on the National Security Commission on Emerging Biotechnol-
ogy Eric Schmidt said in April 2024 that we may be approaching
a “ChatGPT” moment for biotechnology, one as ground-shifting as
the breakthrough in generative AI in November 2022.407 The im-
portance of the technology has not been lost on China. A Chinese
Academy of Science official typified the strategic emphasis China
placed on biotechnology by stating, “As Europe won in the 19th cen-
tury using industry, and the United States won in the 20th century
using information technology, so China will win in the 21st using
biology.” 408 This section will examine the state of U.S.-China bio-
technology competition, China’s biotechnology ambitions, cases of
concern, and the potential risks for the United States.
China Rises up the Value Chain in Biopharma despite
Lagging in Fundamental Research
The CCP’s leadership has long viewed biotechnology—and in
particular biopharmaceuticals—as a critical technology, and it has
sought to become a leader in this field with massive state support
for the sector.409 Starting with the 12th Five-Year Plan (2011–2015),
the Chinese government shifted its strategy in the sector from one
focused on growing copycat manufacturing capabilities toward
one incentivizing innovation not just on pharmaceuticals but also
across agriculture and biomanufacturing.410 The “Made in China
2025” plan, a high-level Chinese policy document released in 2015,
identified “biomedicine and high-end medical equipment” and “new
materials, such as polymers” as two of the ten key sectors set for
state backing.411 The 14th Five-Year Plan for the Bioeconomy called
for investments in biotechnology across a range of industries to put
China “at the forefront globally” by 2035.412 Biotechnology has been
designated a strategic emerging industry by Beijing, and therefore
companies enjoy a host of preferential treatments, including tax
benefits, subsidies, and government procurement benefits.413 The
government has also supported development of high-tech science
parks where companies can cluster and have access to state-of-the-
art R&D facilities and equipment such as DNA sequencers.414
Though traditionally a copycat and maker of generic drugs, China
has prioritized success in biopharma, investing in R&D infrastruc-
ture and supporting biotech companies that have captured key seg-
ments of the value chain for genomic sequencing and biopharma.415
Additionally, there are signs that the Chinese biopharma sector is
becoming more innovative, with metrics such as high-quality publi-
cations, patent filings, and approval of novel drugs on the rise.
China’s efforts have resulted in some significant successes. With
regard to biopharma, China increased its share of global value add-
ed in pharmaceuticals from 5.6 percent in 2002 to 24.2 percent in
2019, surpassing the EU.416 China’s biotechnology sector has been
the recipient of sizable investment increases, with venture capital,
217
equity funds, and IPOs providing funding to the tune of $216 billion
from 2015 to 2023.417 Seven of the world’s ten largest biopharma-
ceutical IPOs were by Chinese companies from 2018 to 2020, accord-
ing to McKinsey & Company, while the total combined market value
of China’s biopharmaceutical industry grew exponentially from $3
billion in 2016 to more than $380 billion in 2021.418
Nevertheless, until very recently, China’s biotechnology indus-
try has struggled to deliver innovative new products, particularly
in biopharmaceuticals.419 Chinese funding has been geared more
toward experimental and translational research; China is not pri-
marily focusing on basic research, which remains an area in which
the United States leads.* 420 More than a dozen biotechnology ex-
perts interviewed by Bloomberg News argue that the persistent
lack of basic research in China has stymied domestic innovation
by failing to build the knowledge foundation on which to explore
novel applications.421 Academic researchers in China struggle
to collaborate with biotech firms to create high-end commercial
products, and as a result, Chinese biopharmaceutical firms have
produced very few truly innovative medicines.422 Many Chinese
biopharmaceutical firms continue to seek to “copycat” products
developed abroad.423 As a result, Chinese biopharma firms have
lagged behind in bringing novel therapeutics to market quickly,
as was the case with China’s mRNA COVID-19 vaccines, which
only gained approval in March 2023, two years after vaccines
developed in the United States.424
With a robust life sciences innovation ecosystem comprising top
universities, venture capital funding, and industry leading firms, the
United States has long been the global leader in biopharmaceuticals
and non-pharmaceutical biotechnology. U.S.-headquartered biotech
firms lead in new drug development, producing twice as many new
chemical or biological entities as those in Europe between 2014 and
2018.425 U.S. firms received 62 percent of global venture capital
funding in biotechnology in 2020, a figure that declined from 69 per-
cent a decade earlier but still far exceeded China (19 percent) and
Europe (15 percent).† 426 Accounting for 40 percent of the world’s
total, the United States still publishes nearly double the Patent
* From 2000 to 2019, 80 percent of China’s R&D expenditures were focused on experimental
development, using existing knowledge to improve products and processes, compared to 62 per-
cent in the same time period for the United States. This emphasis on translational research may
advantage China in developing products for defense and other critical sectors, altering human
genetic structures, and some other applications. As Michelle Rozo, vice chair of the National
Security Commission on Emerging Biotechnology, testified before the Commission, “A system
that funds translational research is better poised to realize applications in certain biotechnology
sectors, including agriculture, [industry], and defense. In a way, China is taking advantage of
American basic R&D by heavily funding translational research.” Michelle Rozo, written testimony
for the U.S.-China Economic and Security Review Commission, Hearing on Current and Emerging
Technologies in U.S.-China Economic and National Security Competition, February 1, 2024, 2–3.
† Funding activity for biotechnology in the United States boomed during the COVID-19 pan-
demic, with venture capital and IPO follow-on funding both peaking at over twice their pre-pan-
demic level in 2021 before falling off in 2022 and 2023. The collapse of Silicon Valley Bank in
March 2023 further constrained funding, with an estimated 50 percent of U.S. biotech companies
banking with the institution. There are signs in 2024 that the industry is recovering, driven by
factors like investment in weight loss drugs and a shifting focus from IPOs to mergers and ac-
quisitions (M&A) activity. Gwendolyn Wu, “Private Biotech M&A Surges amid Difficult IPO Mar-
ket,” Biopharma Dive, July 22, 2024; Chad Wessel, “The State of Emerging Biotech Companies:
Investment, Deal, and Pipeline Trends,” Biotechnology Innovation Organization, June 4, 2024;
Irena Maragkou, “Biotechs Ride Obesity Drug Wave with Novel Approaches That Go beyond GLP-
1Ras,” Pharmaceutical Technology, February 15, 2024; Nicholas Megaw, “US Biotech Fundraising
Boom Ends 2-Year Deal Drought,” Financial Times, February 12, 2024; Patrick Wingrove, “SVB
Fall Casts Shadow on Early-Stage U.S. Biotech,” Reuters, March 13, 2023.
218
Cooperation Treaty (PCT) biotech-related patents as China.427 U.S.

biotechnology companies attracted $56.8 billion in total funding in
2023, 35 percent of the world’s total in comparison to $20.6 billion
to Chinese firms.428 There are positive trends for China, however.
Despite the U.S. lead in basic research, there are recent indications
that Chinese biotech is becoming more innovative in cutting-edge
research. In 2023, five first-in-class drugs were approved in China
and three by the U.S. Food and Drug Administration, including the
first FDA-approved drug to treat nasopharyngeal cancer.429 There
were 33 licensing deals in 2024 between Chinese drug makers and
multinational enterprises.430 These are deals in which multination-
al companies license the IP created by a smaller company and typ-
ically signal some level of innovation in the product. The number of
licensing deals has more than doubled since 2019 and indicates the
increasing confidence of international companies in the quality of
Chinese innovations.431 The amount of high-quality scientific pub-
lications from Chinese academics has overtaken that of the United
States in certain subfields, including novel antibiotics and antivirals
and biomanufacturing.432 Chinese researchers have also made sig-
nificant strides in synthetic biology, the replication of living organ-
isms or creation of novel materials, therapeutics, or organisms.433
The Australian Strategic Policy Institute (ASPI) ranks Chinese re-
search in synthetic biology ahead of the United States in terms of
both the volume and quality of research published.434
Additionally, Chinese biotech companies have become indus-
try leaders in genomic sequencing, mass production of precursors,
and intermediary services needed by innovative pharma and bio-
tech companies, capturing larger segments of the value chain as
contract research organizations (CROs), contract manufacturing or-
ganizations (CMOs), and contract development and manufacturing
organizations (CDMOs).435 A survey from Biotechnology Innovation
Organization, a trade association, found that of 124 U.S. biotech
companies that responded, 79 percent had at least one contract or
product agreement with firms based in China or owned by China for
services such as gene sequencing, data management, and conducting
clinical trials.436
Chinese Firms Become Major Players in Genomics
China has significant capabilities in genomics. Genomics is the
study of an entire organism’s genetic sequence, including that of
humans.437 The Chinese government has a longstanding interest
in the development of genomics, funding its development since the
early 2000s.438 In 2023, the National Natural Science Foundation
under the State Council named Chinese research in genomics as one
of the “ten major advancements in Chinese science.” 439
The ability to analyze vast quantities of genomic data has been
likened to the holy grail of drug discovery, while giving distinct ad-
vantages in healthcare for diagnosing medical conditions and in
determining predispositions for disease.440 Yet, genomics and syn-
thetic biology can also be used for malevolent purposes, such as sur-
veillance using bioindicators and to make more virulent pathogens
that may one day be capable of targeting subsections of populations
based on shared genetic signatures.441
219
China has significant advantages in genomic data. China has

pursued a comprehensive state-led effort to amass genetic data on
humans and living organisms around the world stored in a central
repository known as the China National GeneBank.442 Given the
nature of innovation in biotechnology, access to a massive amount of
genetic data could accelerate the pace of discovery and development
in emerging subfields like synthetic biology, providing the Chinese
R&D community an advantage in the next evolution of biotechnol-
ogy. The Chinese government designated genetic data as a national
strategic resource in 2022, and it restricts the transfer of genetic
information to parties outside of China.443
Chinese firms are becoming main drivers in genomics research
and global leaders in providing genetic sequencing and related ge-
nomics services.444 Principal among these is BGI Group, which was
initially founded as the Beijing Genomics Institute in 1999 to serve
as China’s representative to the U.S.-led Human Genome Project, an
international research collaboration in sequencing human DNA.445
Over the subsequent two decades, BGI’s research has expanded from
mapping the human genome to groundbreaking research on map-
ping primate brains and sequencing blood samples to identify virus-
es.446 The firm has also made strides in developing low-cost genome
testing services and marketing them abroad, building a global brand
as a commercial genetic sequencing firm.447 As a global competitor
in genomics, BGI has grown to become one of the world’s largest
genetic sequencing firms by capacity, with $973 million (RMB 7.05
billion) in revenue in 2022.448 The company maintains offices and
research laboratories across the world, including in Europe, Japan,
and the United States, and has distributed testing products in at
least 80 countries.449 During the COVID-19 pandemic, BGI deployed
genetic testing labs in more than 20 countries around the world
capable of collecting genetic data, which has raised concerns that
China is engaged in a concerted effort to amass genetic data abroad
while walling off domestic data.450 As of October 2024, BGI’s market
capitalization was $2.6 billion, well behind industry leader Illumina
($23.7 billion) and other peer genomics companies, yet the compa-
ny has shown prowess in scaling globally and expanding market
share.451 BGI also runs China’s National GeneBank, overseeing
millions of genetic samples in cooperation with the National De-
velopment and Reform Commission and Ministry of Health, among
other Chinese government agencies.452 Amid this close government
collaboration, BGI has benefited from favorable state-led subsidies,
including a $1.5 billion ten-year loan from the state-controlled Chi-
na Development Bank.453
Other Chinese firms are becoming leading firms in genomics,
too. Beijing-based Novogene has created a dominant presence in
next-generation genetic sequencing—DNA sequencing that provides
higher-volume, faster, and cheaper genetic sequencing capabilities—
completing 1.2 million samples as of 2021.454 To develop its genetic
sequencing capabilities, the firm has sought out research partner-
ships with U.S. partners, a pattern in Chinese-based biotech firms.455
This includes the establishment of a “genome sequencing center” on
the campus of University of California, Davis meant to research and
refine genetic sequencing capabilities.456 In 2022, Novogene also set
220
up a genome sequencing facility in San Jose, California, positioning

it to offer genetic sequencing services to U.S. biotechnology firms in
Silicon Valley.457
China’s Biotech Industry Is Deeply Interconnected with U.S.
Firms
Chinese companies have become integral in U.S. pharmaceutical
supply chains, leading to dependencies and heightened risk of the
transfer of sensitive health data of U.S. citizens.* A few Chinese
companies do have significant globally competitive capabilities in
genomic sequencing and biotech services for innovative companies.
The virtues of an open and collaborative research environment be-
tween the United States and China have been extolled by many in
the scientific community, yet national security experts have raised
concerns particularly around the possible transfer of sensitive
health data of U.S. citizens, which could enable China’s technology
advancement and create vulnerabilities for Americans.458
Chinese companies have been able to capture market share as pro-
viders of services such as genetic sequencing, offering intermediate
services and conducting clinical trials, lowering the cost and occupy-
ing a significant space in the biopharma supply chain in the United
States and globally. Despite growing evidence of collaboration with
the PLA, Chinese genomics firm BGI and other major internation-
al biotech player WuXi have longstanding operations in the United
States, enabling them to conduct U.S.-based R&D.459 Since 2010,
BGI has operated its BGI Americas laboratory in Cambridge, Mas-
sachusetts, and in 2013 BGI acquired U.S.-based DNA sequencing
firm Complete Genomics.460 BGI was a main supplier of COVID-19
test kits in the United States, providing 35 million COVID-19 tests
to U.S. users by August 2020.† 461 Reporting from the Washington
Post in September 2023 details how BGI collected vast amounts of
genetic data from populations around the world during the pan-
demic by deploying its Fire-Eye labs—portable labs that analyzed
genetic samples for traces of COVID-19—in over 20 countries.462
BGI has also conducted extensive research collaborations with U.S.
firms and institutions, including partnerships with the University
of California and the Children’s Hospital of Philadelphia on human
genome sequencing.463
WuXi Group Raises Dependency and Security Concerns

WuXi Group encompasses a constellation of integrated CROs
and CDMOs known as contract research, development, and man-
ufacturing organizations (CRDMOs) that specialize in services re-
lated to drug development and production.464 WuXi has expanded
market presence in the United States and Europe, with WuXi Bi-
ologics and WuXi AppTech among the two largest subsidiaries.465
* Chinese state-sponsored hackers were believed to have played a role in a hack of health-
care records on 80 million Americans in 2015. There is no known evidence indicating that data
from this attack have been used or made available within China for biomedical-related research.
Michael Riley and Jordan Robertson, “Chinese State-Sponsored Hackers Suspected in Anthem
Attack,” Bloomberg, February 5, 2015.
† For more on BGI’s role in supplying COVID-19 testing kits, see U.S.-China Economic and Se-
curity Review Commission, Chapter 2, Section 2, “The Chinese Communist Party’s Economic and
Technological Ambitions,” in 2021 Annual Report to Congress, November 2021, 178–179.
221
WuXi Group Raises Dependency and Security Concerns—

Continued
These firms have become integral to the U.S. pharmaceutical in-
dustry: it is estimated that WuXi has been involved in developing
one-fourth of the drugs currently used in the United States.466
For example, it has developed key ingredients for drugs used in
treatments for HIV, cystic fibrosis, obesity, and cancers like some
types of leukemia and lymphoma.467 About two-thirds of WuXi
AppTech’s revenue ($3.6 billion) came from the U.S. market in
2023.* 468 As the firm has expanded its footprint in the United
States, it has benefited from state and local subsidies, including
an $11.5 million tax break to build a manufacturing plant in
Massachusetts and a $19 million subsidy to build a manufactur-
ing site in Delaware.469
WuXi’s role in the U.S. drug development and manufacturing
market raises significant concerns that a key U.S. industry has
become reliant on a Chinese company with links to the PLA.† 470
Many companies that contract with Chinese-based CRDMOs like
WuXi Group have expressed concerns that a disruption in these
contracts would present major setbacks for drug development
timelines. One survey of 105 U.S. biotechnology companies found
over 90 percent would expect delays in their development pipe-
line if they were forced to switch from a China-based CRDMO
and 64 percent saying this would constitute a “substantial slow-
down.” 471 Another survey—as previously mentioned—from the
trade group Biotechnology Innovation Organization (BIO) yielded
similar results, with 79 percent of 124 biopharma companies sur-
veyed saying they had at least one contract with a China-based or
-owned CRDMO; the survey indicated that fully unwinding these
partnerships would take up to eight years.472 This comes at a
moment when the U.S. pharmaceutical industry is dealing with
active drug shortages near all-time highs.473
WuXi’s position in the drug development pipeline grants it po-
tential access to U.S. clients’ proprietary IP and know-how.474
Furthermore, the company’s recent expansion into genomics
makes the collection of genetic data a core component of its ser-
vices, raising concern over the potential transfer of genetic data
of U.S. persons.475
In light of both firms’ alleged ties to the Chinese military, U.S.

policymakers are seeking to limit their reach into the United States
* In 2015, WuXi purchased an ownership stake in U.S. genetic sequencing firm 23andMe, which
company representatives claimed in 2021 amounted to less than 1 percent. For more on Chinese
firms investing in U.S. genetic sequencing firms, see U.S.-China Economic and Security Review
Commission, Chapter 2, Section 2, “The Chinese Communist Party’s Economic and Technological
Ambitions,” in 2021 Annual Report to Congress, November 2021, 178; Julian E. Barnes, “U.S.
Warns of Efforts by China to Collect Genetic Data,” New York Times, October 22, 2021.
† In June 2024, it was reported that WuXi AppTec employees were listed as co-inventors along-
side scientists from the PLA General Hospital in Beijing on at least ten patents for altitude
sickness drugs in recent years. This follows documented links between the company and the CCP
going back years, with one in seven of WuXi AppTec’s employees believed to be CCP members
in 2013. Kirsty Needham and Andrew Silver, “Staff at Drugmaker under U.S. Scrutiny Worked
with Chinese Military Scientists,” Reuters, June 6, 2024; Sunny Cheung, Arran Hope, and Peter
Mattis, “Red Genes: Assessing WuXi AppTec’s Ties to the Party-Army-State in China,” Jamestown
Foundation, February 9, 2024
222
and access to U.S. genetic data.476 In the last three years, the Com-
merce Department placed BGI subsidiaries on the BIS Entity List
and the Pentagon has labeled BGI a Chinese military company, both
moves that significantly limit BGI’s ability to work with U.S. firms
and to access U.S. technologies.477 Yet limiting these firms’ access
to the U.S. market poses challenges given their extensive network
of U.S. subsidiaries and partnerships and deep involvement in nu-
merous pharmaceutical R&D supply chains.478 For example, MGI
Group, which sells gene sequencing equipment in the United States,
avoided the first round of government sanctions on BGI despite be-
ing a subsidiary of BGI until being spun out in 2022.479 Although
the firm claims to be a “completely different company,” BGI’s founder
and chairman Wang Jian holds 47 percent of MGI shares following
MGI’s public listing.480 Members of Congress have called for MGI
to be named a “Chinese military company” along with other alleged
BGI subsidiaries that have avoided sanctions as of April 2024, in-
cluding genetic sequencing firms Innomics and STOmics.481
Other Chinese biotech firms have also sought collaborations with
U.S. firms and research institutions. VCanBio Cell and Engineering
Corporation, which markets itself as China’s largest biotechnology
firm, boasts a 15,000-square-foot research center and a facility with
an explicit focus on translating advancements in biological research,
both near Boston.482 Another Chinese firm, QLB Biotherapeutics,
similarly oversees a biotech incubator in Boston, with QLB aiming
to invest in U.S. biotech startups housed in the incubator and to ac-
quire the rights to any therapeutics the Chinese-owned, U.S.-based
incubator produces.483
Chinese State Support Helped Create One of the World’s
Largest Bio-Agriculture Companies
China has pursued its biotechnology ambitions in bio-agriculture,
seeking to enhance agricultural processes to create higher yields
and stronger crop resiliency, benefits that are sought after in Chi-
na due to the country’s longstanding concerns surrounding food
insecurity.484 As Chinese companies have become major players in
an already highly concentrated global agribusiness industry, there
are growing concerns about overdependency. Chinese firms have
aggressively registered bio-agricultural patents and are now the
global leaders in government funding of agricultural R&D, accord-
ing to 2022 estimates by the U.S. Department of Agriculture’s Eco-
nomic Research Service.485 China’s progress in genome sequencing
and analysis, which can be leveraged in the agricultural industry
for genetically engineering agricultural products, is also gaining
ground.486 A 2022 study found Chinese scientists had published
more papers concerning crop genomics and plant gene editing tech-
nologies in recent years than any other country.487
To achieve its bio-agricultural ambitions, the Party-state has
staunchly backed the growth of its largest state-owned firms.488 One
such state-owned company is ChemChina, China’s largest chemi-
cal company, which in 2017 purchased Swiss-based seed-producing
giant Syngenta, a leading firm in bio-agriculture.489 A major state
support component was included as part of the $44 billion acqui-
sition, with the Bank of China providing a $10 billion bond and
223
another worth $7 billion coming from China Reform Holdings Corp,

a state-owned asset manager.490 Recent consolidation of global agri-
cultural companies has increased Syngenta’s market share, enabling
China to position itself strategically in the bio-agricultural sector.491
According to Michelle Rozo, vice chair of the National Security Com-
mission on Emerging Biotechnology, following ChemChina’s acqui-
sition of Syngenta, four companies now control large segments of
agricultural biotechnology and other agricultural inputs: U.S.-based
Corteva, German-based Bayer and BASF, and Syngenta.492 These
four firms are now responsible for the vast majority of pesticide and
seed treatment research and manufacturing.493 They also conduct
most global seed research, developing genetically engineered (GE) *
seeds that they themselves sell or license to other firms.† 494
Chinese state ownership of Syngenta affords Beijing influence
over global agricultural markets, disadvantaging U.S. companies.
The Chinese government is both the key biotechnology regulator in
China and the owner of a major bio-agriculture firm that competes
with other firms it regulates, including U.S. firms.495 Therefore, Syn-
genta is in a privileged position of being owned by the same entity
that regulates matters vital to the firm’s success.496 This beneficial
regulatory relationship with the country’s largest domestic agricul-
tural firm occurs as Chinese regulators continue to stymie foreign
competitors.497 According to Dr. Rozo, the Chinese government rou-
tinely slows licensing for U.S. firms to market GE crops in China
and exploits samples of U.S.-produced GE seeds to develop domestic
competitors on a reduced timeline.498 This is a direct violation of
China’s WTO commitments and agreements made as part of the
Phase One trade deal, where Chinese authorities agreed to efficient-
ly review and approve U.S.-made biotechnology products.499 Accord-
ing to a report from the Office of the U.S. Trade Representative
(USTR), China’s lagging approval process of U.S.-made biotechnolo-
gy goods “remains among the most significant commitments under
the Phase One agreement for which China has not demonstrated
full implementation.” 500 In one instance of delayed licensing, after a
* A genetically engineered organism refers to any organism that is modified using techniques to
directly transfer or remove genes in that organism, as opposed to the more common yet broader
category of genetically modified organism (GMO), encompassing organisms altered by GE or con-
ventional breeding. Canadian Biotechnology Action Network, “GM/GE Definition,” 2024.
† The Chinese acquisition of Syngenta, which had to be cleared by the Committee on Foreign
Investment in the United States, also faced opposition by U.S. agricultural stakeholders on se-
curity grounds. Previously, Syngenta had led major research programs relevant to U.S. military
interests, particularly in biofuels. As highlighted in testimony by Dr. Rozo, now that Syngenta is a
Chinese SOE, it could withhold biofuel advancements from the U.S. military, a concern expressed
by domestic farming unions at the time of the ChemChina acquisition deal. Furthermore, several
of Syngenta’s U.S. agricultural facilities are near U.S. military facilities, raising concerns by some
that Syngenta’s ostensibly commercial research sites could serve as covert research sites near
U.S. national security activities. Following Syngenta’s acquisition by ChemChina, the state of
Arkansas announced investigations into Syngenta’s ownership of land in the state. After finding
that the company did not properly disclose its Chinese ownership, the company was ordered to
sell 160 acres of land. Nova J. Daly, written testimony before the Committee on Agriculture U.S.
House of Representatives, Chinese Acquisitions of U.S. Agriculture and Land Holdings and Con-
trol of Relevant U.S. Supply Chains: Addressing National Security Risks, March 20, 2024, 4, 7–9;
Michelle Rozo, written testimony for the U.S.-China Economic and Security Review Commission,
Hearing on Current and Emerging Technologies in U.S.-China Economic and National Security
Competition, February 1, 2024, 9; Neal Earley, “State Orders a Chinese-State Owned Syngenta
Seeds to Divest Ownership of Arkansas Farmland,” Arkansas Democrat Gazette, October 18, 2023;
Attorney General of Arkansas, Attorney General Griffin Orders Divestment of Chinese-Owned
Land and Imposes $280,000 Civil Penalty, October 17, 2023; Food & Water Watch, National Farm-
ers Union, “China National Chemical Corporation Proposed Purchase of Syngenta AG,” July 21,
2016, 12–14.
224
decade-long wait, the Chinese government in 2023 finally approved

licenses for U.S. firm Corteva to market product grown in the Unit-
ed States using a GE canola seed.501 However, due to the delayed
timeline, that canola variety had become outdated.502
Since acquiring Syngenta, the Chinese government continues
to assert its position in the global bio-agriculture sector. In 2020,
the State Council’s State-Owned Assets Supervision and Adminis-
tration Commission began combining agricultural assets of Chem-
China and other firms under the Syngenta name.503 The resulting
Chinese state-owned Syngenta is now the world’s largest seed and
agrochemicals conglomerate, with $27 billion of annual sales and
major markets across Europe, North America, Latin America, and
Africa.504 Since 2021, Syngenta has also reportedly been planning
a Shanghai IPO worth as much as $10 billion, which could provide
the firm with RMB liquidity to facilitate Chinese government-direct-
ed acquisitions of emergent bio-agricultural companies.* 505 If the
Syngenta case is illustrative, there may be further consolidation of
international bio-agricultural firms under direct Chinese state own-
ership.506
AI May Enhance China’s Biotech Ambitions

Chinese breakthroughs in biotech for both commercial and mil-
itary sectors can be propelled by AI and advances in machine
learning, according to Dr. Rozo’s testimony before the Commis-
sion.507 AI and machine learning can be applied to assist in an-
alyzing genetic codes, conducting image analysis for agriculture
and medical diagnostics, and running autonomous experimenta-
tion to accelerate the speed of cutting-edge technological develop-
ment.508 Dr. Rozo testified that nearly every area of biology has
advanced through the use of AI/machine learning tools and will
continue to do so as the data and models improve.509 Chinese
firms already claim to be benefiting from this AI-biotech nex-
us.510 Insilico Medicine, with headquarters in Hong Kong, claims
to have used AI in pharmaceutical development to reduce a mul-
tiyear discovery process down to 18 months and at a fraction of
the cost.511 BioMap, a biotech firm with headquarters in Beijing,
claims to have developed an AI Foundation Model with over 100
billion parameters to speed drug discovery.512
A key aspect of the AI-biotech nexus is quality data. Accord-
ing to the U.S. National Counterintelligence and Security Cen-
ter, China “has enacted national policies prioritizing the collec-
tion of healthcare data both at home and abroad to achieve its
goal of becoming a global biotech leader” and has collected large
datasets from the United States and other countries.513 Dr. Rozo
argues that thanks to government support, China’s biotech eco-
system may be better suited than the United States to utilize
AI and other emerging technologies to advance biotech research,
particularly given its National Genome Sequencing Data Center
and BGI’s significant role in providing genomic sequencing ser-
* As of March 2024, that IPO is currently withdrawn at the direction of Chinese authorities
due to weakness in Chinese equity markets. Reuters, “Exclusive: Beijing Nudged Syngenta to
Withdraw $9 billion Shanghai IPO on Market Weakness,” April 3, 2023.
225
AI May Enhance China’s Biotech Ambitions—Continued

vices.514 Similarly, WuXi Apptec’s role in numerous biotech sup-
ply chains provides WuXi access to a wide variety of otherwise
proprietary data. “It appears that the Chinese system is better
oriented towards convergent [AI-enhanced biotech] research,” Dr.
Rozo testified, and “the Chinese government has been prioritizing
this intersection at a national level for years, while the U.S. Gov-
ernment has yet to do so at the same scale.” 515
Batteries: China’s State Support Powers Growing Market

Dominance
From powering EVs to supporting the U.S. power grid, battery
technology plays an increasingly crucial role in the U.S. economy
and military readiness.516 The U.S. battery market, already esti-
mated at $16.9 billion in 2023, is expected to more than double by
2030 with the transition to battery-powered vehicles and the instal-
lation of more batteries in energy systems.517 In contrast to the oth-
er technologies examined in this chapter where the United States
and China are competing to gain a clear advantage, China currently
dominates nearly all stages of battery production.518 Six out of the
world’s top ten battery producers are based in China, accounting
for 77 percent of global production capacity * as of 2022, compared
to just 6 percent for the United States.519 This advantage is set to
continue, with energy data firm BloombergNEF projecting that by
2025 and beyond, China will maintain at least three times as much
battery production capacity as the rest of the world combined.520
With China’s leading role in battery production, the United States
has become increasingly dependent on China for finished batteries
as well as battery technology, components, and materials.521 Despite
recent attempts to reduce U.S. reliance on Chinese batteries, China
remains the leading battery exporter to the United States, account-
ing for over 70 percent of lithium-ion batteries imported in 2023 by
price and over 50 percent of all electric storage batteries, including
separators and parts.522
China’s Dominance in the Battery Supply Chain
China has attained a sizable advantage at each stage of the
battery supply chain, from upstream mining of raw materials, to
midstream processing and fabrication of components, and finally to
downstream assembly and production of finished batteries.523 In its
14th Five-Year Plan for Raw Material Industry Development, China
describes raw materials as the “foundation of the real economy” and
a “main battlefield for industrial green development.” 524 China’s
success in battery manufacturing stems in large part from its lead-
ing position in producing and processing critical minerals.† 525 As
* Production capacity refers to the maximum potential manufacturing capacity a country can
produce of a given good; for batteries, it is measured in gigawatt hours (GWh).
† Critical minerals currently include 50 minerals and elements considered essential to the eco-
nomic or national security of the United States. They are vulnerable to supply chain disruptions
and are used in manufacturing of a product that, if curtailed, would have significant consequenc-
es for U.S. interests (e.g., lithium, cobalt, graphite, gallium, germanium, nickel, tin, etc.). U.S.
Department of the Interior, U.S. Geological Survey, What Is A Critical Mineral?
226
of January 2024, China is responsible for 60 percent of the world’s

rare earths mining production, a subset of critical minerals crucial
not only for battery production but also for defense technologies,
including missiles, lasers, and tanks.526
Chinese firms have augmented their significant domestic pro-
cessing and refining of rare earths by securing mining agreements
with resource-rich countries to secure supply of the critical minerals
used in batteries.527 Nickel, lithium, and cobalt are vital inputs for
battery manufacturing for which China lacks substantial domes-
tic resources.528 In 2022, China signed a $14 billion deal to mine
nickel in Indonesia and a $422 million deal for lithium mining in
Zimbabwe, complementing existing agreements in the Democratic
Republic of the Congo, where Chinese firms own 80 percent of cobalt
mining.529 Chinese firms continue to expand control of the global
critical mineral mining industry. According to GlobalData, the num-
ber of planned critical mineral mines either under development or
set for exploration by Chinese companies outside of China is set to
more than double to 89, up from the 40 currently in operation.530
Many of these planned mines are set to operate in developing Belt
and Road Initiative member countries in Africa and Southeast Asia,
where Chinese investment in metals and mining is reaching record
highs.531
In line with government directives for rare earth and raw ma-
terial enterprises to consolidate and extend their industrial chains
further downstream, China has also invested heavily in refining ca-
pabilities, constructing factories domestically and abroad to bolster
and enhance its ability to process the materials needed to produce
batteries.532 China now processes and refines 90 percent of the
world’s rare earths and a significant portion of other critical miner-
als needed for lithium-ion batteries, including 95 percent of manga-
nese, 70 percent of cobalt and graphite, 66 percent of lithium, and
over 60 percent of nickel.533 This includes a Chinese-owned $300
million lithium processing plant in Zimbabwe that reportedly has
the capacity to process 4.5 million metric tons of hard rock lithium
annually for export; Zimbabwe has one of the largest concentrations
of lithium reserves in Africa.534 According to Rodrigo Castillo and
Caitlin Purdy at the Brookings Institution, China’s state-owned in-
vestment bank CITIC also boosts China’s refining capabilities by
channeling government funds to support Chinese firms, including
Chengdu-based Tianqi’s overseas lithium refining operations.535 At
the same time China is investing in refining capabilities, efforts
to upgrade resource-refining capabilities in the United States and
Europe are facing pushback due to health and environmental con-
cerns.536
Downstream, China is further solidifying its lead in battery man-
ufacturing. China has invested heavily in manufacturing battery
components and with subsidies for battery manufacturing compa-
nies for years.537 The Chinese government has designated the bat-
tery and EV industry as an industry of strategic importance since at
least 2010, when it was specifically identified as a matter of priority
by the State Council.538 Support for the development of the “new
energy vehicle” industry was included in the 12th Five-Year Plan
(2011–2015), in the Energy-Saving and New Energy Vehicle Indus-
227
try Development Plan (2012–2020), and as one of the ten industrial

priorities in Made in China 2025.539 The most recent 14th Five-Year
Plan (2021–2025) names new energy vehicles as a strategic emerg-
ing industry, and a New Energy Vehicle Industry Development Plan
(2021–2035) outlines advancement objectives in efficiency, global
market share, and integration of autonomous driving systems.540 A
2024 report from the Center for Strategic and International Studies
estimates that between 2009 and 2023, Chinese government sup-
port for the EV and battery industry totaled at least $230.9 billion,
equivalent to 18.8 percent of total EV sales of Chinese car compa-
nies.541 The subsidization has continued, even as China dominates
global battery production. Notably, Fujian-based Contemporary Am-
perex Technology Co., Ltd. (CATL) received $391 million (RMB 2.85
billion) in government support over the first six months of 2023.542
This constituted a nearly threefold increase in government subsidies
year-over-year for a company that comprises 36.8 percent of global
market share of batteries for EVs.543
Buoyed by strong government backing, as of 2023, Chinese firms
produced 77 percent of all battery cathodes produced globally, 74
percent of separators, 82 percent of electrolytes, and 92 percent of
anodes at a fraction of the cost compared to U.S. competitors.* 544
This environment has also allowed Chinese battery makers to devel-
op batteries key to powering future cutting-edge products.545 For ex-
ample, a new condensed battery produced by CATL claims to main-
tain an energy density of up to 500 watt-hours per kilogram (Wh/
kg).546 This is an energy density above the projected requirements
needed to power a future fully electrified airplane.547 Meanwhile,
Chinese breakthroughs in solid-state batteries are set to broaden
the efficiency and duration with which Chinese automotive manu-
facturers can power the newest generation of EVs.548 With such an
extensive array of subsidies and existing market dominance of near-
ly all battery components, Chinese firms are poised to continue dom-
inating global battery markets, including in the United States.549
China’s Dominance in EVs

As automotive firms increasingly focus on the production of
EVs, China’s car manufacturers are well positioned. The global
EV market, which already grew from $384.65 billion in 2022 to
$500.48 billion in 2023, is projected by Fortune Business Insights
to more than triple by 2030, with significant growth in the Asia
Pacific.550 About 60 percent of total EV batteries sold globally in
2022 were made in China.551 This creates dependencies on Chi-
nese-produced EV batteries for U.S. automakers, while Chinese
EV manufacturers work to vertically integrate domestic battery
production into their supply chains in order to solidify first mover
advantages and ascend the ranks of global auto manufacturers.552
According to the Center for Strategic and International Stud-
ies, China’s investment in EV batteries has been backed by about
* Most batteries comprise the same basic components, including positively charged cathodes,
negatively charged anodes, electrolytes made up of lithium salts needed for conductivity, and
a porous separator to prevent the positive and negative sides from touching. Agnes Chang and
Keith Bradsher, “Can the World Make an Electric Car Battery without China?” New York Times,
May 16, 2023; Shawn Hymel, “What Is a Battery?” Sparkfun.
228
China’s Dominance in EVs—Continued

$130 billion in government-led research incentives, government
contracts, and consumer subsidies.553 While Chinese battery sub-
sidies consistently cost the Chinese government billions of dollars
a year, they combine with relatively low labor costs and signifi-
cant manufacturing expertise to allow Chinese firms to produce
battery packs for EVs at a cost of $127 per kilowatt hour com-
pared to their North American and European competitors, whose
costs are 24 percent and 33 percent higher, respectively.554 Chi-
nese EV battery factories can also be constructed at a price more
than $200 million less than a potential counterpart in Europe.555
While some countries are seeking to diversify away from Chi-
nese batteries, this is costly in the near term. BloombergNEF es-
timates that the EU and the United States would need to spend
$98 billion and $82 billion each in initial manufacturing construc-
tion alone to meet domestic battery demand in order to cut their
market reliance on China.556 The EU further estimates it will
need to spend an additional $412 billion (€382 billion) across the
entire battery supply chain to eliminate its reliance on Chinese
battery imports and achieve self-sufficiency by 2030.557 As a re-
sult of China’s dominant position in EV battery making, most
global EV makers are set to continue to depend on China—at
least in the short term—including Tesla, which relies on China
for 40 percent of its battery supply chain.558
Major Chinese EV manufacturers, like BYD, have capitalized
on China’s battery manufacturing advantages.559 Unlike U.S.
competitors, BYD controls nearly all aspects of its battery supply
chain.560 The firm, which was founded as a battery manufactur-
ing business, owns over 20 battery-making plants in China, in-
cluding one of the world’s largest battery-making plants with a
24-gigawatt-hour (GWh) capacity in Qinghai Province.561 BYD’s
stakes in resource mining allow the firm to lock in discounts in
sourcing raw materials to make batteries.562 Like other Chinese
firms, BYD has benefited from strong government support, with
direct subsidies of over $3.7 billion between 2018 and 2022, ac-
cording to the Kiel Institute.563 Amid this generous state support,
BYD has plans to open more battery factories and consolidate
much of its upstream battery-manufacturing sourcing, including
gaining ownership stakes in lithium mining operations, exploring
joint ventures in nickel mining, and developing sodium-ion bat-
teries.564
Chinese firms are now poised to dominate global sales of EVs.
One estimate finds that Chinese EVs are set to account for one-
third of global market share by the end of this decade, increas-
ing market share outside of China from 3 percent in 2024 to 13
percent in 2030.565 BYD has become a major player in the global
EV market, dominating domestic and foreign firms in China’s EV
market while surpassing Tesla in global sales of battery EVs in
the last quarter of 2023, thanks to Chinese government support
and strong domestic supply chains.566 Other Chinese EV firms al-
ready operating at home in what is the world’s largest automotive
market have established beachheads abroad and are surging in
229
China’s Dominance in EVs—Continued

international EV markets. Hangzhou-based Geely Auto reported
a 48 percent year-on-year increase in 2023 EV sales, with more
than 270,000 Geely EVs sold outside of China.567 State-owned
SAIC reported an 18.8 percent increase in its 2023 overseas EV
sales year-over-year and has unveiled plans to begin promoting
14 new EV models for foreign markets by 2025.568
Many countries will gladly accept China’s low-cost EVs, indicat-
ing that China’s market share is likely to increase and ultimately
displace existing suppliers in those markets, a development likely
to cut into the revenue of U.S. automakers from sales overseas.
Some countries have resisted them over concerns that China’s
massive subsidies for the sector have created unfair competition.
The United States and Canada in 2024 both announced a 100
percent tariff on EVs imported from China, and the EU imposed
tariffs ranging from 17 to 38 percent on top of the existing 10
percent tariff on all imported cars.569 Brazil, which became the
largest import market for Chinese EVs in 2024, is in the process
of gradually increasing tariffs on imported vehicles from zero to
35 percent by 2026 in order to protect domestic industry.570
Batteries as Key Components of Global Electrical Grids

Chinese batteries also play a crucial role in providing electrical
storage equipment for power grids worldwide, including in the Unit-
ed States. China is increasingly supporting and subsidizing what
it calls “new-type energy storage systems” (NTESS), energy sys-
tems that use novel technologies to store and distribute power, such
as battery energy storage systems (BESS), compressed air energy
storage, and flywheel systems, among others.571 As of 2023, Chi-
na’s installed NTESS capacity stood at 13.1 gigawatts (GW), with
lithium-ion batteries utilized in these systems accounting for 28.7
percent of the world’s total deployed power capacity for lithium-ion
batteries.572 These energy storage systems are central to China’s
five-year plans at both the national and provincial level, with tar-
gets to reach 100 GW in cumulative battery storage capacity by
2030.573 In contrast, the United States had a total energy storage
system capacity of 17 GW by the end of 2023.574 With China the
global leader in energy storage systems, the United States imported
a record 841,573 metric tons of lithium-ion batteries in 2023, mostly
from China.575 This constituted a 32.9 percent rise from 2022 and
marked the third straight year U.S. battery imports have risen by
over 30 percent.576
Utility-scale batteries are increasingly necessary to support U.S.
energy storage stations, especially as they integrate more power gen-
erated by alternative energy like wind and solar.577 Leading China’s
entrance into U.S. battery energy storage systems is Fujian-based
battery firm CATL, whose battery-backed energy storage systems
are being rapidly installed into the U.S. electric grid.578 According
to Craig Singleton, China program director and senior fellow at the
Foundation for Defense of Democracies, several CATL-supported
BESS projects are under construction or have already been complet-
230
ed in the United States, including a March 2022 CATL battery-sup-

ported BESS project in Florida and an August 2022 project near
Richmond, Virginia.579 Nevada-based firm Primergy Solar entered
into a sole battery supply agreement with CATL in October 2022,
which is set to be among the largest solar and storage projects in
the United States.580
CATL’s rapid expansion in the U.S. electrical storage market
comes at a time when energy storage batteries are increasingly key
to the U.S. grid’s function.581 In the second quarter of 2024, energy
companies connected nearly 4 GW * of battery storage to the United
States grid, up 87.3 percent year-on-year and bringing total capac-
ity to 23.8 GW.582 CATL batteries are well positioned to underpin
Texas’s power grid, where battery storage makes up nearly 60 per-
cent of new energy projects seeking to connect to the grid, far more
than any other energy storage source.583 This battery dependency in
energy grids is only expected to grow. Texas currently has 4 GW of
energy battery storage for its grid; this will rise each of the next two
summers to reach a total of 12–14 GW.584 CATL has major contracts
in Texas, including an agreement with Texas-based HGP Storage to
produce up to 5 GWh † of energy to support the Texas power grid.585
Mr. Singleton argues that the integration of CATL batteries into
the U.S. electrical grid creates potential vulnerabilities to hacking,
intelligence gathering, and disruption from China.586 Due to vulner-
abilities in EV charging networks, EVs themselves, and BESS-re-
lated systems, hardware manufacturers could compromise EVs,
charging networks, electric grids, and industrial control systems.587
Mr. Singleton acknowledges that “it is challenging to ascertain the
precise likelihood of such attacks, [but] the potential exists.” 588 An-
other report from Aon, a cybersecurity advisory firm, similarly iden-
tifies vulnerabilities in BESS systems, finding that their operating
systems and components can be out of date and lacking in sophisti-
cated security measures.589 Should these vulnerabilities be exploit-
ed, they could be deeply disruptive to the energy systems in which
they are embedded.590 In his report, Mr. Singleton indicates that
previous cyberattacks have already targeted energy systems, such
as a 2022 ransomware attack on India’s Tata Power, one of the coun-
try’s largest integrated power companies.591 He warns that in the
worst-case scenarios, such attacks could carry grave consequences,
including potential blackouts of critical industrial areas and major
financial hubs.592 The Aon report further identifies risks of lithi-
um-ion batteries themselves that underpin BESS systems. These
batteries require careful oversight and control for their voltage and
temperature.593 Should a threat actor interfere, these battery cells
could rapidly degrade or, in the case of extreme interference, a re-
mote attack could trigger a significant fire or explosion at the site
of the BESS system with potentially broader consequences for the
local grid, a point echoed by Dr. Jeffrey Nadaner, former Deputy
* One GW is equivalent to 1,000 megawatts and represents roughly the same energy output of
two coal-fired powerplants, enough to power 750,000 homes in the United States. Mary Pressler,
“The US Installs 15.1 Gigawatts of Generation So Far in 2022,” Quick Electricity, September 1,
2022; Dana Hull, “California Hits Renewable Energy Milestone: 1 Gigawatt of Solar Power In-
stalled to Date,” Mercury News, November 8, 2011.
† A gigawatt hour (GWh) is a flow measurement of electrical output over one hour. 1 GW of
installed capacity produces 1 GWh of electricity in an hour, 168 GWh in a week, and 8,760 GWh
over one year.
231
Assistant Secretary of Defense for Industrial Policy, in testimony

before the Commission.* 594
These battery storage systems are complemented by other Chinese
equipment also being installed in the U.S. power grid. As Joe Weiss
describes in Control, from 2006 through 2023, the United States has
imported around 450 transformers over 10,000 kilo-volt-amperes
(kVA) from China.595 More than 360 of these Chinese-made trans-
formers were large transmission systems over 100,000 kVA that are
key to operating the electrical grid.596 Mr. Weiss warns that despite
some executive action † to limit foreign influence in the electrical
grid, U.S. utility firms continue to buy Chinese equipment, including
more than 125 large Chinese transformers since 2020.597 Chinese
energy storage batteries and related equipment are increasingly in-
stalled in U.S. power networks.
Batteries Linger in U.S. Networks
Despite efforts to remove Chinese batteries from some U.S. critical
networks, such as the U.S. military’s ban on buying Chinese batter-
ies, Chinese-produced batteries remain critical parts of the supply
chain for the U.S. government.598 According to Dr. Nadaner’s testi-
mony before the Commission, between 2018 and 2023, 1,503 battery
suppliers to U.S. government agencies relied on Chinese components
in their supply chain, more than double Japan (462) and Germany
(392), the second and third leading component suppliers.599 Last
year, Chinese-produced industrial batteries were unplugged at
Camp Lejeune due to congressional concerns of the potential risks
these batteries posed to disrupting the military installation’s pow-
er supply and energy infrastructure.600 Experts claim that a BESS
system such as the one installed at Camp Lejeune requires frequent
remote operation and that telecommunications equipment connect-
ed to the batteries could be vulnerable to hacking attempts.601 Pre-
ceding the batteries’ removal, 27 lawmakers signed a letter warning
that “CATL could introduce malware into large-scale power storage
stations, threatening the U.S. energy grid” and that the presence of
CATL batteries in U.S. military installations and critical infrastruc-
ture “raise[s] several concerns that a malicious actor, or govern-
ment, could seek to exploit.” 602 Mike Casey, director of the National
Counterintelligence and Security Center, further warns against the
risks introduced by Chinese battery storage systems: “We encour-
age power companies interested in using these industrial battery
energy storage systems from China to think beyond the short-term
cost savings they may realize and consider the potential long-term
vulnerabilities and how to mitigate them.” 603
* The simultaneous detonation of Hezbollah devices in Lebanon in September 2024 demonstrat-
ed the feasibility of prepositioning in a network and carrying out a coordinated remote sabotage
strike. Though the context in which this attack occurred and the tactical approach are unique,
the event underscores the imperative to ensure remote backdoor capabilities are not built into
battery systems in U.S. networks, given these systems’ inherent explosive quality. Bruce Schneier,
“Israel’s Pager Attacks Have Changed the World,” New York Times, September 22, 2024; Craig
Singleton, “Beijing’s Power Play,” Foundation for Defense of Democracies, October 23, 2023.
† Executive Order 13920, signed May 1, 2020, by the Trump Administration, directed the U.S.
Department of Energy to lead interagency efforts to ensure purchases of bulk power systems
used in the U.S. electrical grid from entities controlled by a foreign adversary did not pose un-
acceptable national security risk. The executive order has since been suspended by the Biden
Administration. Joe Weiss, “The U.S. Electric Industry Is Not Responding to Cyber-Vulnerable
Chinese Equipment,” Control, February 29, 2024; Executive Office of the U.S. President, “Securing
the United States Bulk-Power System,” Federal Register 85:26595 (May 4, 2020).
232
U.S. Efforts to Restrict Chinese EVs

With greater U.S. investments to transition from carbon-based
energy sources, the Biden Administration is moving to prevent U.S.
firms from opting for widely available Chinese-made energy tech-
nology, particularly in the transportation sector. In December 2023,
the Administration explicitly restricted Chinese EV suppliers from
receiving tax credits and incentives from the Inflation Reduction Act
by designating them as a Foreign Entity of Concern (FEOC).* 604
The raft of tariff increases the Administration announced in May
2024 brings the rate on Chinese EVs under Section 301 up from 25
percent to 100 percent and on Chinese batteries from 7.5 percent
to 25 percent, citing unfair subsidies and rapid growth of Chinese
exports as threatening to U.S. producers.605
Despite growing scrutiny, U.S. firms have maintained partner-
ships with Chinese battery producers. For example, Ford announced
in February 2023 that it would start producing low-cost lithium-ion
batteries by 2026 at its plant in Michigan using technology licensed
from CATL.606 This illustrates one of the main challenges for U.S.
industries seeking to reduce reliance on Chinese batteries. Even if
the United States reduces dependencies on physical Chinese bat-
teries, China continues to dominate battery supply chains and even
research in battery technology, publishing about half of the world’s
research on battery efficiency.607 As a result, Chinese firms often
maintain an edge over U.S. competitors in technology, IP, and know-
how in battery manufacturing.608 Ford is therefore in an unenviable
position of licensing state-of-the art CATL technology and IP, even
as the Administration seeks to limit the reach of Chinese battery
makers in the United States.609 The planned partnership appears
set to proceed amid bipartisan congressional concerns and the Ad-
ministration’s new rules, which do not directly prohibit the Ford-
CATL agreement.610
Internet of Things (IoT) Raises Growing Concern

There is rising concern of potential security threats to U.S. net-
works associated with Chinese-made devices.611 In recent years,
the Federal Communications Commission (FCC) has placed ten
Chinese companies—including Huawei, ZTE, and Hangzhou
Hikvision Digital Technology—on its Covered List that prevents
the marketing, sale, or operation of any equipment within the
United States due to national security risks.612 Recent attention
has focused on cellular modules produced by Chinese companies,
which connect IoT † devices to the internet that have the poten-
tial to be remotely accessed and controlled from China.613 Chi-
* Under the rules set to be implemented over 2024, companies will be denied tax credits if ve-
hicle batteries contain components that were manufactured or assembled by an FEOC. Beginning
in 2025, the rules expand in scope to disqualify any vehicles whose batteries contain any critical
minerals extracted, processed, or recycled by an FEOC. U.S. Department of the Treasury, Trea-
sury Releases Proposed Guidance to Continue U.S. Manufacturing Boom in Batteries and Clean
Vehicles, Strengthen Energy Security, December 1, 2023.
† An IoT device could connect any electronic device to the internet, such as vehicles and home
appliances. David Shepardson, “US FCC Chair Says China’s Quectel, Fibocom May Pose National
Security Risks,” Reuters, September 6, 2023; U.S. House of Representatives Select Committee on
the Strategic Competition between the United States and the Chinese Communist Party, Letter
to FCC Chair on Chinese Internet Connectivity Modules, August 8, 2023.
233
Internet of Things (IoT) Raises Growing Concern—

Continued
na’s government has sustained policies to boost IoT development,
including accelerating IoT research and applications in the State
Council’s “Made in China 2025” plan released in 2015.614 China is
one of the largest producers of IoT equipment globally, with three
Chinese companies, Quectel (37.1 percent), Fibocom (6.9 percent),
and China Mobile (6.8 percent), collectively holding about half of
the global market as of the first quarter in 2024.615 In Septem-
ber 2023, the FCC reportedly raised security concerns about two
Chinese IoT module companies, Fibocom and Quectel, to U.S. gov-
ernment agencies with the relevant authority to consider whether
they pose national security risks.* 616
The United States is separately considering measures to address

potential privacy, data security, and cyber security concerns associ-
ated with Chinese-made EVs. Similar to the concerns raised by Mr.
Singleton, independent cybersecurity researchers have demonstrat-
ed the ability of Chinese-made EVs and EV charging equipment
to collect and transmit data back to China and install malware.617
In February 2024, the Commerce Department issued an Advanced
Notice of Proposed Rulemaking to address threats stemming from
“connected vehicles” from China.618 On September 23, 2024, BIS
released a Notice of Proposed Rulemaking to address security con-
cerns from connected vehicles that, if finalized, will prohibit the
sale or import of certain types of Chinese hardware and software
integrated into vehicle connectivity systems and automated driving
systems to take effect for model years 2027 and 2030, dependent on
the type of technology.619
Implications for the United States
U.S.-China technology competition is foundational to both U.S.-Chi-
na economic competition and national security. China has realized
the importance of technology supremacy for decades and consistent-
ly implemented policies designed to gain an edge in technologies of
the future. If China surpasses the United States in the development
and deployment of these technologies at scale, industries critical for
the United States and its allies could become overly reliant on Chi-
na, and the balance of regional and global power could shift in the
PLA’s favor. The United States has already begun to take aggressive
steps to ensure continued U.S. technological leadership in these sec-
tors through domestic investments, export controls, and investment
restrictions, and it is considering other policies, but some hurdles
remain.
Advanced computing technology, including AI, is at the forefront
of U.S.-China technology competition. AI will add tremendous value
to the global economy and reshape a swath of industries. AI also has
* Quectel refuted concerns raised regarding the security of its modules. In a press release,
Quectel Wireless Solutions stated that “Quectel customers own the data, and [Quectel has] no
access to any of the data collected.” Business Wire, “Quectel Response to FCC about IoT Module
Security,” September 7, 2023; David Shepardson, “US FCC Chair Says China’s Quectel, Fibocom
May Pose National Security Risks,” Reuters, September 6, 2023.
234
the potential to transform the military balance between the Unit-

ed States and China by helping both militaries improve their data
analysis, accelerate battlefield decision-making, and more effective-
ly target the adversary.620 One key to AI competition is advanced
semiconductors, where the United States has a lead but China is
investing heavily to catch up. Separately, there is a risk that China
may flood the world with cheap legacy semiconductors, forcing pric-
es down, which may threaten the viability of other countries’ legacy
semiconductor industries and provide China with significant global
economic leverage. Another aspect of competition in AI is the quality
and performance of AI models. Amid a vigorous debate within the
AI industry over whether open source or closed source models are
the better approach, entities in China have been using U.S. open
source models as the basis for some of their technological advances.
There is not currently a U.S. policy framework that focuses on the
differences between the two approaches for U.S.-China technology
competition. Moreover, experts have also expressed concern over the
need to address cloud computing, a key potential workaround that
could allow Chinese firms or even the PLA itself to access highly
advanced AI and quantum computing capabilities located in dif-
ferent countries and delivered remotely via the cloud.621 While ex-
isting controls on AI have limited such access to a certain extent,
technological change, developments in global markets, and evolving
Chinese policy responses all underscore the importance of regularly
reviewing U.S. export controls and related policies.
While practical breakthroughs from QIS are generally yet to be
realized, the potentially profound economic and national security
implications of such technologies require close scrutiny. The country
that has the edge in quantum technologies will be able to protect
its communications networks from eavesdropping and interception,
break adversaries’ encryption methods, bolster its scientific research,
and deploy advanced sensing capabilities to detect enemy military
assets.622 To date, the U.S. export control policy response for QIS
has been limited, at least in part because defense applications have
been viewed as less achievable within the short to medium term
for most aspects of QIS other than quantum sensing.623 Unlike the
advanced semiconductor controls used for AI, U.S. quantum tech-
nology controls primarily only target specific Chinese end users in-
stead of the other enabling technology categories. Questions remain
regarding the effectiveness of the end user approach, the utility of
broader controls on enabling technologies and access to R&D and
know-how, and potential opportunities for multilateral cooperation
with allies.624
U.S.-China competition in biotechnology will have significant eco-
nomic impacts in terms of capabilities in numerous technologies and
manufacturing industries of the future, and for some applications
it will have direct national security implications. In addition, ge-
nomic-related biotechnologies raise concerns about data collection,
including access to sensitive health and genetic data on U.S. citizens
and abuse for surveillance purposes. At the same time, many appli-
cations of biotechnology would provide overall benefits to health-
care, medicine, and related technologies, and traditionally, coopera-
tive scientific research in such fields has been supported. While the
235
United States leads in many areas of innovation in biotechnology,

Chinese biotechnology companies such as BGI and WuXi have be-
come integral in U.S. genomic and pharmaceutical supply chains,
raising concerns over dependency for medical and agricultural prod-
ucts. Furthermore, these companies are obtaining advantages over
time due to their access to sensitive data and proprietary commer-
cial information, an area of particular concern given their alleged
ties to the PLA.
Finally, the rapid expansion and dominant position China has
attained in the global battery industry presents an expansive
challenge for policymakers in an emerging technology with major
implications for the transition to clean and renewable energy sys-
tems. With China’s overwhelming presence throughout the battery
production supply chain, Chinese companies are poised to maintain
substantial advantages and market share for powering clean energy
technologies that rely on batteries, likely requiring U.S. manufactur-
ers to rely on suppliers and IP from China at least for the short and
medium term.625 Moreover, the proliferation of Chinese batteries
within U.S. networks, including vital energy infrastructures, creates
cyber security-related concerns, vulnerabilities to remote manipu-
lation, and sabotage. Experts indicate that Chinese-made batteries
heighten the risk of espionage or unforeseen energy supply disrup-
tions and system failures as they become further integrated into
critical U.S. operations.626 Recent U.S. policies have taken limited
steps to address these challenges, specifically provisions in the Infla-
tion Reduction Act incentivizing domestic production of clean energy
vehicles and the recent Advanced Notice of Proposed Rulemaking to
study risks from connected vehicles and associated systems.
236
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80. Kif Leswing, “NVIDIA Dominates the AI Chip Market, but There’s More Com-
petition than Ever,” CNBC, June 2, 2024; Lin Jones et al., “U.S. Exposure to the
Taiwanese Semiconductor Industry,” U.S. International Trade Commission, November
2023, 10.
81. Mackenzie Hawkins, Cagan Koc, and Yuki Furukawa, “US Seeks Allies’ Help
in Curbing China’s AI Chip Progress,” Bloomberg, June 19, 2024; White House, FACT
SHEET: President Biden Takes Action to Protect American Workers and Businesses
from China’s Unfair Trade Practices, May 14, 2024; Yuki Furukawa, “Japan Tightens
Export Controls on More Chip and Quantum Tech,” Bloomberg, April 26, 2024; Toby
Sterling, “Dutch Set to Comply with U.S. Demands on China Exports,” Reuters, April
7, 2024; Gregory C. Allen, Emily Benson, and Margot Putnam, “Japan and the Neth-
erlands Announce Plans for New Export Controls on Semiconductor Equipment,”
Center for Strategic and International Studies, April 10, 2023; U.S. Department of
Commerce, Commerce Implements New Export Controls on Advanced Computing and
Semiconductor Manufacturing Items to the People’s Republic of China (PRC), October
7, 2022.
in Curbing China’s AI Chip Progress,” Bloomberg, June 19, 2024; White House, FACT
SHEET: President Biden Takes Action to Protect American Workers and Businesses
241
from China’s Unfair Trade Practices, May 14, 2024; Yuki Furukawa, “Japan Tightens
Export Controls on More Chip and Quantum Tech,” Bloomberg, April 26, 2024; Toby
Sterling, “Dutch Set to Comply with U.S. Demands on China Exports,” Reuters, April
7, 2024; Gregory C. Allen, Emily Benson, and Margot Putnam, “Japan and the Neth-
erlands Announce Plans for New Export Controls on Semiconductor Equipment,”
Center for Strategic and International Studies, April 10, 2023; U.S. Department of
Commerce, Commerce Implements New Export Controls on Advanced Computing and
Semiconductor Manufacturing Items to the People’s Republic of China (PRC), October
7, 2022.
83. White House, FACT SHEET: CHIPS and Science Act Will Lower Costs, Create
Jobs, Strengthen Supply Chains, and Counter China, August 9, 2022.
84. Yoko Kubota, “The Goal for China’s Chip Giant: Cut Out the U.S.,” Wall Street
Journal, June 3, 2024.
85. Economist Intelligence Unit, “China Boosts State-Led Chip Investment,” March
13, 2024.
86. Fanny Potkin, “Exclusive: Chinese AI Chip Firms Downgrading Designs to
Secure TSMC Production,” Reuters, June 4, 2024; Yuan Gao, “China Creates $47.5
Billion Chip Fund to Back Nation’s Firms,” Bloomberg, May 27, 2024; Liza Lin, “Chi-
na Raises $48 Billion for Semiconductor Fund to Bolster Chip-Making Capabilities,”
Wall Street Journal, May 27, 2024; Reuters, “China Sets Up Third Fund with $47.5
Bln to Boost Semiconductor Sector,” May 27, 2024.
87. Iris Deng, “Shenzhen’s Central Business District Offers Chip-Making Incen-
tives, with Millions in Subsidies for New Projects,” South China Morning Post, June
7, 2023; Global Times, “Chinese Cities Strengthen Deployment for Local Development
of Chip and Related Industries,” April 25, 2023. https://archive.fo/bnpQi; Zhou Fang,
“Chinese Cities Back Compound Semiconductor Industry as Demand Grows,” Yic-
ai Global, April 25, 2023. https://www.yicaiglobal.com/news/20230425-04-chinese-
cities-support-development-of-compound-semiconductor-industry-as-demand-grows;
Ann Cao, “Tech War: Southwestern Tech Hub Chengdu Offers Us$72 Million in
Subsidies to Local Semiconductor Projects amid China’s Chip Self-sufficiency Drive,”
South China Morning Post, March 10, 2023; Ann Cao,“China Gave 190 Chip Firms
US $1.75 Billion in Subsidies in 2022 as It Seeks Semiconductor Self-sufficiency,”
South China Morning Post, March 10, 2023; Arrian Ebrahimi and Jiong Feng, “Chip
Subsidy Flows—Comparing China and the U.S,” Chip Capitols, February 28, 2023.
88. Reuters, “Beijing City to Subsidise Domestic AI Chips, Targets Self-Reliance by
2027,” April 25, 2024.
89. Reuters, “Beijing City to Subsidise Domestic AI Chips, Targets Self-Reliance by
2027,” April 25, 2024.
90. Wayne Williams, “Huawei Claims Its AI Chip Is Faster than Nvidia A100—but
Chinese Powerhouse Struggles to Match Transformational Pace of Rivals as Interna-
tional Sanctions Force Change in Design,” TechRadar, July 1, 2024.
91. Josh Ye, “How Huawei Plans to Rival NVIDIA in the AI Chip Business,” Reu-
ters, November 7, 2023.
92. Jacob Feldgoise and Hanna Dohmen, “Pushing the Limits: Huawei’s AI Chip
Tests U.S. Export Controls,” Center for Security and Emerging Technology, June 17,
2024.
93. Liza Lin and Raffaele Huang, “Huawei Readies New Chip to Challenge NVID-
IA, Surmounting U.S. Sanctions,” Wall Street Journal, August 13, 2024.
94. Liza Lin and Raffaele Huang, “Huawei Readies New Chip to Challenge NVID-
IA, Surmounting U.S. Sanctions,” Wall Street Journal, August 13, 2024.
95. Jeff Pao, “Low Yield for SMIC-Huawei NVIDIA Knockoff? So What?” Asia
Times, June 29, 2024; Jeff Pao, “SMIC to Sell Huawei Costly, Inefficient 5nm Chips,”
Asia Times, February 8, 2024.
96. Hasan Chowdhury, “Cuda Is Nvidia’s Secret Sauce—and Now It’s in the Sights
of European Regulators,” Business Insider, July 2, 2024; Tim Bradshaw, “NVIDIA’s
Rivals Take Aim at Its Software Dominance,” Financial Times, May 21, 2024; James
Wang, “CUDA Is Still a Giant Moat for NVIDIA,” Weighty Thoughts, March 23, 2024;
Pritam Bordoloi, “Why Intel Closing the Gap with NVIDIA Is Good News,” AIM,
September 20, 2023; Kevin Jackson and Doug Eadline, “Spelunking the HPC and AI
GPU Software Stacks,” HPC Wire, June 21, 2024; Deep Lizard, “CUDA Explained -
Why Deep Learning Uses GPUs”.
97. Kevin Jackson and Doug Eadline, “Spelunking the HPC and AI GPU Software
Stacks,” HPC Wire, June 21, 2024; Air Street Capital, Nathan Benaich, and Alex
Chalmers, “Chips All the Way Down,” Air Street Press, May 30, 2024; Stephen Witt,
“How Jensen Huang’s NVIDIA Is Powering the A.I. Revolution,” New Yorker, Novem-
ber 27, 2023.
242
98. Michael Cusumano, “NVIDIA at the Center of the Generative AI Ecosystem—
for Now,” Communications of the ACM, January 8, 2024; Steve Hsu and TP Huang,
“Huawei and the US-China Chip War—#44”, Manifold1, September 21, 2023; Jaryd
Hermann, “How NVIDIA Grows: The Engine for AI and the Catalyst of the Future,”
How They Grow, September 7, 2023.
99. Huawei, “Revolutionizing AI with Huawei’s Ascend: A Comprehensive Over-
view,” August 26, 2023; Pandaily, “Chinese Academy of Sciences Unveils Next-Gen-
eration AI Model ‘Zidong Taichu 2.0,’ ” June 16, 2023; Steven J. Vaughan-Nichols,
“ChatGPT, How Did You Get Here? It Was a Long Journey through Open Source AI,”
Register, March 24, 2023; Andrey Bout et al., “PanGu-Σ: Towards Trillion Parame-
ter Language Model with Sparse Heterogeneous Computing,” Arxiv, March 20, 2023;
PyTorch, “PyTorch at Tesla - Andrej Karpathy, Tesla,” YouTube, November 6, 2019;
MindSpore, “AI Industrial Flow Simulation Model——DongFang·YuFeng,” https://
archive.ph/ybrox’; NVIDIA,“Generative AI for Developers”; Huawei, “Revolutionizing
AI with Huawei’s Ascend: A Comprehensive Overview.”
100. Jaryd Hermann, “How NVIDIA Grows: The Engine for AI and the Catalyst
of the Future,” How They Grow, September 7, 2023; Huawei, “Huawei Releases AI
Strategy and Full-Stack, All-Scenario AI Portfolio,” October 10, 2018.
101. Huawei, “Huawei Releases AI Strategy and Full-Stack, All-Scenario AI Port-
folio,” October 10, 2018.
102. Steven J. Vaughan-Nichols, “ChatGPT, How Did You Get Here? It Was a Long
Journey through Open Source AI,” Register, March 24, 2023; Huawei, “MindSpore:
Huawei’s All-Scenario AI Computing Framework Now Open Source,” April 22, 2020;
PyTorch, “PyTorch at Tesla - Andrej Karpathy, Tesla,” YouTube, November 6, 2019.
103. Kendra Schaefer and Paul Triolo, “China’s Generative AI Ecosystem in 2024:
Rising Investment and Expectations,” National Bureau of Asian Research, June 27,
2024; Kevin Jackson and Doug Eadline, “Spelunking the HPC and AI GPU Software
Stacks,” HPC Wire, June 21, 2024; Jacob Feldgoise and Hanna Dohmen, “Pushing the
Limits: Huawei’s AI Chip Tests U.S. Export Controls,” Center for Security and Emerg-
ing Technology, June 17, 2024; Sasirekha Subramanian, “NVIDIA vs. AMD vs. Intel:
Which AI Stock Is Best as Competition Heats Up?” Forbes, June 12, 2024; Air Street
Capital, Nathan Benaich, and Alex Chalmers, “Chips All the Way Down,” Air Street
Press, May 30, 2024; Xiaofen Qiu, “Forefront丨Huawei Releases Ascend AI Comput-
ing Cluster, Meng Wanzhou Says It Proposes Comprehensive Intelligence Strategy” (
最前线丨华为发布昇腾AI计算集群，孟晚舟称提出全面智能化战略), 36Kr, September 20,
2023. Translation; 1kg, “Nvidia’s CUDA Monopoly,” August 7, 2023; Minghe Hu and
Zen Soo, “China’s Reliance on US-Origin Platforms for Deep Learning Raises Ques-
tions about Country’s AI Push,” South China Morning Post, November 22, 2019.
104. NVIDIA, “Pretrained AI Models”; Max A.Cherney, “Exclusive: Behind the Plot
to Break NVIDIA’s Grip on AI by Targeting Software,” Reuters, March 25, 2024.
105. Eleanor Olcott, Ryan McMorrow, and Tina Hui, “Huawei’s Bug-Ridden Soft-
ware Hampers China’s Efforts to Replace NVIDIA in AI,” Financial Times, Septem-
ber 3, 2024; Chu Daye and Zhang Weilan, “NVIDIA’s Reported Trouble Indication
of Recklessness of US Govt’s Crackdown on China,” Global Times, January 8, 2024.
106. Kate Kaye, “Will Nationalism End the Golden Age of Global AI Collaboration,”
RedTail Media, June 14, 2024; Jeffery Ding, “Feature Translation: AI Frameworks
Development White Paper,” ChinAI Substack, March 7, 2022.
107. Gregory C. Allen, “In Chip Race, China Gives Huawei the Steering Wheel:
Huawei’s New Smartphone and the Future of Semiconductor Export Controls,” Cen-
ter for Strategic and International Studies, October 6, 2023.
108. Eleanor Olcott, Ryan McMorrow, and Tina Hui, “Huawei’s Bug-Ridden Soft-
ware Hampers China’s Efforts to Replace NVIDIA in AI,” Financial Times, Septem-
ber 3, 2024; Kimberley Kao and Raffaele Huang, “Chips or Not, Chinese AI Pushes
Ahead,” Wall Street Journal, August 23, 2024; Tony Peng, “Huawei Claims AI Chips
Surpass NVIDIA’s A100, Chinese AI Apps Break into the US, and Tesla FSD Inten-
sifies China’s ADAS Competition,” Recode China AI, June 24, 2024; Data Ape, “Is
It Harder for Huawei CANN to Replace Nvidia CUDA than for Hongmeng to Re-
place Android?” (华为CANN要替代英伟达CUDA，比鸿蒙替代安卓还难么),” Sohu, June
14, 2024. Translation. https://archive.fo/SJy3Y; Dava_ Xu, “What Is Ascend CANN?”
Huawei, November 29, 2022.
109. C. Scott Brown, “The HUAWEI Ban Explained: A Complete Timeline and Ev-
erything You Need to Know,” Android Authority, April 4, 2024; Natalie Weinstein,
“Google Cuts Off Huawei Phones from Future Android Updates,” CNET, May 20,
2019.
110. Jessica Dolcourt, “Huawei Could Survive without Android, but It Wouldn’t Be
Pretty,” CNET, May 25, 2019; Andrew Williams, “What Google’s Huawei Ban Means
for Millions of Android Users,” Wired, May 20, 2019.
243
111. Ron Amadeo, “Huawei’s HarmonyOS: ‘Fake It Till You Make It’ Meets OS
Development,” arsTECHNICA, February 2, 2021; Kamal Munir and Hamza Mudassir,
“Four Reasons Huawei’s New Harmony OS Won’t Solve Its Problems,” The Conver-
sation, August 19, 2019.
112. Diksha Madhok and Joyce Jiang, “Huawei Isn’t Just Back from the Dead. It’s
a Force to Be Reckoned With,” CNN, June 24, 2024; Megan Hogan, “Export Controls
Are Only a Short-Term Solution to China’s Chip Progress,” War on the Rocks, De-
cember 22, 2023.
113. Iris Deng, “Tech War: Huawei Sees HarmonyOS Breaking the Dominance
of Android and Apple’s iOS in China,” South China Morning Post, June 21, 2024;
Gangandeep Kaur, “Huawei Intensifies Development of HarmonyOS App Ecosystem,”
Fierce Network, April 22, 2024.
114. Xinmei Shen, “Huawei to Roll Out Home-Grown Mobile Operating System
in Challenge to Apple’s Ios, Android,” South China Morning Post, October 7, 2024;
Wayne Williams, “Huawei Succeeds Where Microsoft Failed Miserably—Harmonyos
Now on Almost One Billion Devices, and China’s Largest Mobile Phone Manufacturer
Has Completely Eliminated Android,” TechRadar, July 1, 2024; Diksha Madhok and
Joyce Jiang, “Huawei Isn’t Just Back from the Dead. It’s a Force to Be Reckoned
With,” CNN, June 24, 2024; Zhang Erchi and Denise Jia, “Huawei’s Latest Operating
System Completely Breaks with Android,” Caixin Global, January 19, 2024.
115. Jimmy Goodrich, “China’s Evolving Semiconductor Strategy,” UC Institute on
Global Conflict and Cooperation, May 29, 2024.
116. Reva Goujon, Jan-Peter Kleinhans, and Laura Gormley, “Thin Ice: US Path-
ways to Regulating China-Sourced Legacy Chips,” Rhodium Group, May 13, 2024.
119. Andrew David et al., “Foundational Fabs: China’s Use of Nonmarket Policies
to Expand Its Role in the Semiconductor Supply Chain,” Silverado Policy Accelerator,
October 2023, 4, 19.
120. Andrew David and Sarah Stewart, “China Semiconductor Manufacturing
Equipment Import Analysis: 2023 Imports Grow amid Build Out of Foundational
Fabs,” Silverado Policy Accelerator, March 2024, 5.
121. TrendForce, “China’s Import of Chip Making Equipment Hit New High This
Year, with Mature Nodes Driving the Demand,” August 26, 2024.
122. Che Pan, “Tech War: China Advances in Chip Tool Self-Sufficiency but Li-
thography Still a ‘Choke Point,’ ” South China Morning Post, August 7, 2024; Jowi
Morales, “China Only Produces 1% of Critical Litho Chipmaking Tools, Exposing It
to Harsh US Sanctions—Investment in Domestic Toolmakers Looks to Reverse the
Trend,” Tom’s Hardware, June 14, 2024.
123. Jingyue Hsaio, “China Imports over 400 Lithography Machines from the
Netherlands in Past Five Years,” DigiTimes Asia, January 25, 2024.
124. Laura Dobberstein, “Banned US Chipmaking Equipment Still Ending Up in
China, Says Report,” Register, November 15, 2023; U.S.-China Economic and Security
Review Commission, 2023 Annual Report to Congress, November 2023.
126. Antonia Hmaidi, “China’s Long-Term Struggle to Become Integral in Semicon-
ductor Supply Chains,” Mercator Institute for China Studies, March 4, 2024; Arjun
Kharpal, “China May be Making More Advanced Chips despite U.S. Sanctions—But
It Still Faces Big Problems,” CNBC, February 11, 2024
127. Matt Brazil and Peter W. Singer, “Size Isn’t Everything: China’s New Chip
is Less Earthshaking than You May Have Heard,” Defense One, November 9, 2023.
ways to Regulating China-Sourced Legacy Chips,” Rhodium Group, May 13, 2024;
Andrew David et al., “Foundational Fabs: China’s Use of Nonmarket Policies to Ex-
pand Its Role in the Semiconductor Supply Chain,” Silverado Policy Accelerator, Oc-
tober 2023, 4, 19; Aaron Klotz, “US Sanctions Transform China into Legacy Chip
Production Juggernaut—Production Jumped 40% in Q1 2024,” Tom’s Hardware, April
17, 2024.
244
132. Aaron Krolik and Paul Mozer, “The Illicit Flow of Technology to Russia Goes
through This Hong Kong Address,” New York Times, July 25, 2024.
137. McKinsey and Company, “Generative AI: The Next S-Curve for the Semicon-
ductor Industry?” March 29, 2024.
138. Paul Triolo and Kendra Schaefer, China’s Generative AI Ecosystem in 2024:
2024; Girish Sastry et al., “Computing Power and the Governance of Artificial Intel-
ligence,” arXiv, February 14, 2024; Jai Vipra and Sarah Myers West, “Computational
Power and AI,” AI Now Institute, September 27, 2023.
139. Paul Triolo and Kendra Schaefer, “China’s Generative AI Ecosystem in 2024:
2024.
2024.
2024.
2024.
2024.
144. Rebecca Arcesati, “China’s AI Development Model in an Era of Technological
Deglobalization,” Mercator Institute for China Studies, May 2, 2024; Jane Cai, “Chi-
na’s New Data Agency Plans Fast Track to Powerful National Computing Network,”
South China Morning Post, April 3, 2024; Xinhua, “China Empowers Green, Digital
Future with Mega Data Project,” February 22, 2022.
145. China Daily, “Computing Power Infrastructure Key to Digital Economy,” Octo-
ber 12, 2023; Global Times, “China Aims to Increase Computing Power by More than
50% by 2025,” October 9, 2023.
146. Josh Ye, “China Targets 50% Growth in Computing Power in Race against
U.S.,” Reuters, October 9, 2023.
147. China Daily, “Action Plan to Improve Technology Standards,” May 30, 2024;
Sylvie Zhuang, “China Plans Leading Role in Global AI Race on Standards and Com-
puting Power Push,” South China Morning Post, May 30, 2024.
148. David McCabe, “China’s Cloud Computing Firms Raise Concern for U.S.,” New
York Times, June 21, 2023.
149. IDC, “Worldwide Spending on Public Cloud Services Is Forecast to Double
between 2024 and 2028, According to New IDC Spending Guide,” July 29, 2024.
150. Dan Robinson, “When It Comes to Cloud, It’s China against the World,” Reg-
ister, August 21, 2024.
151. Canalys, “Mainland China’s cloud service spend grew by 20% in Q1 2024—
Canalys,” June 27, 2024.
ister, August 21, 2024; Clark Robert, “China’s Cloud Market to Triple by 2027, Says
Govt Think-Tank,” Light Reading, August 2, 2024.
ister, August 21, 2024; Fan Feifei, AWS Will Step Up Long-Term Play in Nation,
Exec Says,” China Daily, June 6, 2024. https://web.archive.org/web/20240721071904/
https:/www.chinadaily.com.cn/a/202406/06/WS66610fcaa31082fc043cb2b4.html.
154. Fan Feifei, “AWS Will Step Up Long-Term Play in Nation, Exec Says,” China
Daily, June 6, 2024.
155. Mark Haranas, “Cloud Market Share in Q2: Microsoft Drops, Google Gains,
AWS Remains Leader,” CRN, August 7, 2024; Canalys, “Mainland China’s Cloud Ser-
vice Spending to Grow by 18% in 2024,” March 28, 2024.
156. Huawei Cloud, “Global Layout”; Alibaba Cloud, “Regions and Zones,” August
29, 2024; Tencent Cloud, “Tencent Cloud Global Infrastructure.”
245
157. Huawei Cloud, “Global Layout”; Alibaba Cloud, “Regions and Zones,” August
29, 2024; Tencent Cloud, “Tencent Cloud Global Infrastructure.”
158. Gagandeep Kaur, “Southeast Asia Emerging as the New Battleground for
Cloud Service Providers,” Fierce Network, May 16, 2024; Tsubasa Suriga and Akito
Tanaka, “Southeast Asia’s Digital Battle: Chinese and U.S. Big Tech Face Off over
$1tn Market,” Nikkei Asia, November 15, 2023.
159. Alibaba Cloud, “Going Global | How Far Can Chinese Cloud Service Reach?”
Alibaba Cloud Community, September 13, 2024; EqualOcean, “How Far Can a Chi-
nese “Smart Cloud” Go?” (一朵中国 “智能云”, 能飘多远), September 6, 2024. Transla-
tion. https://web.archive.org/web/20240924151452/https://cn.equalocean.com/analys
is/202409061041971?spm=a2c65.11461447.0.0.486412b9v1L4eh.
160. Kevin Xu, “US vs China: A Cloud Proxy War,” Interconnected, July 3, 2023;
Google, “Cloud Locations”; Microsoft, “Microsoft Datacenters”.
161. Saheli Roy Choudhury, “As Information Increasingly Drives Economies, China
Is Set to Overtake the US in Race for Data,” CNBC, February 13, 2019.
162. Zac Haluza, “What Is China’s ‘National Cloud’?” Root Access, August 10, 2022.
163. Andrew Stokols, “How Is China’s ‘Eastern Data Western Compute’ (东数西算)
Developing?” Sinocities, May 28, 2024.
164. Robert Clark, “Cloud News: China Unveils National Cloud, Telstra Commits
to Azure,” Light Reading, July 26, 2022.
165. Trivium Tech, “Tianjin’s on Cloud (Computing) Nine,” May 31, 2023; Tracy
Qu, “Alibaba’s Cloud Services Unit Expands Business with China’s Data Exchanges
under Major New Deal in Southern Tech Hub Shenzhen,” April 24, 2023.
166. Jeremy Hsu, “Electricity Demand from Data Centres Set to Double by 2026,”
New Scientist, January 24, 2024; Blue Ocean Technology, “Accelerate the ‘Green
Transformation’ of Data Centers to Enable Low-Carbon Development of the Dig-
ital Economy” (加速数据中心 “绿色转型” 赋能数字经济低碳发展), October 18, 2023.
Translation. https://web.archive.org/web/20240806212618/https%3A%2F%2Fwww.
blueocean-china.net%2Ffaq3%2F926.html.
167. People’s Daily, “China Has Created Three Batches of 153 National Green Data
Centers, ‘Turn Green’ and Energy Consumption ‘Slims Down’ ” (我国已创建三批共计
153家国家绿色数据中心数据中心 “变绿” 能源消耗 “瘦身,”), May 6, 2022. Translation;
Jiang Hongqiang, Li Bo, and Zhang Wei, “Promoting Green and Low-Carbon Devel-
opment of Data Centers” (推动数据中心绿色低碳发展), China Environment News, Feb-
ruary 2, 2022. https://web.archive.org/web/20240918150104/http://www.ce.cn/cysc/
stwm/gd/202202/10/t20220210_37319445.shtml.
168. John Kemp, “China’s Rapid Renewables Rollout Hits Grid Limits,” Reuters,
July 4, 2024; China Electric Power Knowledgebase, “Ranking of GDP and Electricity
Consumption Growth Rates of Provinces in China in 2023” (中国电力知库, “2023年
全国各省GDP和用电量增速排行), February 27, 2024. Translation. https://web.archive.
org/web/20240918175112/https://m.bjx.com.cn/mnews/20240207/1360866.shtml;
Amy Hawkins, “China Ramps Up Coal Power despite Carbon Neutral Pledges,”
Guardian, April 23, 2023; Xiaoying You, “Explainer: Why China’s Provinces Are So
Important for Action on Climate Change,” CarbonBrief, October 10, 2022; Ye Ruolin
and Yuan Ye, “Untangling the Crossed Wires of China’s ‘Super Grid,’ ” Dialogue Earth,
March 29, 2021; Debin Fang et al., “The Impacts of Electricity Consumption in Chi-
na’s Key Economic Regions,” Applied Energy, June 1, 2020.
169. Colleen Howe, “Explainer: The Numbers behind China’s Renewable Energy
Boom,” Reuters, November 15, 2023; Yue Qiu et al., “Analysis of China’s Electricity
Price and Electricity Burden of Basic Industries under the Carbon Peak Target be-
fore 2030,” CSEE Journal of Power and Energy Systems (March 2024); Guo Yingzhe,
“China Unveils Vast Plan to Build Regional Data Center Clusters,” Caixin Global,
February 18, 2022.
170. Zhang Erchi and Chen Min, “Five Things to Know about China’s Mega East-
West Data Center Plan,” Nikkei Asia, April 21, 2022; Lightcone Intelligence, “The
‘East Data West Computing’ Project Has Been Launched” (东数西算”工程启动，一文
看懂云计算巨头数据中心布局), Pingwest, March 2, 2022. Translation.
171. China National Development and Reform Commission et al., Implementation
Opinions on Deeply Implementing the “Eastern Data and Western Computing” Project
to Accelerate the Construction of a National Integrated Computing Network (国家发
展改革委等部门关于深入实施“东数西算”工程加快构建全国一体化算力网的实施意见),
December 29, 2023. Translation. https://archive.ph/CD833.
172. Liu Liehong, “Liu Liehong, Accelerate the Construction of a National Inte-
grated Computing Network and Promote the Construction of a Chinese-Style Mod-
ern Digital Foundation” (刘烈宏,加快构建全国一体化算力网推动建设中国式现代化数字
基座), Qiushi, June 2024. Translation. https://web.archive.org/web/20240919173604/
http://www.qstheory.cn/dukan/qs/2024-03/16/c_1130089697.htm; Dannie Peng,
246
“China Is Spending Billions on a National Computing Network. Its Data Chief Says
Why,” South China Morning Post, March 17, 2024; Caijing Eleven, “The National
Integrated Computing Network Policy Has Been Finalized, Which Has Three Di-
rect Impacts on Computing Power Companies” (吴俊宇,” “全国一体化算力网政策落
定，对算力企业有三大直接影响), 36kr, December 29, 2023. Translation; NDRC, “The
National Development And Reform Commission And Other Departments Issued
Opinions On Deepening The Implementation Of The ‘Eastern Data And Western
Computing’ Project And Accelerating The Construction Of A National Integrated
Computing Network” (数据局, 关于深入实施“东数西算”工程加快构建全国一体化算
力网的实施意见(发改数据 (2023) 1779号), December 29, 2023. Translation. https://
web.archive.org/web/20240919173701/https://www.ndrc.gov.cn/xxgk/zcfb/tz/202312/
t20231229_1363000.html.
173. Liu Liehong, “Developing an Integrated National Computing Network,” Qi-
ushi English, July 8, 2024. Translation; Dannie Peng, “China Is Spending Billions
on a National Computing Network. Its Data Chief Says Why,” South China Morning
Post, March 17, 2024.
174. Global Times, “China Vows to Establish Integrated Computing Power Net-
work, Boosting Digital Economy: NDB Chief,” March 25, 2024.
175. China Daily, “2024 Big Data Expo ‘Integration of Digital and Comput-
ing, Driving the Future’ Exchange Event Was Held in Guiyang” (2024数博会“数
算一体，驱动未来”交流活动在贵阳举办), September 2, 2024. Translation. https://
web.archive.org/web/20240919225040/https://cn.chinadaily.com.cn/a/202409/02/
WS66d545d7a310a792b3ab9cf8.html; Che Pan, “China Invests US$6.1 Billion in
Data Centre Infrastructure amid Surge in Demand for AI Chips,” South China Morn-
ing Post, August 29, 2024; Andrew Stokols, “How is China’s ‘Eastern Data Western
Compute’ (东数西算) Developing?” Sinocities, May 28, 2024.
176. Andrew Stokols, “How is China’s ‘Eastern Data Western Compute’ (东数西算)
177. Andrew Stokols, “How is China’s ‘Eastern Data Western Compute’ (东数西算)
178. Xinhua, “The Thirst for Computing Power, Guian’s Solution” (算力之渴贵安之
解), June 17, 2024. Translation; Zhang Zitong, “Supply and Demand Mismatch, Dupli-
cate Construction, Domestic Computing Centers Explore Intelligent Upgrades” (供需
错配、重复建设，国内算力中心探路智能化升级), 21st Century Economy, May 10, 2024.
Translation; Caijing, “China’s Computing Power, Ambition and Weakness” (中国算
力，雄心与软肋｜《财经》封面), May 5, 2023. Translation. https://archive.fo/PYPh5;
Huang Xin, “There Are Several Hurdles for ‘Eastern Data’ to Achieve ‘Western Com-
puting’ ” (东数实现西算要迈几道坎), Economics Daily, April 21, 2024. Translation; Xin-
hua, “Outlook | ‘Counting in the East and Calculating in the West’ Blocking Perspec-
tive” (東數西算”堵點透視), January 15, 2024. Translation. https://archive.ph/zrveK.
179. White House, Readout of White House Roundtable on U.S. Leadership in AI
Infrastructure, September 12, 2024.
180. Wall Street Journal, “U.S. Looks to Restrict China’s Access to Cloud Comput-
ing to Protect Advanced Technology,” July 4, 2023; Hanna Dohmen et al., “Controlling
Access to Advanced Compute via the Cloud: Options for U.S. Policymakers, Part I”
and “Part 2,” Center for Security and Emerging Technology, May 15, 2023.
181. Eleanor Olcott, Qianer Liu, and Demetri Sevastopulo, “Chinese AI Groups Use
Cloud Services to Evade US Chip Export Controls,” Financial Times, March 8, 2023.
182. Eleanor Olcott, Qianer Liu, and Demetri Sevastopulo, “Chinese AI Groups Use
Cloud Services to Evade US Chip Export Controls,” Financial Times, March 8, 2023.
183. Eduardo Baptista, Fanny Potkin, and Karen Freifeld, “Chinese Entities Turn
to Amazon Cloud and Its Rivals to Access High-End US Chips, AI,” Reuters, August
23, 2024.
184. Raffaelle Huang, “Chinese AI Researchers Are Secretly Accessing Banned
NVIDIA Chips,” Wall Street Journal, August 26, 2024.
185. Raffaelle Huang, “Chinese AI Researchers Are Secretly Accessing Banned
NVIDIA Chips,” Wall Street Journal, August 26, 2024.
186. Akin Gump Export Controls and Economic Sanctions Practice Group, “Com-
merce Imposes Significant New Controls on Advanced Semiconductors,” October 24,
2023.
187. Akin Gump Export Controls and Economic Sanctions Practice Group, “Com-
merce Imposes Significant New Controls on Advanced Semiconductors,” October 24,
2023.
188. Aaron Gregg and Cat Zakrzewski, “Microsoft Invests in Arabic AI Firm as U.S.
Tries to Limit China’s Sway,” Washington Post, April 16, 2024.
247
189. U.S. Department of Commerce, “Taking Additional Steps to Address the Na-
tional Emergency with Respect to Significant Malicious Cyber-Enabled Activities,”
Federal Register 89:19 (January 29, 2024).
190. Liza Lin, “China Puts Power of State behind AI—and Risks Strangling It,”
Wall Street Journal, July 16, 2024.
191. Jeremy Daum, “Overview of Draft Measures on Generative AI,” China Law
Translate, April 14, 2023.
192. Raffaele Huang, “China Moves to Censor AI,” Wall Street Journal, April 11,
2023.
195. Chang Che and John Liu, “China’s Answer to ChatGPT Gets an Artificial
Debut and Disappoints,” New York Times, March 16, 2023.
196. Sylvie Zhuang, “China Rolls Out Large Language Model AI Based on Xi Jin-
ping Thought,” South China Morning Post, May 21, 2024.
199. McKinsey and Company, “What Is Generative AI?” April 2, 2024; NVIDIA,
“What Is Generative AI.”
2024; Kelly Le, “Chinese Firms Lag behind US Peers in AI Development ‘by Two
Years,’ Alibaba Chairman Joe Tsai Says,” South China Morning Post, April 5, 2024;
Paul Mozur, John Liu, and Cade Metz, “China’s Rush to Dominate A.I. Comes with a
Twist: It Depends on U.S. Technology,” New York Times, February 28, 2024.
201. Tracy Qu, “Baidu Says Ernie AI Chatbot Now Has 200 Million Users,” Wall
Street Journal, April 16, 2024; Arjun Kharpal, “China’s Baidu Claims Its Ernie Bot
Beats ChatGPT on Key Tests as A.I. Race Heats Up,” CNBC, June 27, 2023; Helen
Toner, Jenny Xiao, and Jeffrey Ding, “The Illusion of China’s AI Prowess,” Foreign Af-
fairs, June 2, 2023; Cheyenne Dong, “Alibaba Rolls Out ChatGPT Alternative Tongyi
Qianwen,” Technode, April 10, 2023; Chang Che and John Liu, “China’s Answer to
ChatGPT Gets an Artificial Debut and Disappoints,” New York Times, March 16, 2023.
202. Helen Toner, Jenny Xiao, and Jeffrey Ding, “The Illusion of China’s AI Prow-
ess,” Foreign Affairs, June 2, 2023; Cheyenne Dong, “Alibaba Rolls Out ChatGPT
Alternative Tongyi Qianwen,” Technode, April 10, 2023; Chang Che and John Liu,
“China’s Answer to ChatGPT Gets an Artificial Debut and Disappoints,” New York
Times, March 16, 2023.
203. Tracy Qu, “Baidu Says Ernie AI Chatbot Now Has 200 Million Users,” Wall
Street Journal, April 16, 2024; Arjun Kharpal, “China’s Baidu Claims Its Ernie Bot
Beats ChatGPT on Key Tests as A.I. Race Heats Up,” CNBC, June 27, 2023; Helen
Toner, Jenny Xiao, and Jeffrey Ding, “The Illusion of China’s AI Prowess,” Foreign Af-
fairs, June 2, 2023; Cheyenne Dong, “Alibaba Rolls Out ChatGPT Alternative Tongyi
Qianwen,” Technode, April 10, 2023; Chang Che and John Liu, “China’s Answer to
ChatGPT Gets an Artificial Debut and Disappoints,” New York Times, March 16, 2023.
204. Paul Mozur, John Liu, and Cade Metz, “China’s Rush to Dominate A.I. Comes
with a Twist: It Depends on U.S. Technology,” New York Times, February 28, 2024.
205. Kelly Le, “Chinese Firms Lag behind US Peers in AI development ‘by Two
Years,’ Alibaba Chairman Joe Tsai Says,” South China Morning Post, April 5, 2024.
with a Twist: It Depends on U.S. Technology,” New York Times, February 28, 2024;
William Marcellino et al., “The Rise of Generative AI and the Coming Era of So-
cial Media Manipulation 3.0 Next-Generation Chinese Astroturfing and Coping with
Ubiquitous AI,” RAND Corporation, 2023, 10.
2024.
208. Josh Ye, “China’s AI ‘War of a Hundred Models’ Heads for a Shakeout,” Reu-
ters, September 21, 2023.
2024.
210. Kelly Le, “ ‘Too Many’ AI Models in China: Baidu CEO Warns of Wasted Re-
sources, Lack of Applications,” South China Morning Post, July 5, 2024.
248
211. Pablo Chavez, “An AI Challenge: Balancing Open and Closed Systems,” CEPA,
May 30, 2023.
212. Jon Bateman et al., “Beyond Open vs. Closed: Emerging Consensus and Key
Questions for Foundation AI Model Governance,” Carnegie Endowment for Interna-
tional Peace, July 23, 2024.
213. George Lawton, “Attributes of Open vs. Closed AI Explained,” TechTarget,
July 8, 2024; Pablo Chavez, “An AI Challenge: Balancing Open and Closed Systems,”
CEPA, May 30, 2023.
214. Qiao Qin’en, “OpenAI Cuts Off Access to Users in China, Hong Kong and
Macau,” Radio Free Asia, July 10, 2024.
215. Zeyi Yang, “Why Chinese Companies Are Betting on Open-Source AI,” MIT
Technology Review, July 24, 2024; Voice of America, “US Plans to Limit Ameri-
can-Made AI Models in China,” May 12, 2024.
with a Twist: It Depends on U.S. Technology,” New York Times, February 21, 2024.
217. Meaghan Tobin and Cade Metz, “China Is Closing the A.I. Gap with the Unit-
ed States,” New York Times, July 25, 2024.
218. Meaghan Tobin and Cade Metz, “China Is Closing the A.I. Gap with the Unit-
ed States,” New York Times, July 25, 2024.
219. Rohit Sehgal, “AI Needs Data More than Data Needs AI,” Forbes, October
5, 2023; Rob Toews, “Synthetic Data Is about to Transform Artificial Intelligence,”
Forbes, June 12, 2022.
220. Matt Pottinger and David Feith, “The Most Powerful Data Broker in the
World Is Winning the War against the U.S.,” New York Times, November 30, 2021;
Solomon Partners Technology Group, “Data Becomes the New Oil: Businesses Have
Opportunity to Monetize Information as Fuel for AI Models,” Solomon Partners,
March 14, 2024.
221. Shanna Khayat, “China Has a Digital Grand Strategy. Does the President
Know?” Pacific Forum, March 7, 2023; Dave Dorman and John Hemmings, “Under-
standing Xi Jinping’s Digital Strategy for China,” U.S. Department of State, March
1, 2023.
222. Central People’s Government of the People’s of the Republic of China, “Nation-
al 13th Five-Year Plan for the Development of Strategic Emerging Industries” (国务
院关于印发“十三五”国家战略性新兴产业发展规划的通知), November 29, 2016. CSET
Translation.
223. United States Information Technology Office, “President Xi Emphasizes Im-
portance of Big Data”; Lindsay Gorman, “China’s Data Ambitions Strategy, Emerging
Technologies, and Implications for Democracies,” National Bureau of Asian Research,
August 14, 2021.
224. Xinhua, “Opinions of the CPC Central Committee and the State Council on
Building a More Complete System and Mechanism for Market-Oriented Allocation
of Factors”(中共中央国务院关于构建更加完善的要素市场化配置体制机制的意见), April
9, 2020. Translation. https://web.archive.org/web/20240821164904/https://www.gov.
cn/zhengce/2020-04/09/content_5500622.htm.
225. Graham Webster, “Translation: Establishing the National Data Administra-
tion (March 2023),” Digichina, March 7, 2023.
226. Zeyi Yang, “China Just Set Up a New Bureau to Mine Data for Economic
Growth,” MIT Technology Review, March 15, 2023.
227. National Development and Reform Commission, “Announcement on Soliciting
Public Opinions on the “Three-Year Action Plan for Data Elements × (2024–2026)
(Draft for Comments)” (关于向社会公开征求《“数据要素×”三年行动计划(2024–2026
年)(征求意见稿)》意见的公告[已结束), December 15, 2023. Translation; Qiheng Chen,
“China’s New National Data Bureau: What It Is and What It Is Not,” China Proj-
ect, March 20, 2023; Fan Feifei, “Data Applications Key to Driving China’s Economic
Growth,” China Daily, December 29, 2023.
228. National Data Administration, “Liu Liehong, Director of the National Bureau
of Statistics, Hosted a Symposium with Entrepreneurs and Listened Carefully to Their
Opinions and Suggestions” (国家数据局局长刘烈宏主持召开企业家座谈会认真听取企业
意见建议), May 25, 2024. Translation. https://web.archive.org/web/20240829142102/
https://mp.weixin.qq.com/s/hkXY5KWPvsYjrVhHX9Ak7A.
229. Julia Lu, “China’s Data Exchanges, Explained,” Technode, August 17, 2021.
230. Eleanor Olcott and Wenjie Ding, “China Struggles to Control Data Sales as
Companies Shun Official Exchanges,” Financial Times, December 27, 2023.
231. Julia Lu, “China’s Data Exchanges, Explained,” Technode, August 17, 2021;
Amba Kak and Samm Sacks, “Shifting Narratives and Emergent Trends in Da-
ta-Governance Policy,” Paul Tsai China Center, AI Now, New America, August 2021.
249
232. Shanghai Pilot Free Trade Zone, “Shanghai FTZ to Speed Up Data Flow, Coop-
eration,” Shanghai.gov (English), February 7, 2024; Giulia Interesse, “China Releases
New Measures to Further Open-Up Its Free Trade Zones,” China Briefing, July 6, 2023;
China’s Ministry of Commerce, “The Ministry of Commerce Issued the List of Key Tasks
for Pilot Free Trade Zones (2023–2025)” (商务部印发,自贸试验区重点工作清单,2023—
2025年), June 25, 2023. Translation. https://web.archive.org/web/20240829150837/
http://m.mofcom.gov.cn/article/syxwfb/202306/20230603418113.shtml; Barry van
Wyk, “The Chinese Government Wants a Data Trading Market, but It May Never
Happen,” China Project, October 11, 2022; Julia Lu, “China’s Data Exchanges, Ex-
plained,” Technode, August 17, 2021.
233. Shanghai Pilot Free Trade Zone, “Shanghai FTZ to Speed Up Data Flow, Co-
operation,” Shanghai.gov (English), February 7, 2024; Mu Chen and Yu Tian, “Is Chi-
na Locking Information on the Country Inside a ‘Black Box’?” Baiguan, May 8, 2023;
Barry van Wyk, “The Chinese Government Wants a Data Trading Market, but It May
Never Happen,” China Project, October 11, 2022; Tracy Qu, “How to Buy and Sell
Data? Shanghai Starts New Exchange for Trading Massive Amounts of Data Like
Commodities,” South China Morning Post, November 27, 2021; Julia Lu, “China’s
Data Exchanges, Explained,” Technode, August 17, 2021; Amaya Zhou and Barbara
Li, “Policies Relaxing Data Restrictions Adopted in China’s Free Trade Zones,” Reed
Smith, February 21, 2021; Li Chunguang and Wang Shuo, “Four Aspects of Big Data
Development: Market, Policy, Practice and Challenges” (大数据发展四面观:市场、政
策、实践与挑战), WeChat, January 28, 2021. Translation.
234. Matt Sheehan, “Much Ado about Data: How America and China Stack Up,”
MacroPolo, June 16, 2019.
236. David Yang et al., “The AI-Surveillance Symbiosis in China: A Big Data China
Event,” Center for Strategic and International Studies, August 18, 2022.
237. Stanford Center on China’s Economy and Institutions, “Has Access to Gov-
ernment Data Given China’s AI Firms an Innovation Edge?” Stanford University,
June 15, 2022.
241. Paul Mozur and Cade Metz, “In One Key A.I. Metric, China Pulls ahead of the
U.S.: Talent,” New York Times, March 22, 2024.
242. Paul Mozur and Cade Metz, “In One Key A.I. Metric, China Pulls ahead of the
U.S.: Talent,” New York Times, March 22, 2024.
243. MacroPolo, “The Global AI Talent Tracker 2.0,” 2024.
244. MacroPolo, “The Global AI Talent Tracker 2.0,” 2024.
245. Dahlia Peterson, Ngor Luong, and Jacob Feldgoise, “Assessing China’s AI
Workforce: Regional, Military, and Surveillance Geographic Clusters,” Center for Se-
curity and Emerging Technology, November 2023.
246. Center for Security and Emerging Technology, “Country Activity Tracker
(CAT): Artificial Intelligence,” May 29, 2024.
247. U.S.-China Economic and Security Review Commission, 2023 Annual Report
to Congress, November 2023.
248. Zahra Khan, “China Conducts Nationwide Audit of Research Misconduct af-
ter Thousands of Papers Retracted Last Year,” Chemistry World, February 16, 2024;
Jeffrey Stoff, Leslie Mcintosh, and An Chi Lee, “Transparency and Integrity Risks
in China’s Research Ecosystem: A Primer and Call to Action,” Center for Research
Security & Integrity, September 2024.
(CAT): Artificial Intelligence,” September 19, 2024.
(CAT): Artificial Intelligence,” September 19, 2024.
251. Jeffrey Ding, “Explaining China’s Diffusion Deficit,” Foreign Policy Research
Institute, September 16, 2024.
252. Brenda Goh and Paul Sandle, “Exclusive: China Took Part in Leaders’ AI
Meeting Even though UK Did Not Acknowledge,” Reuters, November 3, 2023; UK
Government, The Bletchley Declaration by Countries Attending the AI Safety Summit,
1-2 November 2023, November 1, 2023.
253. Yukon Huang, Isaac B. Kardon, and Matt Sheehan, “Three Takeaways from
the Biden-Xi Meeting,” Carnegie Endowment for International Peace, November 16,
250
2023; White House, Readout of President Joe Biden’s Meeting with President Xi Jin-
254. Alexandra Alper, “UN Adopts First Global Artificial Intelligence Resolution,”
Reuters, March 21, 2024.
255. Jamey Keaten, “Top US and Chinese Officials Begin Talks on AI in Gene-
va,” Associated Press, May 15, 2024; White House, Statement from NSC Spokesper-
son Adrienne Watson on the U.S.-PRC Talks on AI Risk and Safety, May 15, 2024;
Huang Da, “China and the United States Hold First Intergovernmental Dialogue
on Artificial Intelligence” (中美举行人工智能政府间对话首次会议), CCTV, May 15,
2024. Translation. https://web.archive.org/web/20240520192253/https://news.cctv.
com/2024/05/15/ARTIIvG55tknLsj93CHilQdX240515.shtml; China’s Ministry of
Foreign Affairs, Foreign Ministry Spokesperson Wang Wenbin’s Regular Press Con-
ference on May 14, 2024 (2024年5月14日外交部发言人汪文斌主持例行记者会), May 14,
2024. Translation. Bochen Han, “US and China Set for First High-Level Talks on
Artificial Intelligence, US Officials Say,” South China Morning Post, May 13, 2024.
256. China’s Ministry of Foreign Affairs, China’s Position Paper on Regulating Mil-
itary Applications of Artificial Intelligence (中国关于规范人工智能军事应用的立场文件),
December 14, 2021. Translation; Xinhua, “China Submits Position Paper on Regulat-
ing Military Applications of AI,” December 14, 2021.
257. People’s Daily, “CCTV Strait Commentary | The Complete Reunification of
the Motherland Must and Will Certainly Be Achieved!” (总台海峡时评丨祖国完全统一
一定要实现,也一定能够实现!)October 19, 2022. Translation; Embassy of the People’s
Republic of China in the United States of America, “Spokesperson of the Standing
Committee of the National People’s Congress Made a Statement on the Visit of U.S.
House Speaker Pelosi to Taiwan, China”, August 2, 2022; China’s Ministry of Foreign
Affairs, China’s Position Paper on Regulating Military Applications of Artificial Intel-
ligence (中国关于规范人工智能军事应用的立场文件), December 14, 2021. Translation.
258. Alexandra Alper, “UN Adopts First Global Artificial Intelligence Resolution,”
Reuters, March 21, 2024; U.S. Department of State, Political Declaration on Responsi-
ble Military Use of Artificial Intelligence and Autonomy, 2024; Amber Wang, “US-Led
AI Declaration on Responsible Military Use Sees 45 Countries Join, but Not China,”
South China Morning Post, November 14, 2023.
259. Greg Torode, “US Official Urges China, Russia to Declare Only Humans, Not
AI, Control Nuclear Weapons,” Reuters, May 2, 2024.
260. Jacob Stokes, written testimony for U.S.-China Economic and Security Review
and National Security Competition, February 1, 2024, 3; U.S. Department of Defense,
Annual Report to Congress: Military and Security Developments Involving the People’s
Republic of China 2023, October 19, 2023, iv, 34, 41.
261. Zhang Yulong et al., “Technical Framework Design and Key Issues Analysis
in Task-Level Wargame Intelligent Decision Making” (任务级兵棋智能决策技术框架设
计与关键问题分析), Journal of Command and Control 10:1 (February 2024): 19–25.
Translation; Xu Tongle et al., “Development of Cross-Domain Communication Net-
working Technologies for Marine Autonomous Unmanned System” (海洋自主无人系
统跨域通信组网技术发展), Journal of Command and Control 9:6 (December 2023).
Translation; Han Zengliang et al., “Multi-UAH Time Coordinated Path Planning
Based on HME-ABC Algorithm” (基于 HME-ABC 算法的多无人直升机时间协同航路规
划), Journal of Command and Control 9:6 (December 2023). Translation; Li Li et al.,
“Intelligent Generation Mode of Course of Action and Its Situation Characteriza-
tion Method” (作战任务序列智能生成方式及其态势表征方法), Journal of Command and
Control 9:5 (October 2023). Translation; Fei Su and Jingdong Yuan, “Chinese Think-
ing on AI Integration and Interaction with Nuclear Command and Control, Force
Structure, and Decision-Making,” European Leadership Network, November 2023, 3,
5–7; Margarita Konaev et al., “U.S. and Chinese Military AI Purchases: An Assess-
ment of Military Procurement Data between April and November 2020,” Center for
Security and Emerging Technology, August 2023; Zhou Yun, Cheng Chunlei, and Zhao
Jingran, “Drones: From the ‘Shallow’ to the ‘Deep’ Battlefield” (无人机:从战场“浅近”
飞向“纵深”), China Military Online, July 28, 2023. Translation. https://web.archive.
org/web/20240415050807/http://www.81.cn/szb_ 223187/szbxq/index.html?paperNa
me=jfjb&paperDate=2023-07-28&paperNumber=10&articleid=911496; Qiu Chenhui,
“When Missiles Meet Artificial Intelligence” (当导弹遇上人工智能), China Youth Dai-
ly, April 23, 2018. http://web.archive.org/web/20231202011951/http://zqb.cyol.com/
html/2018-04/23/nw.D110000zgqnb_ 20180423_ 2-12.htm.
262. Margarita Konaev et al., “U.S. and Chinese Military AI Purchases: An Assess-
Security and Emerging Technology, August 2023, 8.
251
Security and Emerging Technology, August 2023, 6, 8.
Security and Emerging Technology, August 2023, 5–7.
265. Sam Bresnick, “China Bets Big on Military AI,” Center for European Policy
Analysis, April 3, 2024; Gregory C. Allen, written testimony for U.S.-China Economic
and Security Commission, Hearing on China’s Pursuit of Defense Technologies: Impli-
cations for U.S. and Multilateral Export Control and Investment Screening Regimes,
April 13, 2023, 9–10.
and National Security Competition, February 1, 2024, 4–5; Yun Nao Think Tank,
“Application Background of Artificial Intelligence Technology in the Field of Mili-
tary Intelligence” (人工智能技术在军事情报领域的应用背景), January 15, 2024. Trans-
lation. https://web.archive.org/web/20240516190434/https://m.chuandong.com/tech/
tech46839.html; Zhang Dongrun and Zhang Wenhong, “Intelligent Evolution of Un-
manned Reconnaissance” (无人侦察的智能化嬗变), China Military Online, July 28,
2022. Translation. https://web.archive.org/web/20240516183959/http://www.81.cn/
jfjbmap/content/2022-07/28/content_320794.htm; U.S. National Intelligence Council,
Global Trends 2040, March 2021, 7.
268. Yun Nao Think Tank, “Application Background of Artificial Intelligence Tech-
nology in the Field of Military Intelligence” (人工智能技术在军事情报领域的应用背
景), January 15, 2024. Translation; Zhang Dongrun and Zhang Wenhong, “Intelligent
Evolution of Unmanned Reconnaissance” (无人侦察的智能化嬗变), China Military On-
line, July 28, 2022. Translation. https://web.archive.org/web/20240516183959/http://
www.81.cn/jfjbmap/content/2022-07/28/content_320794.htm; Chen Xi, Ge Tengfei,
and Song Daoqing, “An Assessment of the Impact of Intelligent Intelligence Means
on the Strategic Stability of Great Powers” (智能化情报手段对大国战略稳定的影响评
估), Journal of Intelligence 40:6 (June 2021): 16. Translation. https://web.archive.
org/web/20240117212543/https://m.fx361.com/news/2021/0103/14051841.html; Gao
Tianfu et al., “Analysis and Research about the Application of AI Technology on the
Submarine Combat System” (人工智能技术在潜艇作战系统中应用分析), Ship Science
and Technology 42:11 (2020). Translation.
269. U.S. Department of Defense, Annual Report to Congress: Military and Security
Developments Involving the People’s Republic of China 2023, October 19, 2023, 34.
271. Liu Xuanzun and Fan Wei, “China’s Wing Loong Drones to See More Appli-
cations, Become More Intelligent: Chief Designer,” Global Times, December 1, 2023.
273. Zhang Yulong et al., “Technical Framework Design and Key Issues Analysis
in Task-Level Wargame Intelligent Decision Making” (任务级兵棋智能决策技术框架设
计与关键问题分析), Journal of Command and Control 10:1 (February 2024). Trans-
lation; Chen Lei and Yang Lianzhen, “Looking Forward to Military Governance in
the Intelligent Era” (前瞻智能化时代军事治理), China Military Online, January 11,
2024. Translation. https://web.archive.org/web/20240215105353/http://www.81.cn/
ll_ 208543/16279771.html; Li Li et al., “Intelligent Generation Mode of Course of Ac-
tion and Its Situation Characterization Method” (作战任务序列智能生成方式及其态势
表征方法), Journal of Command and Control 9:5 (October 2023). Translation; Margar-
ita Konaev et al., “U.S. and Chinese Military AI Purchases: An Assessment of Mili-
tary Procurement Data between April and November 2020,” Center for Security and
Emerging Technology, August 2023, 5–7; U.S. National Intelligence Council, Global
Trends 2040, March 2021, 7.
274. Liu Xia, “Artificial Intelligence May Change the Future Battlefield” (人工
智能或将改变未来战场), Science and Technology Daily, November 21, 2023. Trans-
lation. https://web.archive.org/web/20240510092951/http://digitalpaper.stdaily.
com/http_www.kjrb.com/kjrb/html/2023-11/21/content_562885.htm?div=-1; Yang
Zi, “How China Leverages Artificial Intelligence for Military Decision-Making,” in
Roy D. Kamphausen, ed., China’s Military Decision-Making in Times of Crisis and
252
Conflict, National Bureau of Asian Research, 2023, 83–84; Military Digest, “The Art
of Decision-Making! How Does Artificial Intelligence Empower the ‘Joint All-Do-
main Combat Command and Control System?’ ” (决策的艺术！人工智能如何赋能 “
联合全域作战指控体系”), December 27, 2021. Translation. https://web.archive.org/
web/20220415012546/http://www.%E5%9B%BD%E9%98%B2%E6%95%99%E8%82
%B2%E7%BD%91.com/show-82-213-1.html; Li Bin, “Li Bin: The Role of Machines in
Military Activities and Compliance with International Law” (李彬:军事活动中机器的
角色与国际法的合规), The Paper, January 30, 2021. Translation. https://web.archive.
org/web/20240510103158/https://www.thepaper.cn/newsDetail_forward_11025528.
275. Fiona S. Cunningham, “The Unknowns about China’s Nuclear Modernization
Program,” Arms Control Association, June 2023; Center for Strategic and Internation-
al Studies, “How Did the 20th Party Congress Impact China’s Military?” October 25,
2022; John Chen, written testimony for U.S.-China Economic and Security Review
Commission, Hearing on China’s Cyber Capabilities: Warfare, Espionage, and Impli-
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276. Yang Zi, “How China Leverages Artificial Intelligence for Military Deci-
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277. Bochen Han, “US and China Set for First High-level Talks on Artificial Intel-
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278. Fu Yongqing, Zhang Yuan, and Tan Bao, “Digital Revolution: Data Drives Future
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of Crisis and Conflict, National Bureau of Asian Research, 2023, 74; Song Yuangang,
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279. Song Yuangang, Shao Longfei, and Wang Han, “Military Big Data: An Accelera-
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280. Yang Zi, “How China Leverages Artificial Intelligence for Military Deci-
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281. Jacob Stokes, Alexander Sullivan, and Noah Greene, “U.S.-China Competition
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282. Jacob Stokes, Alexander Sullivan, and Noah Greene, “U.S.-China Competition
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283. Margarita Konaev et al., “U.S. and Chinese Military AI Purchases: An As-
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253
286. United Nations Office for Disarmament Affairs, “Lethal Autonomous Weapon
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288. Global Times, “Oddly Shaped Chinese Combat-Ready Helicopter Drone Popu-
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289. Global Times, “Oddly Shaped Chinese Combat-Ready Helicopter Drone Popu-
lar in International Market,” April 3, 2019; Zhuhai Ziyuan UAS, “Recon-Attack Un-
manned Helicopter.”
290. Nathan Beauchamp-Mustafaga, written testimony for U.S.-China Economic
and Security Review Commission, Hearing on Current and Emerging Technologies
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Jessica Brandt, “Propaganda, Foreign Interference, and Generative AI,” Brookings In-
stitution, November 8, 2023; Katrina Manson, “The US Military Is Taking Generative
AI Out for a Spin,” Bloomberg, July 5, 2023; William Marcellino et al., “The Rise of
Generative AI and the Coming Era of Social Media Manipulation 3.0 Next-Genera-
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291. Albert Zhang, Tilla Hoja, and Jasmine Latimore, “Gaming Public Opinion: The
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Albert Zhang, Tilla Hoja, and Jasmine Latimore, “Gaming Public Opinion: The CCP’s
Increasingly Sophisticated Cyber-Enabled Influence Operations,” Australian Strategic
Policy Institute, April 24, 2023, 11–18; Craig Timberg and Shane Harris, “Chinese
Network of Fake Accounts Targets Trump with English-language Videos,” Washing-
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in U.S.-China Economic and National Security Competition, February 1, 2024, 1–2.
294. Microsoft Threat Intelligence, “Same Targets, New Playbooks: East Asia
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295. Microsoft, “How Microsoft Names Threat Actors,” April 29, 2024; Microsoft
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Threat Actors Employ Unique Methods,” April 2024, 6–8.
in U.S.-China Economic and National Security Competition, February 1, 2024, 2;
William Marcellino et al., “The Rise of Generative AI and the Coming Era of So-
cial Media Manipulation 3.0 Next-Generation Chinese Astroturfing and Coping with
Ubiquitous AI,” RAND Corporation, 2023, 15–19.
299. William Marcellino et al., “The Rise of Generative AI and the Coming Era of
Social Media Manipulation 3.0 Next-Generation Chinese Astroturfing and Coping
with Ubiquitous AI,” RAND Corporation, 2023, 16; Wang Yunlong and Zhang Zhiwei,
“Emerging Communication Technology Revolution and Developmental Trends in Mil-
itary Struggle for Public Opinion” (新兴传播技术革命与军事舆论斗争发展趋势), China
Military Science, August 2020, 103–104. Translation.
in U.S.-China Economic and National Security Competition, February 1, 2024, 4, 11;
Li Bicheng, Hu Huaping, and Xiong Yao, “Intelligent Agent Model for Online Public
Opinion Guidance” (网络舆情引导智能代理模型), National Defense Technology 3 (2019).
Translation. https://web.archive.org/web/20240428215845/https://oversea.cnki.net/
KCMS/detail/detail.aspx?dbcode=CJFD&dbname=CJFDLAST2019&filename=GFC
254
K201903014&uniplatform=OVERSEA&v=RDZVWbo4dFB0w_ DlbNDwQnhbaLWI2
mRIE9eFLE9PSIXN5WUjcJqaZPFo-fg5W_VC; John Costello and Joe McReynolds,
“China’s Strategic Support Force: A Force for a New Era,” in Phillip C. Saunders et
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15, 2017.
301. People’s Daily, “When Will Humanoid Robots Enter Every Household?” (人形
机器人何时进入千家万户), March 17, 2024. Translation; Jose Antonio Lanz, “AI Re-
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302. People’s Daily, “When Will Humanoid Robots Enter Every Household?” (人形
机器人何时进入千家万户), March 17, 2024. Translation.
303. China’s Ministry of Industry and Information Technology, Notice of the Minis-
try of Industry and Information Technology on Issuing the “Guiding Opinions on the
Innovation and Development of Humanoid Robots” (工业和信息化部关于印发《人形机
器人创新发展指导意见》的通知), October 20, 2023. Translation; Ministry of Industry
and Information Technology, Guiding Opinion on the Innovation and Development
of Humanoid Robots (人形机器人创新发展指导意见), November 2, 2023, Translation;
Yuanyue Dang, “China Says Humanoid Robots Are New Engine of Growth, Pushes
for Mass Production by 2025 and World Leadership by 2027,” South China Morning
Post, November 3, 2023.
304. Evan Ackerman, “Humanoid Robots Are Getting to Work,” IEEE Spectrum,
December 30, 2023; Randal C. Nelson, “Robot Actuators,” University of Rochester.
305. Charlie Kemp, “It Cooks, It Cleans! When Will Robots Be Doing Our Chores?”
Wall Street Journal, Podcast, September 13, 2024; Nick Huber, “ ‘Humanoid’ Robot
Wave Signals Change on the Production Line,” Financial Times, March 26, 2024.
306. Wang Huawei, “Discussing Criminal Liability in the Governance of Human-
oid Robots” (论人形机器人治理中的刑法归责), May 20, 2024. Translation. https://web.
archive.org/web/20241001193945/http://www.chv.org.cn/sjzk/1358.html; Gaze into
the Sky [NetEase Blog], “The Rise of China’s Humanoid Robot Industry Will Replace
the People’s Liberation Army in Performing Tasks, Making the Great Task of Reuni-
fication Easier” (中国人形机器人产业崛起，代替解放军执行任务，让统一大业更轻松),
April 15, 2024. Translation; China’s Ministry of Industry and Information Technology,
Guiding Opinion on the Innovation and Development of Humanoid Robots (人形机器
人创新发展指导意见), November 2, 2023, Translation.
307. Elsa B. Kania, “In Military-Civil Fusion, China Is Learning Lessons from the
United States and Starting to Innovate,” Strategy Bridge, August 27, 2019.
308. Wang Yonghua, “Pay Attention to the Military Application of Humanoid Ro-
bots” (关注人形机器人军事运用), China Military Online, June 13, 2023. Translation;
Guo Bingxin, Zhong Yuhang, and Lei Hongyu, “Popular Science on Chinese Mili-
tary Technology: Do the Ever-Changing Humanoid Robots Dream of Going to the
Battlefield?” (科普中国军事科技]日新月异的类人机器人会梦见上战场吗?), Guangming
Science Popularization, March 28, 2023. Translation; Luo Ling, “ ‘Smart Robot’ Im-
proves Combat Effectiveness” (“灵巧机器人”提升战斗力), PLA Daily, March 8, 2019.
Translation.
309. Wang Yonghua, “Focus on the Military Application of Humanoid Robots” (关
注人形机器人军事运用), China Military Online, June 13, 2023. https://web.archive.
org/web/20240429133710/http://www.81.cn/szb_ 223187/szbxq/index.html?paperN
ame=jfjb&paperDate=2023-06-13&paperNumber=07&articleid=908058; Luo Ling,
“ ‘Smart Robot’ Improves Combat Effectiveness” (“灵巧机器人”提升战斗力), PLA
Daily, March 8, 2019. Translation. https://web.archive.org/web/20200623024514/
http:/military.people.com.cn/n1/2019/0308/c1011-30964831.html; Fu Qianshao, “The
Rise of China’s Humanoid Robot Industry Will Replace the People’s Liberation Army
in Performing Tasks, Making the Reunification Easier” ( 中国人形机器人产业崛起，代
替解放军执行任务，让统一大业更轻松), YouTube, April 17, 2024. Translation.
310. Ryan McMorrow, “China’s Army Tests Gun-Toting Version of Robot Dog,” Fi-
nancial Times, May 30, 2024.
314. Mandy Zuo, “China Wants Humanoid Robots to Automate Aged Care, Handle
Grunt Work as Demographics Shift,” South China Morning Post, July 17, 2024.
315. Che Pan, “Tesla Shows Its Humanoid Robot Optimus at China AI Conference,
but behind Glass,” South China Morning Post, July 5, 2024.
255
316. Goldman Sachs, “The Global Market for Humanoid Robots Could Reach $38
Billion by 2035,” February 27, 2024.
319. Hrvoje Kukina, “Economic Aspects of Progress in Quantum Technologies,”
Stanford Center for Responsible Quantum Technology.
320. Beth Stackpole, “Quantum Computing: What Leaders Need to Know Now,”
Massachusetts Institute of Technology Sloan School of Management, January 11,
2024; Center for Strategic and International Studies, “Is China a Leader in Quantum
Technologies?” August 15, 2023; Sam Howell, “The China-US Quantum Race,” Diplo-
mat, January 13, 2023; John Workman, “Computing Power and the New World Or-
der,” Pathstone, December 10, 2021; Paul Smith-Goodson, “Quantum USA vs. Quan-
tum China: The World’s Most Important Technology Race,” Forbes, October 10, 2019;
Interagency Working Group on Quantum Information Science of the Subcommittee
on Physical Sciences, Advancing Quantum Information Science: National Challenges
and Opportunities, July 2016, 2; IBM, “What Is Quantum Computing.”
321. Arthur Herman, “The Quantum Revolution Is Now,” Hudson Institute, Feb-
ruary 29, 2024; James Andrew Lewis and Georgia Wood, “Quantum Technology: Ap-
plications and Implications,” Center for Strategic and International Studies, May 25,
2023.
322. National Institutes of Health, What Is Quantum Information Science (QIS)?
May 3, 2024; Edward Parker, written testimony for U.S.-China Economic and Securi-
ty Review Commission, Hearing on Current and Emerging Technologies in U.S.-China
Economic and National Security Competition, February 1, 2024, 2; Edward Park-
er, “Commercial and Military Applications and Timelines for Quantum Technology,”
RAND Corporation, 2021, v.
323. Edward Parker, “Commercial and Military Applications and Timelines for
Quantum Technology,” RAND Corporation, 2021, v.
324. BAE Systems, “What Is Quantum Sensing?”
326. McKinsey and Company, “What Is Quantum Computing?” April 5, 2024.
327. Edward Parker, written testimony for U.S.-China Economic and Security Re-
view Commission, Hearing on Current and Emerging Technologies in U.S.-China Eco-
nomic and National Security Competition, February 1, 2024, 3; Center for Strategic
and International Studies, “Is China a Leader in Quantum Technologies?” August
15, 2023.
329. Joelle Carson, “The Next Quantum Revolution,” MIT Spectrum (Spring 2024).
nomic and National Security Competition, February 1, 2024, 4.
331. Edward Parker, written response to question for the record for U.S.-China
Economic and Security Review Commission, Hearing on Current and Emerging
Technologies in U.S.-China Economic and National Security Competition, February
1, 2024, 2.
1, 2024, 3.
334. Jean-François Bobier et al., “Are You Ready for Quantum Communications?”
Boston Consulting Group, March 22, 2023.
335. Edward Parker, written testimony for U.S.-China Economic and Security
Review Commission, Hearing on Current and Emerging Technologies in U.S.-China
Economic and National Security Competition, February 1, 2024, 2; Edward Park-
er, “Commercial and Military Applications and Timelines for Quantum Technology,”
RAND Corporation, 2021, v.
336. Xinhua, “Xi Focus: Xi Stresses Advancing Development of Quantum Science
and Technology,” October 17, 2020.
337. White House, Fact Sheet: Biden-Harris Administration Continues Work to Se-
cure a Post-Quantum Cryptography Future, August 13, 2024.
256
Quantum Technology,” RAND Corporation, 2021, 2.
Economic and National Security Competition, February 1, 2024, 5–6; Edward Parker
et al., “An Assessment of the U.S. and Chinese Industrial Bases in Quantum Technol-
ogy,” RAND Corporation, vii, 84, 86.
340. Edward Parker et al., “An Assessment of the U.S. and Chinese Industrial Bas-
es in Quantum Technology,” RAND Corporation, February 2, 2022, 79.
es in Quantum Technology,” RAND Corporation, February 2, 2022, 84, 86; Origin
Quantum, “About Origin Quantum”; QuantumCTek, “QuantumCTek Headquarters
and Office Locations.”
es in Quantum Technology,” RAND Corporation, vi; National Science and Technology
Council, Committee on Science, National Quantum Initiative Supplement to the Pres-
ident’s FY 2024 Budget, December 2023, 5.
es in Quantum Technology,” RAND Corporation, 44.
347. National Science and Technology Council, Committee on Science, National
Quantum Initiative Supplement to the President’s FY 2024 Budget, December 2023, 3.
348. Nigel Howard et al., “Quantum Computing: Developments in the UK and US,”
Covington Global Policy Watch, August 9, 2024.
es in Quantum Technology,” RAND Corporation, 45–47.
es in Quantum Technology,” RAND Corporation, vi, 46–47.
351. Edward Parker et al., “An Assessment of the U.S. and Chinese Industrial
Bases in Quantum Technology,” RAND Corporation, 49; Quantum Insider, “State of
Quantum Report 2024,” January 29, 2024.
es in Quantum Technology,” RAND Corporation, February 2, 2022, vi.
es in Quantum Technology,” RAND Corporation, February 2, 2022, vi.
es in Quantum Technology,” RAND Corporation, February 2, 2022, 34, 74.
356. Patrick Tucker, “Is China about to Destroy Encryption as We Know It? May-
be,” Defense One, January 20, 2023; Richard Waters, “Chinese Researchers Claim to
Find Way to Break Encryption Using Quantum Computers,” Financial Times, Jan-
uary 4, 2023; Stephen Chen, “Chinese Team Says Quantum Physics Project Moves
Radar Closer to Detecting Stealth Aircraft,” South China Morning Post, September 3,
2021; Jeffrey Lin and P.W. Singer, “China’s Latest Quantum Radar Could Help Detect
Stealth Planes, Missiles,” China Aerospace Studies Institute, July 11, 2018.
357. Zhang Tong, “Chinese Scientists Hack Encryption on Quantum Computer: Pa-
per,” South China Morning Post, October 17, 2024; Mark Tyson, “Chinese Scientists
Use Quantum Computers to Crack Military-Grade Encryption—Quantum Attack
Poses a ‘Real and Substantial Threat’ to RSA and AES,” Tom’s Hardware, October 14,
2024; Wang Chao et al., “Quantum Annealing Public Key Cryptographic Attack Algo-
rithm Based on D-Wave Advantage” (基于D-Wave Advantage的量子退火公钥密码攻击
算法研究), Chinese Journal of Computers 47:5 (May 2024): 1030–1031. Translation.
per,” South China Morning Post, October 17, 2024.
257
361. Craig S. Smith, “Debunking Hype: China Hasn’t Broken Military Encryption
with Quantum,” Forbes, October 16, 2024.
362. Patrick Tucker, “Is China about to Destroy Encryption as We Know It? May-
be,” Defense One, January 20, 2023; Richard Waters, “Chinese Researchers Claim to
Find Way to Break Encryption Using Quantum Computers,” Financial Times, Jan-
uary 4, 2023.
363. Stephen Chen, “Chinese Scientists’ Claims for New Quantum Code-Breaking
Algorithm Raise Eyebrows in the US,” South China Morning Post, January 11, 2023;
Richard Waters, “Chinese Researchers Claim to Find Way to Break Encryption Using
Quantum Computers,” Financial Times, January 4, 2023.
364. Richard Waters, “Chinese Researchers Claim to Find Way to Break Encryp-
tion Using Quantum Computers,” Financial Times, January 4, 2023.
365. Stephen Chen, “Chinese Scientists’ Claims for New Quantum Code-Breaking
Algorithm Raise Eyebrows in the US,” South China Morning Post, January 11, 2023.
366. Global Times, “China-Made Quantum Computing Thermometer Makes
New Temperature Measuring Record, Enhances Tech Self-Reliance,” June 16, 2024;
QuantumCTek, “The Actual Operating Indicators of Guodun Dilution Refrigera-
tor Have Reached the International Mainstream Level” (国盾稀释制冷机实际运行
指标达已达国际主流水平), February 29, 2024. Translation. https://web.archive.org/
web/20240426005816/http://www.quantum-info.com/News/qy/2024/2024/0320/783.
html; Matt Swayne, “Reports: China Mass Producing Dilution Refrigerator Critical
to Superconducting Quantum Computing,” Quantum Insider, February 28, 2024.
367. Anhui Daily, “[Anhui Daily] New Breakthroughs Have Been Made in Key
Domestic Superconducting Quantum Computing Equipment” ([安徽日报]国产超导量
子计算关键设备取得新突破), February 29, 2024. Translation.
368. People’s Daily, “Quantum Computer Core Components Achieve Breakthrough
in Anhui” (量子计算机核心部件在安徽实现突破), May 16, 2024.
369. Dannie Peng, “China Replaces Imported Quantum Computer Component with
Domestic Product Immediately after U.S. Sanctions,” South China Morning Post, May
18, 2024.
Domestic Product Immediately after U.S. Sanctions,” South China Morning Post,
May 18, 2024; People’s Daily, “Quantum Computer Core Components Achieve Break-
through in Anhui” (量子计算机核心部件在安徽实现突破), May 16, 2024. Translation.
Domestic Product Immediately after U.S. Sanctions,” South China Morning Post, May
18, 2024.
372. Zhang Chao, Wang Yuanhe, and Jiang Xuefeng, “Quantum Radar with Vor-
tex Microwave Photons” (涡旋微波量子雷达), Journal of Radars 10:5 (October 2021):
749. Translation. https://web.archive.org/web/20220803174543/https://radars.ac.cn/
cn/article/doi/10.12000/JR21095; Stephen Chen, “Chinese Team Says Quantum
Physics Project Moves Radar Closer to Detecting Stealth Aircraft,” South China
Morning Post, September 3, 2021; Xinhua, “My Country’s First Single-Photon De-
tection Quantum Radar Prototype Debuts at Zhuhai Air Show” (我国首部单光子检测
量子雷达样机亮相珠海航展), November 8, 2018. Translation. https://web.archive.org/
web/20220924060018/http://www.xinhuanet.com/politics/2018-11/08/c_1123684731.
htm.
373. Xinhua, “My Country’s First Single-Photon Detection Quantum Radar Pro-
totype Debuts at Zhuhai Air Show” (我国首部单光子检测量子雷达样机亮相珠海航展),
November 8, 2019. Translation.
374. Zhang Chao, Wang Yuanhe, and Jiang Xuefeng, “Quantum Radar with Vortex
Microwave Photons” (涡旋微波量子雷达), Journal of Radars 10:5 (October 2021): 749.
Translation; Stephen Chen, “Chinese Team Says Quantum Physics Project Moves
Radar Closer to Detecting Stealth Aircraft,” South China Morning Post, September
3, 2021.
375. Stephen Chen, “Chinese Team Says Quantum Physics Project Moves Radar
Closer to Detecting Stealth Aircraft,” South China Morning Post, September 3, 2021;
Adrian Cho, “The Short, Strange Life of Quantum Radar,” Science, September 25,
2020.
nomic and National Security Competition, February 1, 2024, 3–4; Victoria Bela, “Chi-
na and Russia Test ‘Hack-Proof’ Quantum Communication Link for Brics Countries,”
South China Morning Post, December 30, 2023; Aleksandr V. Khmelev et al., “Eur-
asian-Scale Experimental Satellite-Based Quantum Key Distribution with Detector
Efficiency Mismatch Analysis,” October 27, 2023, 1, 8; Center for Strategic and In-
ternational Studies, “Is China a Leader in Quantum Technologies?” August 15, 2023;
258
China Daily, “World’s First Integrated Quantum Communication Network,” January
7, 2021; Yu-Ao Chen et al., “An Integrated Space-to-Ground Quantum Communica-
tion Network over 4,600 Kilometers,” Nature 589 (January 2021): 214. https://web.
archive.org/web/20240425202242/https://subsites.chinadaily.com.cn/nccst/2021-
01/07/c_668029.htm.
377. Juljan Krause, “The Quantum Race: U.S.-Chinese Competition for Leadership
in Quantum Technologies,” University of California Institute on Global Conflict and
Cooperation, February 28, 2024, 1, 4; Edward Parker, oral testimony for U.S.-Chi-
na Economic and Security Review Commission, Hearing on Current and Emerging
1, 2024, 172; John Costello, written testimony for U.S.-China Economic and Security
Review Commission, Hearing on China’s Pursuit of Next Frontier Tech: Computing,
Robotics, and Biotechnology, March 16, 2017, 5–6; Ma Jia, “Eavesdropping, Invisible
Radio Waves” (窃听, 看不见的电波), China Science News, November 9, 2013. Transla-
tion.
nomic and National Security Competition, February 1, 2024, 3–4.
Economic and National Security Competition, February 1, 2024, 3–4; Yu-Ao Chen et
al., “An Integrated Space-to-Ground Quantum Communication Network over 4,600
Kilometers,” Nature 589 (January 2021): 214; China Daily, “World’s First Integrated
Quantum Communication Network,” January 7, 2021.
nomic and National Security Competition, February 1, 2024, 4; Stephen Chen, “China
Launches New Satellite in ‘Important Step’ towards Global Quantum Communica-
tions Network,” South China Morning Post, July 27, 2022.
nomic and National Security Competition, February 1, 2024, 4; Victoria Bela, “China
and Russia Test ‘Hack-Proof’ Quantum Communication Link for BRICS Countries,”
South China Morning Post, December 30, 2023; Aleksandr V. Khmelev et al., “Eur-
asian-Scale Experimental Satellite-Based Quantum Key Distribution with Detector
Efficiency Mismatch Analysis,” October 27, 2023, 1, 8.
382. U.S. Department of Commerce, Commerce Adds 37 PRC Entities to Entity List
for Enabling PRC Quantum and Aerospace Programs, Aiding Russian Aggression in
Ukraine, May 9, 2024; U.S. Department of Commerce, Commerce Lists Entities In-
volved in the Support of PRC Military Quantum Computing Applications, Pakistani
Nuclear and Missile Proliferation, and Russia’s Military, November 24, 2021.
383. U.S. Department of Commerce, Addition of Entities and Revision of Entries
on the Entity List; and Addition of Entity to the Military End-User (MEU) List, No-
vember 26, 2021; Chris Sanders, “China Criticizes U.S. for Putting Chinese Firms on
Trade Blacklist,” Reuters, November 25, 2021; U.S. Department of Commerce, Com-
merce Lists Entities Involved in the Support of PRC Military Quantum Computing
Applications, Pakistani Nuclear and Missile Proliferation, and Russia’s Military, No-
vember 24, 2021.
384. U.S. Department of Commerce, Commerce Adds 37 PRC Entities to Entity List
for Enabling PRC Quantum and Aerospace Programs, Aiding Russian Aggression in
Ukraine, May 9, 2024.
385. U.S. Department of Commerce, Department of Commerce Implements Controls
on Quantum Computing and Other Advanced Technologies Alongside International
Partners, September 5, 2024, 2.
on Quantum Computing and Other Advanced Technologies Alongside International
Partners, September 5, 2024; Kevin Wolf, written testimony for U.S.-China Economic
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398. U.S. Department of Commerce Bureau of Industry and Security, “Commerce
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445. BGI, “BGI History,” April 5, 2024; Ken Dilanian, “Congress Wants to Ban Chi-
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447. Kristy Needham and Clare Baldwin, “China’s Gene Giant Harvests Data from
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458. Karen Hao and Sha Hua, “The U.S. Is Turning Away from Its Biggest Scien-
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460. BGI Americas, “History,” 2015; Christina Larson, “Inside China’s Genome Fac-
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484. Kevin Dong et al. “China’s Food Security: Key Challenges and Emerging Poli-
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499. Office of the U.S. Trade Representative, 2021 Report to Congress on China’s
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513. U.S. National Counterintelligence and Security Center, China’s Collection of
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516. Jeb Nadaner, written testimony for the U.S.-China Economic and Security
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518. Gracelin Baskaran, “What China’s Ban on Rare Earths Processing Technology
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519. Jack Aylmer, “An Electric Vehicle Future Needs Batteries. China Is Dominat-
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520. Akshat Rathi, “How China Left the World Far Behind in the Battery Race,”
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521. Jeb Nadaner, “Building China-Resistant Battery Supply Chains,” Govini;
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523. Phoebe Sedgman, Jinshan Hong, and Linda Lew, “China’s Stranglehold on EV
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524. China’s Ministry of Industrial Information and Security, Ministry of Science
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527. Congressional-Executive Commission on China, Hearing on Cobalt to Cars:
How China Exploits Child and Forced Labor in the Congo, November 14, 2023; Yu-
dith Ho and Eko Listiyorini, “Chinese Companies Are Flocking to Indonesia for Its
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528. Jackie Northam, “China Dominates the EV Battery Industry. Can the Rest of
the World Catch Up?” NPR, July 22, 2023.
529. Yudith Ho and Eko Listiyorini, “Chinese Companies Are Flocking to Indonesia
for Its Nickel,” Bloomberg, December 1, 2022; Reuters, “China’s Huayou Buys Lithium
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266
mission on China, Hearing on Cobalt to Cars: How China Exploits Child and Forced
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530. Polly Bindman, “Weekly Data: China Seeks to Extend Its Critical Minerals
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531. Polly Bindman, “Weekly Data: China Seeks to Extend Its Critical Minerals
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532. International Energy Agency, “14th FYP for Raw Material Industry Devel-
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534. Farai Mutsaka, “A Chinese Mining Company Has Opened a Giant Lithium
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535. Rodrigo Castillo and Caitlin Purdy, “China’s Role in Supplying Critical Miner-
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536. Rodrigo Castillo and Caitlin Purdy, “China’s Role in Supplying Critical Miner-
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537. Kenji Kawase, “China Gives EV Sector Billions of Yuan in Subsidies,” Nikkei
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538. European Commission, Commission Implementing Regulation (EU) 2024/1866
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541. Evelyn Cheng, “China Has Spent at Least $230 Billion to Build Its EV In-
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542. Kenji Kawase, “China Gives EV Sector Billions of Yuan in Subsidies,” Nikkei
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543. Contemporary Amperex Technology Co., Ltd., “CATL Tops Global EV Battery
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544. Agnes Chang and Keith Bradsher, “Can the World Make an Electric Car Bat-
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545. Peter Johnson, “CATL Establishes Aviation Unit as It Moves Closer to Elec-
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548. Jill Shen, “China’s GAC Declares a Breakthrough in All-Solid-State Battery
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550. Fortune Business Insights, “Electric Vehicle Market Size, Share & Covid-19
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551. Daniel Ren, “Who Powers the World’s EVs? China Has 6 of the Top 10 EV
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553. Agnes Chang and Keith Bradsher, “Can the World Make an Electric Car Bat-
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558. Nikkei, “Tesla Relies on China for 40% of Battery Supply Chain: Analysis,”
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559. Stephen Ezell, “How Innovative Is China in the Electric Vehicle and Battery
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560. Paolo Gerbaudo, “The Electric Vehicle Developmental State,” Phenomenal
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561. Economic Times, “China’s BYD Launches World’s Biggest Battery Factory,”
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562. Benchmark Source, “BYD Secures Lithium Discount after Buying Stake in
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563. Tsvetana Paraskova, “China Heavily Subsidized BYD to Expand Its EV Mar-
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CHAPTER 4: UNSAFE AND UNREGULATED
CHINESE CONSUMER GOODS: CHALLENGES IN
ENFORCING IMPORT REGULATIONS
AND LAWS
Abstract
The rapid escalation of e-commerce sales impedes U.S. efforts
to ensure the safety and regulatory compliance of consumer
products flooding the market from China. These new channels,
combined with China’s reinvigorated focus on export manufactur-
ing as a pillar of economic growth, mean that Chinese factories
will remain major suppliers across the consumer products space.
Though the quality of goods sourced from China has improved
somewhat over the past two decades as a result of increased due
diligence and monitoring on the factory floor, significant excep-
tions remain, and overall product quality and safety still fall short
of U.S. standards. Many Chinese companies that disregard manu-
facturing best practices utilize cross-border e-commerce channels
to send products directly to consumers under a de minimis ex-
emption that provides duty-free entry for small parcel shipments.
A continually rising flood of small parcels at U.S. ports of entry
compounds the difficulty of detecting potentially risky products
before they reach households and children. Holding Chinese man-
ufacturers and exporters accountable remains challenging—if not
virtually impossible—under the Xi regime. Moreover, China is
home to the world’s largest counterfeiting industry, harming not
only U.S. businesses but also consumers who face increased safe-
ty risks from shoddily made imitations. Accurate data on consum-
er product imports are crucial to enforcement, but an increased
number of Chinese exporters are seeking to exploit loopholes in
U.S. law and disguise the nature and/or origins of their imports
to dodge higher tariffs on products from China.
Key Findings
• China aims to continue growing its manufacturing sector,
leading to further industrial overcapacity and a surge in ex-
ports. Chinese manufacturers have, in general, improved in
quality and reliability over the past decade, owing in part
to increased enforcement by Chinese authorities domesti-
cally and increased due diligence by foreign firms. Howev-
er, the scale and dynamism of China’s manufacturing sector
means regulators in the United States struggle to respond
to emergent product safety issues. New online platforms and
the multitude of third-party e-commerce sellers and resellers
compound these issues.
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272
• U.S. regulators are overwhelmed by the volume of imports ar-

riving from China, and they are only able to inspect a small
fraction of imports, potentially leaving large numbers of unsafe
or illegal goods to enter the U.S. market daily.
• Unscrupulous China-based sellers lack the diligence, capacity,
and skill required to produce high-quality goods that meet U.S.
safety regulations, thus increasing U.S. consumers’ exposure to
risks stemming from unsafe, counterfeit, and poor-quality goods
from China. These deceptive tactics by Chinese producers are
particularly concerning in industries such as batteries and med-
ical products, where defective products pose potentially debili-
tating or deadly consequences.
• U.S. import regulators face significant challenges in monitoring
the growing volume of Chinese e-commerce shipments specifi-
cally, which typically enter under a de minimis exemption that
provides duty-free treatment for parcels valued under $800.
The growth of smaller, China-based sellers on U.S. e-commerce
sites and the rising popularity of Chinese e-commerce platforms
present a novel and growing risk to U.S. consumers and the
ability to enforce safety regulations and other laws. Insufficient
data, personnel, and overwhelming volume mean these ship-
ments receive less scrutiny.
• Some Chinese companies have tried to circumvent normal U.S.
customs channels in response to tariffs and other U.S. laws.
Though the true scale of customs fraud is unknowable, some ac-
tors are using illegal tactics such as transshipment, circumven-
tion, and import undervaluation to evade paying customs duties.
These tactics worsen the information available to U.S. agencies,
increasing the challenge of identifying hazardous imports.
Recommendations
• With respect to imports sold through an online marketplace,
known as the “de minimis” exemption), which allows goods val-
ued under $800 to enter the United States duty free and, for
all practical purposes, with less rigorous regulatory inspection.
Congress should provide U.S. Customs and Border Protection
adequate resources, including staff and technology, for imple-
mentation, monitoring, and enforcement.
• Congress amend the Consumer Product Safety Act to (1) grant
the U.S. Consumer Product Safety Commission (CPSC) unilat-
eral mandatory recall authority over products where the Chi-
nese seller is unresponsive to requests from the CPSC for fur-
ther information or to initiate a voluntary recall and the CPSC
has evidence of a substantial product hazard, defined as either
failing to comply with any CPSC rule, regulation, standard, or
ban or posing a substantial risk of injury to the public; and (2)
classify Chinese e-commerce platforms as distributors to allow
for enforcement of recalls and other safety standards for prod-
ucts sold on these platforms.
273
• Congress direct the U.S. Department of Homeland Security

and U.S. Customs and Border Protection, in conjunction with
the U.S. Department of Commerce, to develop assessment
tools capable of identifying the true origins of parts, com-
ponents, and materials contained in products entering the
United States to prevent tariff evasion and limit safety and
security risks in light of the increasing complexity of global
supply chains.
• Congress require that the U.S. Trade Representative, in consul-
tation with the U.S. Department of Commerce, the U.S. Inter-
national Trade Commission, and other entities, as appropriate,
prepare a comprehensive report within 90 days on the operation
of the U.S.-Mexico-Canada Trade Agreement since its entry into
force that provides data and information on:
○ Chinese-affiliated investments in Mexico and Canada and spe-
cific information on their production of goods and how those
goods may enter the U.S. market either as finished products
or as components in other products;
○ Trade flows of products produced in China to Mexico and
Canada and how such trade flows have changed;
○ Prices of products produced in China shipped to Mexico and
Canada as well as products shipped through those countries
to the United States and how those prices relate to the prices
of such goods shipped directly into the U.S. market; and
○ Trade enforcement actions by Mexico and Canada regard-
ing Chinese-produced products (including those transshipped
through third countries’ markets) and how such actions relate
to U.S. trade enforcement actions.
• Congress amend applicable laws to mandate that online mar-
ketplaces clearly disclose on product listings for Chinese-made
goods the name, physical address, and contact information for
the manufacturer. The online marketplaces should also be re-
quired to clearly display a warning label that the item is man-
ufactured in a country that does not comply with U.S. consumer
safety standards.
• Congress direct the U.S. Government Accountability Office to
investigate the reliability of safety testing certifications for con-
sumer products and medical devices imported from China.
Introduction
According to data provided by the U.S. Census Bureau, the Unit-
ed States imported $426.9 billion in goods from China in 2023, al-
though this undercounts e-commerce sales.1 Everything from water
heaters to consumer electronic products to pool drain covers and
children’s toys are made in factories across China and then shipped
into the U.S. market. In most cases, these Chinese-made products
present minimal to no health and safety risks to U.S. consumers,
in part due to efforts by U.S.-based importers and retailers to vet
and monitor the quality of manufacturing taking place in China.
However, changing consumption patterns and marketing and sell-
274
ing strategies by Chinese firms are increasingly exposing U.S. con-

sumers to poorly made and poorly regulated goods from China. A
large and increasing portion of imports from China comes from on-
line shopping—and specifically by the purchase of consumer goods
through e-commerce platforms with direct delivery to homes. These
platforms directly connect U.S. consumers to China-based manufac-
turers that often lack the diligence, capacity, and skill required to
produce high-quality goods that meet U.S. safety regulations. More-
over, since these firms are based in China, they generally lie outside
the reach of U.S. regulators, courts, and law enforcement agencies.
They are therefore able to sell unsafe goods directly into the U.S.
market and are unlikely to ever be held accountable for the harm
these products cause. These problems are further compounded by
the limited capacity to monitor the millions of small parcels that
enter the U.S. market duty free each day under a de minimis exemp-
tion.* As a result, billions of dollars of potentially unsafe, hazardous,
and even deadly goods are shipped from China directly to the door-
steps of U.S. homes every year, presenting a risk to U.S. consumers
and firms alike.
U.S. information on imports from China is hampered by illegal
and duplicitous behavior by some Chinese exporters. Billions of dol-
lars’ worth of counterfeit goods from China are seized each year by
U.S. customs authorities, although this is likely just a fraction of the
knockoff goods sold into the U.S. market. In addition to infringing
on intellectual property rights (IPR) and causing financial and repu-
tational harm to U.S. businesses, Chinese counterfeits may lack the
safety features and materials of legitimate products, posing hazards
to U.S. consumers from toxic materials and other risks. Parallel to
this behavior, an increased number of exporters are seeking to avoid
or evade U.S. customs duties. Recent U.S. trade actions taken since
2018 resulted in increased tariffs on two-thirds of goods entering
the U.S. market from China, creating an increased financial incen-
tive to game the U.S. import process and mitigate tariff burdens.
Though the true scale of illegal behavior is unknowable, anecdotal
evidence suggests a rising number of companies are employing tac-
tics like transshipment, circumvention, and evasion to avoid tariffs,
amplifying the challenges facing U.S. customs officials.
This chapter begins with an overview of the challenges in assur-
ing the quality of China-based producers, which are amplified by the
scale of China’s manufacturing sector as well as challenges in en-
suring the quality of goods from China-based producers. The chapter
considers the difficulties of enforcing tariffs and regulations on Chi-
nese imports at the border and the tactics used to evade detection.
The chapter then examines the safety and reliability of goods from
China and considers the challenges U.S. regulators face in monitor-
* On September 13, 2024, the Biden Administration announced that it intended to release two
Notices of Proposed Rulemaking that would modify the de minimis exemption. These include
rules that would make goods subject to tariffs under Section 232 of the Trade Expansion Act of
1962 as well as Section 201 and Section 301 of the Trade Act of 1974 ineligible for de minimis
entry and expand the information required on de minimis customs invoices. The Biden Adminis-
tration also announced that the U.S. Consumer Product Safety Commission plans to propose a fi-
nal rule that requires all importers of consumer products to electronically file product certificates,
which attest that a product complies with U.S. product safety laws and regulations. As of October
11, 2024, these rulemakings have not been released. White House, Biden-Harris Administration
Announces New Actions to Protect American Consumers, Workers, and Businesses by Cracking
Down on De Minimis Shipments with Unsafe, Unfairly Traded Products, September 13, 2024.
275
ing imports from China. This portion also pays special attention to
the impact e-commerce has on consumer product safety and U.S.
regulators’ burdens. This chapter draws on the Commission’s 2024
hearing on “Consumer Products from China: Safety, Regulations,
and Supply Chains,” consultations with policy experts, and open
source research and analysis.
U.S. Consumer Product Sourcing from China
The sheer volume of products entering from China poses a fun-
damental challenge to the effective enforcement of U.S. laws, reg-
ulations, and trade measures. This issue is especially acute in the
consumer products sector, which constitutes roughly half of China’s
exports to the United States.2 China is the largest source of con-
sumer goods for the United States, accounting for over 25 percent
of U.S. consumer product imports in 2023.3 This total, amounting to
$210.2 billion, exceeded the combined value of consumer products
sourced from the United States’ next four largest trading partners.4
Chinese producers likely have an even larger role in the consumer
products space than these data indicate, as they undercount e-com-
merce shipments and also do not reflect China’s expanding role as
a supplier of manufacturing inputs. China’s export manufacturing
capacity will likely expand further as China’s government focuses
on export manufacturing as a pillar of economic growth amid the
economy’s slowdown. (For more, see Chapter 1, “U.S.-China Econom-
ic and Trade Relations (Year in Review).”) As a consequence, the
manufacturing practices and standards of Chinese manufacturers
will continue to have an outsized impact on the safety and quality
of goods for sale in the U.S. market.
In addition to this overwhelming volume of goods, U.S. regulators
are also sifting through a growing number of factories in China that
are sending goods into the U.S. market. The number of companies
in China involved in its traded goods sector grew 29 percent be-
tween 2019 and 2023, with over 645,000 businesses in China under-
taking either import or export activities by the end of 2023.5 This
growth was partly driven by an acceleration in direct-to-consumer
e-commerce trade, which expanded during the COVID-19 pandemic
as quarantine measures pushed consumers to rely more on online
channels for shopping.6 According to China’s customs agency, total
e-commerce exports have grown from $92 billion in 2018 to $262
billion in 2023, increasing 36 percent on average each year.7 E-com-
merce trade now accounts for 7.7 percent of China’s overall exports.8
In 2023, China reported that more than 100,000 different companies
participated in cross-border e-commerce transactions.9 The United
States is the largest export market for China-based e-commerce sell-
ers.10 Chinese e-commerce firms sent $97.9 billion in goods to the
United States in 2023, equivalent to nearly 20 percent of China’s
total U.S.-bound exports, according to China’s customs agency.* 11
* The United States does not produce an official estimate on imports that were sold through an
e-commerce platform. Many, but not all, e-commerce shipments enter under the United States’
de minimis exemption, which provides duty-free treatment for parcels valued under $800. U.S.
Customs and Border Protection reports that de minimis imports from China totaled $10.4 billion
in fiscal year 2021 (the most recent year showing shipments by country), but this estimate may
be unreliable due to the difficulty in recording and verifying the value of individual parcels.
George Serletis, “U.S. Section 321 Imports Surge with Rising E-Commerce Shipments from Chi-
na,” U.S. International Trade Commission, November 2023; Josh Zumbrun, “The $67 Billion Tariff
276
The growth in firms selling directly to U.S. consumers poses a chal-

lenge for U.S. regulators in monitoring imports, enforcing U.S. reg-
ulations, and identifying bad actors.* Additionally, U.S. businesses
that source products from China-based manufacturers continue to
encounter difficulties due to unscrupulous tactics employed by some
Chinese manufacturers.
Challenges in Ensuring the Quality of China-Based Producers
Many foreign firms hire quality control (QC) inspectors in China
to ensure Chinese manufacturers meet global standards; however,
corruption and gamesmanship frequently undermine the integri-
ty of these inspections. Corruption in the QC inspection process is
a common issue facing foreign firms seeking to produce in China.
Some Chinese factory owners attempt to influence QC inspectors
through a variety of means, from overt cash offers to more subtle
forms of compensation like free entertainment.12 In addition, QC
inspectors themselves may seek to extort suppliers by threatening
to submit an unfavorable report unless the supplier offers compen-
sation.13 Attempted and realized extortion by both inspectors and
suppliers adds uncertainty to U.S. firms’ assessments of Chinese
manufacturers’ production quality. U.S. firms looking to conduct
regular QC inspections in China must therefore carefully vet and
rotate inspectors to avoid this risk, a process that adds time and
cost to production.14 In addition, there is a cottage industry of con-
sultants in China helping factories pass inspections by any means
necessary. In 2021, the South China Morning Post investigated
these consultants by placing an ad for a fictitious factory looking
for help selling to European buyers.15 One Shanghai-based consul-
tant responded to the ad by saying, “As long as you cooperate, keep
the troublemakers out of the factory on inspection day, and make
sure workers follow our guidance on answering questions, we will
guarantee you pass.” 16 Beyond coaching employees, these consul-
tants can provide forged records and time cards and can even bring
auditors to a “show factory”—a different plant that is more aligned
with “Western” production standards.17
Even when a U.S. firm believes it has found a quality manufac-
turer, it can be difficult to ensure that Chinese producers continue
to adhere to contractually agreed-upon standards. Some foreign pur-
chasers experience quality fade, a phenomenon where a manufac-
turer begins cutting corners to reduce costs and increase profits, re-
sulting in decreased product quality. AsiaInspection,† a third-party
QC service, analyzed data on thousands of in-factory quality checks
from 2018 and found that 26 percent of made-in-China products
were manufactured outside of quality specifications.18 In addition to
variance in product quality, U.S. purchasers reportedly face the risk
Dodge That’s Undermining U.S. Trade Policy,” Wall Street Journal, April 25, 2022; U.S. Customs
and Border Protection, Section 321 De Minimis Shipments: Fiscal Year 2018 to 2021 Statistics,
October 2021.
* One method used by the U.S. Consumer Product Safety Commission, which is charged with
enforcing U.S. product safety rules and regulations, to identify hazardous imports is to screen
for entities that have previously violated U.S. regulations or that have not previously imported
regulated products. Jim Joholske, written response to questions for the record for the U.S.-China
Economic and Security Review Commission, Hearing on Consumer Products from China: Safety,
Regulations, and Supply Chains, March 1, 2024, 2.
† AsiaInspection is now called QIMA.
277
of their Chinese manufacturers suddenly going out of business.19

Chinese producers—particularly those operating in low-tech, la-
bor-intensive industries like textiles, clothing, shoes, and toys—face
rising competition from other countries with low-wage manufactur-
ing, like Vietnam.20 As Dan Harris, founder of the international law
firm Harris Sliwoski, observes, some Chinese manufacturers have
suddenly gone out of business without informing their U.S. purchas-
er, leaving the U.S. firm without a supplier and sometimes without
the product they purchased.21 The number of bankruptcies in China
has risen since 2016, when the Party-state launched a deleveraging
campaign to curtail lending from the “shadow” or informal banking
system.* According to aggregated statistics provided by China’s Su-
preme People’s Court, the number of bankruptcy filings accepted in
Chinese courts increased from roughly 5,000 filings in 2016 to more
than 15,000 in 2021.† 22
U.S. firms’ ability to seek relief for unsatisfactory production is
further undermined by the China Export & Credit Insurance Cor-
poration, or Sinosure, which appears to engage in extorting foreign
firms.23 Sinosure is China’s only state-owned policy-oriented credit
insurer, and as a result, it enjoys a strong position in the export
credit insurance market.24 Sinosure facilitates trade with China by
providing insurance to Chinese manufacturers that sell to foreign
purchasers on credit; if a foreign purchaser defaults on payment,
Sinosure will compensate the Chinese manufacturer.25 However,
according to Mr. Harris, issues with this system arise when Chi-
nese manufacturers deliver poor-quality or hazardous goods and
the foreign purchaser refuses to pay the balance owed or requests
new products. The Chinese manufacturer contacts Sinosure, which
then demands payment from the foreign purchaser on behalf of the
manufacturer, threatening to sue the purchaser in either China
or their home country. Mr. Harris testified before the Commission
that in some cases, Sinosure will put the foreign purchaser on a
blacklist and refuse to provide insurance to Chinese manufactur-
ers seeking to supply to that purchaser.26 The foreign purchaser
must then either pay for all its products in full up front and accept
greater risk of being defrauded by the manufacturer or else effec-
tively be banned from purchasing Chinese exports. Left with few
options, many foreign purchasers end up paying for the defective
and sometimes even undelivered products.27 Mr. Harris argues that
Sinosure’s aggressive approach to repayment effectively subsidizes
low-quality Chinese manufacturers.28 Meanwhile, U.S. businesses
* Shadow banking refers to banking services that are provided by non-bank financial institu-
tions outside of the regulatory structure of the formal banking system. China’s shadow banking
sector ballooned after 2009 as banks channeled funds to off-balance-sheet entities to circumvent
restrictions on credit growth, and informal or non-bank lending accounted for 31 percent of total
credit growth between 2012 and 2016. As China started to regulate these channels and tighten
access to credit after 2016, many borrowers from shadow banks were suddenly cut off from new
credit, and rising default rates forced China’s banking system to absorb a growing volume of
non-performing assets. This had the effect of raising borrowing costs economy-wide and squeez-
ing non-state firms’ access to new credit as banks sought to avoid taking on new credit risk by
charging higher interest rates. This impacted businesses’ capacity to refinance or roll over debt,
contributing to rising defaults. Logan Wright, “Grasping Shadows: The Politics of China’s Delever-
aging Campaign,” Center for Strategic and International Studies, April 2023.
† Chinese bankruptcy data understate the number of defunct companies, as many smaller com-
panies choose to settle with creditors outside of court. China has established new specialized
bankruptcy courts across China since 2019 in an effort to improve the bankruptcy process and
reduce delays and other frictions in bankruptcy proceedings. Bo Li and Jacopo Ponticelli, “Going
Bankrupt in China,” Review of Finance 26:3 (2022): 456–458, 466.
278
and consumers may struggle to sue a Chinese counterparty in both

U.S. and Chinese courts.* 29
Challenges to Tariff Enforcement at the Border
The China Section 301 tariff actions are unprecedented in the re-
cent history of U.S. trade policy. The United States has not previous-
ly raised import duties on such a large volume of imports sourced
from a single country. Since 2018, U.S. Customs and Border Protec-
tion (CBP) has assessed $231 billion in Section 301 duties on im-
ports from China, roughly equivalent to $39 billion per year.30 This
exceeds the $35 billion in duties collected by CBP in fiscal year (FY)
2017 from all countries across all trade duties and remedies.31 These
duties created a significant financial incentive for firms to reduce
their tariff burden, including through legal offramps from paying
import duties and through tactics to evade tariffs illegally. Firms’
attempts to utilize exceptions and exploit gaps in tariff enforcement
have created acute challenges for U.S. customs authorities.
Chinese Exporters Use Small Parcel Shipments to Avoid U.S.
Import Duties
Since 2017, cross-border e-commerce trade between the United
States and China has surged as Chinese exporters take advantage
of the de minimis customs exemption to avoid Section 301 tariffs
and other import duties, violating the original intent of the law.†
The de minimis rule is a provision in U.S. law that authorizes the
customs authority to waive most import duties on shipments im-
ported by “one person on one day,” provided that the combined value
of the shipments is less than $800.32 In contrast, China’s own de
minimis threshold is less than $10.33 (For more, see Appendix I,
“United States’ Top 15 Trading Partners’ De Minimis Thresholds.”)
Between FY 2018 and FY 2023, the annual volume of de minimis
imports from all countries more than doubled to reach one billion
small parcels (see Figure 1).34 By comparison, the number of ship-
ments entering the U.S. market through formal customs channels,
which excludes de minimis entries but includes containers offloaded
at ports, increased only 4.9 percent from 35 million in FY 2018 to
36.7 million in FY 2023.‡ 35 The volume of de minimis shipments
has continued to grow disproportionately, with an average of nearly
* For more on China’s selective enforcement of contract law, see U.S.-China Economic and Secu-
rity Review Commission, Chapter 2, Section 1, “Rule by Law: China’s Increasingly Global Legal
Reach,” in 2023 Annual Report to Congress, November 2023, 175–222.
† The de minimis exemption was introduced in 1938 as an amendment to the Tariff Act of
1930. The exemption was intended to exempt low-value shipments from standard customs proce-
dures, where the administrative costs of collecting tariffs would otherwise outweigh the revenue
generated. The threshold was initially set at $5 for bona fide gifts and souvenirs and other
items acquired abroad by travelers and $1 for all other cases, including commercial merchandise.
Congress raised the latter threshold to $5 in 1978 before increasing it to $200 in the Customs
Modernization Act of 1994. It was raised to the current level of $800 in the Trade Facilitation and
Trade Enforcement Act of 2015, which was aimed at facilitating cross-border e-commerce trade
for small foreign sellers on platforms such as eBay. Charles Benoit, “ ‘De Minimis’ in Customs
Law: How Express Shippers Turned an Administrative Customs Provision into an Instrument of
Economic Devastation and Lawlessness at Ports,” Coalition for a Prosperous America, November
2021, 3, 5, 7–8.
‡ An importer is required to file an entry summary to enter merchandise into U.S. commerce,
which CBP uses to assess whether the cargo is admissible and determine the duties owed. Gen-
erally, an importer can either file a formal entry or, if the merchandise is valued under $2,500,
file an informal entry and make use of simplified customs procedures. Shipments valued under
$800 may be eligible for de minimis entry, and importers do not need to file entry summaries.
Informal Entry Procedures, 19 C.F.R. § 128.24, 2016.
279
four million de minimis shipments entering the United States each

day between October 2023 and June 2024.36 The majority of these
packages were likely imported from China. In FY 2021—the most
recent period for which CBP has produced country-level data—im-
ports from China accounted for 58 percent of the total 771 million
de minimis entries.37
Figure 1: Volume of U.S. De Minimis Imports from China
(FY 2018–FY 2023)
1,000
900
800
700
Millions of parcels
600
500
400
300
200
100
Total de minimis imports De minimis imports from China
Note: CBP has only published data on China’s share of de minimis imports up to FY 2021. The
projection for Chinese shipments after FY 2022, shown by the dotted line segment, is based on
the ratio of Chinese de minimis packages to total de minimis imports in FY 2021. Given the
rapid growth of Chinese e-commerce platforms Shein and Temu in recent years, using FY 2021
as a baseline likely underestimates the current volume of de minimis shipments from China.
Source: U.S. Customs and Border Protection, E-Commerce, August 22, 2024; U.S. Customs and
Border Protection, Section 321 De Minimis Shipments: Fiscal Year 2018 to 2021 Statistics, Oc-
tober 2022, 3.
The surge in de minimis imports coincided with both an expan-

sion in U.S. e-commerce consumption during the COVID-19 pandem-
ic and the imposition of the China Section 301 duties. This suggests
some Chinese firms utilized direct-to-consumer e-commerce channels
to avoid paying higher tariffs. Products targeted by most U.S. trade
remedies, including Section 301 tariffs, remain eligible for duty-free
treatment under the de minimis exemption, provided shipments
meet the $800 value threshold.38 Products subject to an antidump-
ing and countervailing duty (AD/CVD) order, though, are not eligible
for de minimis entry.39 Chinese companies in sectors heavily target-
ed by U.S. Section 301 duties have utilized e-commerce channels to
avoid paying duties. The apparel sector is illustrative. The Section
301 tariff actions applied a 7.5 percent tariff to 90 percent of U.S.
apparel imports from China (relative to 2017 import levels).40 The
280
Chinese fast-fashion company Shein has since developed expansive

logistics operations based on using small parcel shipments that fall
below the de minimis threshold.41 Along with the Chinese e-com-
merce platform Temu, these companies are estimated to account for
over half of all de minimis shipments from China.42 In total, one
study estimates that as a result of de minimis imports, $7.8 billion
in duties were avoided in 2021, equivalent to 9.2 percent of total
duties collected that year.43
The de minimis exemption also allows Chinese exporters to use
fulfillment centers and warehouses in Mexico and Canada to “wash”
bulk shipments of tariffs. CBP evaluates the “one person on one day”
condition at the time of importation to the United States, meaning
Chinese exporters can place goods in a bonded warehouse across
the U.S. border until it makes a sale through a direct-to-consumer
e-commerce channel.* 44 This enables exporters to use ocean-borne
shipping to transport Chinese products in bulk to bonded warehous-
es located in Canada or Mexico before breaking the containerized
shipment into individual parcels that fall below the U.S. de minimis
threshold.† 45 Though CBP has not published data on the volume
of Chinese de minimis packages entering indirectly through bor-
der warehousing, data on truck-borne de minimis imports suggest
a growing number of firms are taking advantage of such schemes.
Between FY 2020 and FY 2023, de minimis packages carried by
truck into the United States grew from 97 million to 170 million
and now make up nearly 20 percent of all de minimis bills of lad-
ing.46 Although Canadian and Mexican products likely constitute a
significant portion of these imports given these producers’ proximity
to the U.S. border, the volume of de minimis packages that enter
via overland routes still exceeds the combined number of parcels
sourced from these two U.S. neighbors.‡ Instead, tens of millions of
these packages were likely sourced from other overseas countries
utilizing warehousing schemes.47
CBP has the authority to adjust the de minimis exemption with-
out additional legislation. The statute underlying the de minimis
exemption—Section 321 of the Tariff Act of 1930—authorizes CBP
to waive duties on shipments valued under $800, but it can also
create rules to deny de minimis treatment when it “is necessary for
any reason to protect the revenue or to prevent unlawful importa-
tions.” 48 Elizabeth Drake, partner at Schagrin Associates, testified
before the Commission that CBP “already has the discretion to deny
* Bulk shipments sent directly to a U.S.-based bonded warehouse or free trade zone are not
eligible for the de minimis exemption, as the receiving entity is considered the importer of record
for the purposes of determining the “one person.” U.S. International Trade Commission, Foreign
Trade Zones (FTZs): Effects of FTZ Policies and Practices on U.S. Firms Operating in U.S. FTZs
and under Similar Programs in Canada and Mexico, April 2023, 98–99, 220–221.
† Importers can even use U.S. ports of entry to receive ocean-borne freight as part of these
schemes to utilize the de minimis exemption. For example, some third-party logistics providers
load containers that arrive at the Ports of Los Angeles and Long Beach onto trucks and drive the
containers in-bond across the border to fulfillment centers in Tijuana, Mexico. Economist, “How
Chinese Goods Dodge American Tariffs,” June 27, 2024; Josh Zumbrun, “The $67 Billion Tariff
Dodge That’s Undermining U.S. Trade Policy,” Wall Street Journal, April 25, 2022.
‡ In FY 2021, 65 million and 22 million de minimis shipments were produced and sourced from
Canada and Mexico, respectively. This includes packages carried by air freight, which is by far
the most prevalent transportation method, and only a portion of these totals reflects shipments
carried overland. By comparison, 109 million de minimis parcels crossed the U.S. border on trucks
during the same time period. U.S. Customs and Border Protection, E-Commerce, April 10, 2024;
U.S. Customs and Border Protection, Section 321 De Minimis Shipments: Fiscal Year 2018 to 2021
Statistics, October 2022, 3.
281
de minimis treatment in order to protect the revenue or to ensure

the effective enforcement of import admissibility standards,” includ-
ing to address issues related to health and safety, enforcement of the
Uyghur Forced Labor Prevention Act, imports of fentanyl and fen-
tanyl precursors (see textbox below), and other imports that violate
U.S. regulations.49 CBP could prevent shipments subject to Section
301 duties and other trade remedies from entering under the de
minimis provision through an administrative ruling.50
Chinese Fentanyl Traffickers Exploit the De Minimis

Rule to Skirt Detection
Chinese chemical manufacturers have exploited e-commerce
channels, including international mail and express consignment
operations, to route fentanyl and fentanyl-related substances
(such as precursors) into the United States, contributing to the
U.S. opioid crisis. Direct shipments of fentanyl from Chinese drug
makers to U.S. doorsteps had risen up until 2019, when China
“scheduled” the entire class of fentanyl-type drugs—meaning the
production and export of these drugs is banned without special
government permits—significantly reducing the flow of finished
drugs.51 At the time, however, China scheduled just two of the
numerous precursor chemicals used to synthesize fentanyl,* and
Chinese entities subsequently shifted to supply North Ameri-
ca-based drug traffickers with other fentanyl inputs.52 China is
now the primary supplier of chemicals and materials for synthe-
sizing fentanyl to Mexican cartels and other criminal groups op-
erating in the United States.53
De minimis shipments serve as a key vector linking these sup-
ply chains as Chinese entities exploit the less stringent reporting
requirements and minimal likelihood of inspection.† Some Mexi-
co-based criminal groups have found it easier to first ship fentan-
yl materials to the United States under de minimis provisions,
smuggle them across the border for further processing, and then
send the drug back into the United States.54 These chemicals are
widely and easily available on Chinese e-commerce storefronts.
In 2024, a team of Reuters reporters was able to procure all the
chemicals needed to produce fentanyl by placing orders with Chi-
nese online sellers, some of whom provided recipes for synthesiz-
ing fentanyl from their products.55 Moreover, unlike many other
* Fentanyl can be synthesized directly from a wide range of chemicals, called precursors. Drug
makers also make use of pre-precursors to produce precursors for fentanyl manufacturing. The Inter-
national Narcotics Control Board has identified 153 fentanyl-related substances that currently have
no other legitimate uses. Ricardo Barrios, Susan V. Lawrence, and Liana W. Rosen, “China Primer:
Illicit Fentanyl and China’s Role,” Congressional Research Service CRS IF 10890, February 20, 2024.
† Given the overwhelming volume of small parcels entering the United States, U.S. regulators
rely on advanced electronic data, automated screening, and other data sources to identify ship-
ments that may contain opioids or other illegal goods. However, CBP states that it cleared over
685 million de minimis shipments with insufficient data to properly determine risk in FY 2022.
In addition, the U.S. Department of Homeland Security Office of the Inspector General concluded
in 2023 that “CBP did not consistently target for additional inspection or evaluate potentially
inadmissible international mail entering the United States through its nine [international mail
facilities],” and it has not fully implemented requirements to utilize advanced electronic data
as required in the Synthetics Trafficking and Overdose Prevention Act of 2018 (STOP Act). U.S.
Department of Homeland Security, Office of Inspector General, CBP Did Not Effectively Conduct
International Mail Screening or Implement the STOP Act (Redacted), September 25, 2023; U.S.
Customs and Border Protection, Commercial Customs Operations Advisory Committee, Govern-
ment Issue Paper, Next Generation Facilitation Subcommittee, E-Commerce Task Force, June 2023.
282
Chinese Fentanyl Traffickers Exploit the De Minimis

Rule to Skirt Detection—Continued
illegal drugs, large-scale production of fentanyl does not depend
on industrial-scale supplies of chemicals, and small parcel ship-
ments of inputs can yield large quantities of the product. Just
one kilo of the precursor 1-boc-4 piperidone is enough to produce
750,000 fentanyl tablets.56 Economists Timothy J. Moore, Wil-
liam W. Olney, and Benjamin Hansen link increased state-lev-
el imports to a rise in opioid deaths, estimating that fentanyl
smuggled through legal customs channels killed approximately
14,000–20,000 Americans per year, accounting for 30–40 percent
of all opioid deaths between 2017 and 2020.* 57
Though China has taken recent steps to curb the flow of fentan-
yl-related material, cooperation with the United States remains lim-
ited. In August 2024, China announced that it would expand regu-
latory controls to cover three additional fentanyl precursors.58 This
move came two years after UN member states agreed to subject
these inputs to international restrictions.59 (For more on U.S.-China
counternarcotics diplomacy, see Chapter 2, “U.S.-China Security and
Foreign Affairs (Year in Review).”) However, as of October 11, 2024,
China has not placed controls on other common fentanyl precursors,
despite continued U.S. diplomatic pressure.† 60
Illicit Actors Evade Tariffs through Customs Fraud

The increase in tariffs on Chinese products created a significant
incentive to lower or evade U.S. import duties, leading to an increase
in trade-related fraud. To avoid paying duties, firms may employ a
wide range of illegal and deceptive tactics, with two being particu-
larly prominent.61 First, importers may file false invoices with U.S.
customs to evade tariffs, misreporting the nature of the merchandise
through tactics including undervaluation, product misclassification,
and other methods.62 Second, importers may employ transshipment
and circumvention schemes to route goods through third country
markets to obtain a more favorable duty rate.63
The number of customs violations penalized by the U.S. govern-
ment rose following the introduction of the China Section 301 tariffs
and other trade measures aimed at China. Between October 2018
and September 2019—the first fiscal year after the Office of the
U.S. Trade Representative initiated the China Section 301 trade
actions—CBP collected $30.1 million in penalties and liquidated
* This study relied on import data from the U.S. Census Bureau, which does not include de
minimis shipments.
† For example, China currently does not have control measures for N-Phenethyl-4-piperidone (NPP)
and 4-Anilino-N-phenethylpiperidine (ANPP), two precursors that are extensively used by Mexican
drug cartels in fentanyl production. These chemicals, among others, are included in Table I of the
1988 UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, to which
China is a signatory. The agreement requires members to take measures to prevent the distribution
of listed substances for the illicit manufacture of drugs and maintain systems to monitor manufac-
ture and distribution of listed substances for legitimate purposes. John Coyne and Liam Auliciems,
“No, China Isn’t Really Suppressing Its Production of Fentanyl Precursors,” The Strategist, August
23, 2024; International Narcotics Control Board, “Precursors and Chemicals Frequently Used in the
Illicit Manufacture of Narcotic Drugs and Psychotropic Substances: 2019,” February 27, 2020, 47,
106–107, 108.
283
damages * related to customs violations, double the value collected

in FY 2018.64 In FY 2022, the most recent period for which CBP
has published data, this amount fell back to $19.3 million, yet CBP
still issued nearly twice as many penalties and liquidated damages
compared to FY 2018, suggesting that the frequency of infractions
remains above norm.65 The import value related to these infractions
is not available. CBP also collected $78 million in unpaid duties as
a result of audits in FY 2022 and identified $97 million in lost val-
ue or revenue through investigations into AD/CVD evasion under
its Enforce and Protect Act (EAPA) authority, up from $42 million
resulting from audits and $15 million from EAPA investigations in
FY 2018.66 It is likely that additional illicit activity has gone un-
detected. Though it is difficult to estimate the true scale of illegal
activity, signs suggest that trade misinvoicing and illegal transship-
ment have grown more rampant since 2018.
Duty Evasion through False Import Declarations
The declining quality of U.S. import data points toward systemic
tariff avoidance. U.S. duty assessment is based on customs docu-
mentation filed by importers, creating an incentive to misreport the
nature of the imported merchandise.67 Such tactics include underre-
porting the value of the shipment or misclassifying the merchandise
as a different Harmonized Tariff System (HTS) heading to obtain a
lower duty.68 According to the U.S. Government Accountability Office
(GAO), “Many trade-related documents, such as purchase orders, in-
voices, and customs documents, are vulnerable to fraudulent manip-
ulation.” 69 Because such evasive activity leads to a poor-quality data
environment, it is not possible to accurately measure the impact of
illicit import invoices. However, researchers have taken advantage
of discrepancies in trade data gathered by U.S. and Chinese statis-
tical authorities to approximate the level of trade fraud; though U.S.
tariffs create a financial incentive to falsify information reported to
U.S. customs, they have little effect on companies’ incentives to file
accurate export invoices with Chinese customs. According to these
studies, importers may be understating their U.S. imports by tens of
billions of dollars per year (for more, see textbox below).70
Customs Fraud, De Minimis Shipments, and Worsening

Data on the U.S.-China Trade Deficit
The true value of the bilateral trade deficit between the United
States and China is likely tens of billions of dollars higher than
reported in official U.S. trade estimates. U.S. data on imports from
China are based on customs declarations, meaning that tariff eva-
sion creates errors in aggregate U.S. trade data and leads to dis-
crepancies with the trade data reported by Chinese customs author-
* CBP has legislative authority to issue penalties for filing fraudulent customs documentation
and other tactics to evade customs enforcement. In addition, many importers are required to
purchase importation bonds, which are surety bonds that form a contract between CBP and the
importer. If the importer breaches its obligations under the bond, including by violating trade
laws and regulations, CBP can collect liquidated damages against the import bond. U.S. Customs
and Border Protection, What Every Member of the Trade Community Should Know About: Cus-
toms Administrative Enforcement Process: Fines, Penalties, Forfeitures, and Liquidated Damages,
February 2004, 25, 40; Government Accountability Office, Civil Fines and Penalties Debt: Review
of U.S. Customs Service’s Management and Collection Process, May 2002, 9.
284

Data on the U.S.-China Trade Deficit—Continued
ities. Mirror trade analysis is a commonly used technique to identify
false or missing customs declarations based on differences in trade
reported by the customs agencies of the exporting and importing
nations.* 71 Prior to 2018, the U.S. Census Bureau’s estimates on
imports of goods from China have exceeded the equivalent figure
from China’s customs agency by an average of $95 billion, largely
owing to financial incentives for Chinese firms to underreport the
value of exports to Chinese customs to receive tax advantages under
China’s value-added tax regime prior to 2018.72 However, this pat-
tern has reversed since the Section 301 tariffs went into effect (see
Figure 2). In 2020, the gap between U.S. and Chinese data all but
disappeared as the United States reported a steeper decline in im-
ports than China.73 Economists at the U.S. Federal Reserve estimate
that $55 billion in value is missing from U.S. import data due to
firms’ efforts to avoid U.S. tariffs.† 74 Because of this evasion, Adam
Wolfe, emerging markets economist for Absolute Strategy Research,
assesses that “Chinese data are likely more reliable since U.S.-based
firms have a financial incentive to understate their imports to avoid
paying higher tariffs.” 75
Figure 2: Disappearing Gap in Reported Goods Imports from China:
U.S. vs. Chinese Data, 2010–2023
$600
$550
Trade flows (US$ billions)
$500
$450
$400
$350
$300
$250
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
U.S. reported imports from China Chinese reported exports to United States
Source: United Nations Statistics Division, “UN Comtrade Database.”
* As reviewed in a recent GAO report, mirror trade analysis has significant limitations when
it comes to identifying illicit trade behavior. Legitimate reasons for trade gaps may exist, such
as differing customs valuation methodologies between different countries. U.S. Government Ac-
countability Office, Trade-Based Money Laundering: U.S. Government Has Worked with Partners
to Combat the Threat, but Could Strengthen Its Efforts, April 2020, 57–59.
† The change in the reported data was also a result of Chinese exporters overstating the value of
shipments to Chinese customs. China lowered the gross value-added tax and raised the value-added
tax rebate on exports after the tariffs went into effect, changing the incentives for Chinese firms to re-
port the value of their exports. Economists Hunter L. Clark and Anna Wong find that the value-added
tax effect caused China’s reported exports to increase (leading to a smaller gap in U.S.-China trade
data), but this effect was marginal compared to the undervaluation effect in U.S. import data. Hunt-
er L. Clark and Anna Wong, “Did the U.S. Bilateral Goods Deficit with China Increase or Decrease
during the US-China Trade Conflict?” U.S. Federal Reserve, June 21, 2021.
285

Data on the U.S.-China Trade Deficit—Continued
Two tactics to avoid tariffs are likely to blame for the deteri-
oration in the quality of U.S. trade data. First, some U.S.-based
importers have evaded tariffs by illicitly misreporting the value
of shipments to U.S. customs officials, since underreporting the
value reduces the gross import tax assessed on each shipment.76
Second, shipments valued less than $800 that utilize the de mi-
nimis exemption are not included in the U.S. Census Bureau’s
trade estimates.77 This data gap alone leaves potentially tens
of billions of dollars in unaccounted imports from China-based
e-commerce companies; CBP estimates that $54.5 billion in de
minimis shipments from all countries entered the United States
in FY 2023.* 78
Distorted trade data may prevent U.S. policymakers from de-
signing effective trade and supply chain policies and obscure
the true extent of the United States’ continued reliance on
Chinese manufacturers. For instance, recorded U.S. imports of
clothing from China have declined 39 percent between 2018
and 2023, according to U.S. customs data; however, estimates
indicate that textile and apparel products make up around
half of all de minimis shipments entering the United States.79
Moreover, these problematic data potentially compromise the
U.S. government’s ability to evaluate the impact of tariffs on
the U.S. economy. For instance, the U.S. International Trade
Commission’s 2023 Economic Impact of Section 232 and 301
Tariffs on U.S. Industries report relies on U.S. Census Bureau
data to model the impact of the tariffs on trade, production,
and prices, and its findings could be flawed if the data are
problematic.80
Legal action targeting evasion of China Section 301 tariffs has

been limited. To date, the U.S. government has penalized only a few
instances of Section 301 evasion under the False Claims Act (FCA),
which prohibits making false statements or otherwise defrauding
the U.S. government, including false customs documentation.81 The
FCA contains a whistleblower provision whereby a person can file
a lawsuit based on allegations of fraud against the government, in-
cluding customs evasion, and be financially rewarded for it.† Up
to May 2024, the U.S. government has reached settlements in four
cases under the FCA that involved evasion of China Section 301
* The consistency of the de minimis value estimates produced by CBP is questionable. The Coa-
lition for a Prosperous America asserts that CBP relies only on data submitted through electronic
manifests, which cover only a portion of the shipments. Compared to CBP’s estimate of $46.5
billion in imports in FY 2021, the organization instead estimates that the United States import-
ed $188 billion in de minimis shipments in 2022. A separate study based on data on shipments
valued under $800 from three global carriers implies that the average shipment was valued at
$120 in 2021. This suggests that FY 2021 de minimis imports totaled $82.2 billion. Pablo D. Fa-
jgelbaum and Amit Khandelwal, “The Value of De Minimis Imports,” NBER Working Paper, June
2024, 7, 17; Charles Benoit, “Falsehoods & Facts: The Truth about De Minimis,” Coalition for a
Prosperous America, August 14, 2023.
† In a successful case, the whistleblower receives a monetary reward worth 15–30 percent of the
funds recovered by the government, incentivizing private citizens to act as bounty hunters. Jona-
than Tycko, “A Statistical Analysis of the Government’s Settlement of False Claims Act Lawsuits
Alleging Evasion of Customs Duties,” National Law Review, August 3, 2023.
286
duties, with settlements totaling $5.7 million.82 These cases likely

reflect only a portion of the ongoing litigation, as other cases may
be held under seal within the U.S. court system until a settlement
or judgment is reached.* 83 Historically, the amount of time required
to complete an FCA customs case—from filing the case to reaching
a settlement—averaged 3.1 years.84 However, the FCA may be un-
derutilized to pursue customs evasion due to the complexities of
such cases. For instance, the U.S. Department of Justice has the
option to intervene and take over a case, a move that increases the
chances of success due to the resources available to government
prosecutors.† 85 The government is less likely to intervene in cas-
es involving smaller financial stakes or where the evidence is not
particularly strong.86 A whistleblower may choose to litigate a case
independently, but they will need to bear the legal costs themselves.
Customs fraud cases may be particularly complex to litigate inde-
pendently given the complicated and often arcane nature of U.S.
customs regulations.87 In addition, potential whistleblowers may be
located outside the United States, making them reticent to file out
of fear of retaliatory action.‡
Whistleblower lawsuits under the FCA complement direct govern-
mental authorities to pursue customs fraud. CBP has a statutory
mandate to detect and penalize customs fraud under the Tariff Act
of 1930.88 To aid its enforcement efforts, CBP provides a monetary
incentive, separate from the FCA provisions, for whistleblowers to
flag instances of evasion and transshipment.89 However, CBP is not
required to respond to or publicly report on the results of investi-
gations into such allegations.90 As Ms. Drake testified before the
Commission, the enforcement process is opaque, and “the private
sector has no formal role in helping Customs guard against evasion”
of customs duties other than AD/CVD.91 In contrast, the tools avail-
able to combat AD/CVD evasion—the anti-circumvention statute
administered by the U.S. Department of Commerce and the Enforce
and Protect Act (EAPA) authorities administered by CBP—provide
specific timelines and statutory requirements to involve private pe-
titioners and have been viewed as highly effective.92 (For more, see
Appendix II, “Authorities for Combating Evasion of U.S. Customs
* When an FCA case is filed with a court, the court initially places the case under seal for
60 days, but the U.S. government may request the court extend the seal so it can conduct its
investigation. While the case is under seal, the court will not acknowledge the existence of the
lawsuit, and the case will not appear on the court’s publicly available electronic docket (PACER).
Jonathan Tycko, “Can a False Claims Act Qui Tam Case, Alleging Customs Fraud, Be Filed and
Pursued Anonymously?” National Law Review, February 8, 2024.
† The U.S. Department of Justice created a “Trade Fraud Task Force” to lead its efforts on
trade-related crimes and coordinate with other agencies, such as CBP, on ensuring compliance
with U.S. trade laws. However, some assess that the task force has limited capacity given the
scale of international trade crime it faces. Camille Edwards and Olga Torres, “DOJ Involvement
in the Enforcement of Trade and National Security Laws,” JD Supra, April 23, 2024; U.S. Rep-
resentatives Mike Gallagher and Raja Krishnamoorthi, Letter to the Honorable Alejandro May-
orkas, January 19, 2024, 4.
‡ The FCA allows for foreign whistleblowers to file cases of fraud against the U.S. government,
but they may not be afforded the same whistleblower protections as U.S. citizens or employees of
U.S. companies. Though such lawsuits can be filed anonymously, the identity of the whistleblower
may be easy to deduce once the court case is unsealed. The FCA includes a provision that offers
relief to employees who experience retaliation or job loss for filing fraud allegations, including
reinstatement to their position. However, for employees working overseas, the process of filing a
claim of retaliation is complex, and the provision may not extend to foreign companies not gov-
erned by U.S. law. Tycko & Zavareei, “International Whistleblower Protections;” Jason Zuckerman
and R. Scott Oswald, “Whistleblowers: What Protections and Forms of Relief Are Available for
Foreign-Based Employees,” Employment Law Group, 2011, 24–25.
287
Duties: Antidumping and Countervailing Duties vs. Section 301 and

Other Tariffs.”)
Transshipment and Circumvention through Third Country
Markets
Trade data indicate that some countries have emerged as hubs for
the transshipment of goods and duty evasion through circumvention
strategies. As U.S. imports shifted to third countries, some Chinese
exporters sought to lower their tariff burden by transiting goods
through these new export hubs. In 2019, Vietnam’s customs agency
identified dozens of products destined for the United States that
were imported from China and given “made in Vietnam” labels.93
Closely related to transshipment is duty circumvention, which in-
volves importing products subject to an AD/CVD order or compo-
nents of those products into a third country, doing minimal addition-
al processing (e.g., assembling components), and exporting the final
product as originating in the country of minimal processing.* 94 It
is challenging, however, to quantify the full extent of transshipment
and circumvention (see textbox below). Between FY 2017 and FY
2023, CBP completed more than 200 investigations into AD/CVD
evasion under the EAPA and identified $1.2 billion in duties owed
to the U.S. government.95
Evaluating Transshipment and Circumvention Based on

Trade Data
As documented by a number of scholars, third countries that
increased their exports to the United States since 2017 fre-
quently increased imports from China of the exact same product
codes they were shipping to the United States, suggesting that
finished goods were merely being rerouted through other econo-
mies.96 However, the correlation between third countries’ imports
from China and exports to the United States may also reflect
legitimate trade. Rules of origin can be complicated and very
product-specific. Even when a product imported from China is
exported without a change in its tariff classification, a domestic
manufacturer can significantly transform the good in a way that
meets U.S. criteria for country of origin. Further, the apparent
flow of Chinese products through these markets may instead re-
flect imports for final demand by these countries. Since produc-
ers in other economies may struggle to match the cost efficiency
of Chinese production, these economies may purchase low-cost
goods from China for domestic consumption as well as engage
in some level of additional processing for re-export to the United
States. For instance, after the United States placed an AD/CVD
on Chinese solar panels in the early 2010s, Chinese solar com-
panies sought out other markets for their subsidized production,
causing shipments of solar products that were previously bound
for the United States to shift to countries such as Malaysia.97
Many of these Chinese imports were used for solar installation
* AD/CVD circumvention as defined in the Tariff Act of 1930 also covers making minor alter-
ations in the original country so that the product falls outside the coverage of the AD/CVD order
while still retaining the same general characteristics. Tariff Act of 1930 § 1677j, Pub. L. 71-361,
codified at 19 U.S. Code § 1677j, 1994.
288
Evaluating Transshipment and Circumvention Based on

Trade Data—Continued
in Malaysia. Meanwhile, Malaysia’s domestic solar industry ex-
98
panded rapidly, fueled by investments from Chinese and South
Korean solar producers.99 Since they could not compete domesti-
cally on cost with unfairly traded Chinese imports, this produc-
tion was exported.100 Some Malaysia-based production involved
minimal additional processing of imported Chinese components
and was found by the Commerce Department to constitute eva-
sion of U.S. trade remedy duties on Chinese imports.101 Some of
the new production, however, involved substantial manufacturing
in Malaysia and was not found by the Commerce Department to
constitute circumvention.102 These facts demonstrate that trans-
shipment and evasion activities can occur alongside legitimate
trade flows.* 103
Transshipment and circumvention can create risks for the United

States by obscuring an import’s source country and factory, increas-
ing the challenge of securing supply chains against regions known
for hazardous or unethical sourcing and production practices. For
instance, China is the world’s largest importer of timber that is at
high risk of having been cut through illegal logging, the import of
which is banned in the United States.104 Since 2017, an accelerating
volume of wooden furniture appeared to flow from China into Viet-
nam for export to the United States, raising the risk that unethically
or illegally sourced timber enters the domestic market.105 More fun-
damentally, Chinese exporters that are willing to transship products
illegally are also less likely to adhere to U.S. safety and quality stan-
dards, as exemplified by the “honey laundering” practice of Chinese
honey producers. Since the United States placed antidumping duties
on Chinese honey in 2001, Chinese producers used transshipment
schemes involving Thailand, Malaysia, the Philippines, Russia, and
other countries to continue accessing the U.S. market, some of which
involved adulterating the honey to obscure its origin, affecting the
quality and safety of the honey.106 Due to these ongoing tactics, in
2020 CBP released a strategy for testing honey imports to verify the
country of origin and detect adulteration.107
Chinese State Support for Overseas Manufacturing Likely
Perpetuates Economic Distortions
Chinese companies, particularly those that benefit from state
support, are seeking to avoid tariffs by moving production overseas.
Previously, when the United States used AD/CVD orders to address
non-market support in certain Chinese sectors, some Chinese com-
* On August 18, 2023, the Commerce Department issued its final determination on circumven-
tion of AD/CVD orders on solar cells and modules from China. It concluded that five firms located
in Cambodia, Thailand, and Vietnam were re-exporting Chinese solar products to evade U.S.
duties. It investigated two companies operating in Malaysia—South Korea’s Hanwha Q Cells and
China’s Jinko Solar—but determined that these companies were not circumventing the orders.
The department also placed a country-wide circumvention finding on all four economies, meaning
that all exporters in these markets must certify that they are not circumventing the AD/CVD
orders before they are allowed to import the product under the most-favored-nation tariff. U.S.
Department of Commerce, Final Determination of Circumvention Inquiries of Solar Cells and
Modules from China, August 18, 2023.
289
panies responded by setting up factories overseas to continue ex-

porting to the United States. Despite being located outside of Chi-
na, many of these manufacturers continued to benefit from Chinese
government support and sell goods at less than market value. Ms.
Drake notes multiple examples where Chinese companies increased
outbound investment after the United States reached an affirmative
finding in investigations and applied duties.108 Chinese tire manu-
facturers that were impacted by U.S. AD/CVD orders on passenger
vehicle and light truck tires (issued in 2015) and truck and bus tires
(issued in 2019) subsequently set up plants in Thailand, Vietnam,
and Taiwan.109 Exports from these economies have since surged.
Between 2020 and 2022, U.S. imports of truck and bus tires from
Thailand more than doubled from 4.7 million units to 10.2 million
units.110 Three Chinese companies have opened factories in Thai-
land since 2017, helping drive the surge in exports.* 111 Following a
petition from the United Steelworkers, the Commerce Department
initiated an antidumping investigation into imports of these tires
from Thailand in November 2023, and in October 2024 it found that
Thailand-based tire manufacturers were dumping their products in
the United States.112 Since 2017, similar patterns have emerged or
accelerated in other sectors subject to U.S. AD/CVD orders, includ-
ing China’s quartz producers and its steel industry.113
Such producers may benefit from Chinese policies to push man-
ufacturing capacity overseas. Though the true level of non-market
support to overseas production platforms is difficult to quantify, the
Commerce Department as well as multiple analysts assess that
their scale is growing.114 The Party-state has long supported Chi-
nese companies with surplus industrial capacity to set up facilities
overseas. (For more on the role of Chinese producers in U.S. imports
from Vietnam and other third countries, see Chapter 1, “U.S.-Chi-
na Economic and Trade Relations (Year in Review).”) At the 2014
China-ASEAN Summit, then Premier Li Keqiang stated that China
encourages “competitive Chinese producers of iron and steel, cement
and plate, etc. to shift their operation to ASEAN countries to meet
the local need of infrastructure development through investment,
leasing, and loan lending so as to achieve mutual benefit.” 115 Chi-
na’s Belt and Road Initiative widened financing channels to support
foreign direct investment (FDI) in member countries, and many of
the projects financed by China’s policy banks, including China Exim
Bank and China Development Bank, involved overseas production
facilities in steel, textiles, metals, and other areas where China has
domestic surplus capacity.116 Though these policies are not specific
to companies subject to antidumping or antisubsidy measures, some
companies have taken advantage of China’s “Going Out” policy † and
the Belt and Road Initiative explicitly to avoid such duties. For in-
* In its AD/CVD investigation of truck and bus tires from China, the Commerce Department
found that one of these companies, Double Coin Holding, benefited from state subsidies. In 2017,
the Commerce Department assessed a 38.6 percent subsidy rate on Double Coin in addition to an
economy-wide 22.6 percent dumping rate. Meanwhile, Double Coin invested $285 million to set
up a factory in Thailand, which began producing tires for the U.S. market in 2018. Tire Business,
“Double Coin Shipping to U.S. from New Thai Factory,” April 12, 2018; U.S. International Trade
Administration, Commerce Finds Dumping and Subsidization of Imports of Truck and Bus Tires
from the People’s Republic of China, January 23, 2017.
† After 1999, China promulgated the “Going Out” strategy to accelerate overseas investment
by Chinese companies. Subsequent implementing regulations simplified the approval process
and relaxed requirements for overseas investment projects. Nargiza Salidjanova, “Going Out:
290
stance, China National Building Material, which produces glass fi-

bers among other industrial materials, established subsidiaries in
2012 in Egypt for the explicit purpose of avoiding trade remedies
imposed by the EU that began in 2011.117 An executive of one of
the subsidiaries, Jushi, stated, “If you export fiberglass to Europe
from China, you have to pay antidumping and antisubsidy duties of
24.8 percent, not to mention the tariff. There is no tariff if you ex-
port to Europe or the Middle East from Egypt, nor any antidumping
and antisubsidy duties.” 118 The European Commission subsequently
initiated an antisubsidy investigation into Jushi’s Egypt production
over support provided by China. In 2020, the EU imposed counter-
vailing duties on certain glass fiber products from Egypt (see text-
box below).119
EU Antisubsidy Investigations Document How Chinese

State Support Is Funneled through Overseas Special
Economic Zones
The EU has applied its antisubsidy and antidumping laws in
novel ways to respond to Chinese subsidies to overseas subsid-
iaries. The European Commission’s investigation into state sup-
port for Egypt-based subsidiaries of Chinese companies in the
fiberglass industry concluded in 2020, resulting in AD/CVD or-
ders targeting exports from entities based in both Egypt and Chi-
na.120 The investigation found that the Chinese-owned entities
received support from the Chinese government through a special
economic zone set up jointly by the two governments called the
China-Egypt Suez Economic and Trade Cooperation Zone.121 The
commission concluded that the companies in the zone benefited
from various forms of state support, including preferential loans
from Chinese banks, loans and capital injections from the state-
owned parent companies, and direct subsidies from the Egyptian
government.122 While the details of the financing arrangements
were not fully disclosed by the parties involved,* Chinese state
support clearly assisted the development of Chinese industrial
champions in Egypt.123 Notably, the European Commission at-
tributed Chinese state support to the Egyptian government, us-
ing a legal workaround in order to apply EU antisubsidy laws to
the case. The treatment of transnational subsidies remains a con-
tested issue under the WTO Agreement on Subsidies and Coun-
tervailing Measures, with differing interpretations on whether
the subsidy recipient must be located in the same territory as
the government or public body providing the aid.† 124 Instead of
An Overview of China’s Outward Foreign Direct Investment,” U.S.-China Economic and Security
Review Commission, March 30, 2011, 5.
* For example, as the banks involved did not provide their credit risk assessments for the
financing in question, the commission instead compared the interest rates to market indica-
tors, reaching the conclusion that the interest rates offered were below market rates. European
Commission, Commission Implementing Regulation (EU) 2020/776 of 12 June 2020 Imposing
Definitive Countervailing Duties on Imports of Certain Woven and/or Stitched Glass Fibre Fabrics
Originating in the People’s Republic of China and Egypt and Amending Commission Implement-
ing Regulation (EU) 2020/492 Imposing Definitive Anti-Dumping Duties on Imports of Certain
Woven and/or Stitched Glass Fibre Fabrics Originating in the People’s Republic of China and
Egypt, EUR-Lex, June 15, 2020, 104–108.
† Separate from the transnational subsidy issue, the United States alleges that prior rulings
at the WTO hamper efforts to punish China’s unfair trade practices. As a result of another
U.S.-China dispute in 2008, the WTO determined that Chinese state-owned enterprises and Chi-
291
EU Antisubsidy Investigations Document How Chinese

State Support Is Funneled through Overseas Special
Economic Zones—Continued
ruling on the matter, the European Commission determined that
Egypt had actively sought and cooperated with China to invite
the financial support to the special economic zone, which enabled
the commission to make a ruling under its existing antisubsidy
statutes.125
In 2022, the European Commission applied a similar reason-
ing to impose countervailing duties on steel producers in Indo-
nesia that benefited from Chinese support.* 126 At Indonesia’s
request, the WTO established a dispute settlement panel in May
2023 to examine whether the EU acted inconsistently with the
Agreement on Subsidies and Countervailing Measures when it
attributed Chinese financial contributions to the Indonesian gov-
ernment.† 127
Before 2024, the United States did not treat cross-border support
to Chinese production facilities located in third countries as coun-
tervailable subsidies.128 Prior to a policy revision issued in March
2024, the Commerce Department’s regulations precluded the agency
from countervailing cross-border support for production.‡ 129 Con-
sequently, it has only ever assessed support provided by the host
government to domestic enterprises in previous countervailing duty
investigations.130 Additionally, the “non-market economy” method-
ology for the Commerce Department’s antidumping investigations
prevented the government from examining cases where a producer
in a market economy, such as India, benefited from equipment and
raw material imported from China at below-market prices.131 In
March 2024, the Commerce Department updated its methodology
nese state commercial banks would not be considered “public bodies.” The WTO opined that the
United States was imposing excess AD/CVDs because it was too broad in its interpretation of
“public body” and, consequently, its assessment of China’s state subsidies. “The mere fact that a
government is the majority shareholder of an entity does not demonstrate that the government
exercises meaningful control over the conduct of that entity, much less that the government has
bestowed it with governmental authority.” World Trade Organization, “United States—Definitive
Anti-Dumping and Countervailing Duties on Certain Products from China: Appellate Body Re-
port,” 2011, 123, 130.
* The support was linked to the Indonesian Morowali Industrial Park, which is focused on
building a stainless steel industry. China cooperated with Indonesia to build the industrial park.
European Commission, Commission Implementing Regulation (EU) 2022/433 of 15 March 2022
Imposing Definitive Countervailing Duties on Imports of Stainless Steel Cold-Rolled Flat Products
Originating in India and Indonesia and Amending Implementing Regulation (EU) 2021/2012
Imposing a Definitive Anti-Dumping Duty and Definitively Collecting the Provisional Duty Im-
posed on Imports of Stainless Steel Cold-Rolled Flat Products Originating in India and Indonesia,
March 15, 2022, 105–106.
† The European Commission also investigated ongoing circumvention activities, and in May
2024 it imposed duties on Taiwan, Turkey, and Vietnam after it found that steel from Indone-
sia was being shipped through these countries to the EU with minimal additional processing.
European Commission, Commission Fights Circumvention of Tariffs on Imports of Cold-Rolled
Stainless Steel, May 7, 2024.
‡ When the Commerce Department self-imposed this rule on its AD/CVD proceedings, it be-
lieved a government “would not normally be motivated to promote, at what would be considerable
cost to its own taxpayers, manufacturing or higher employment in foreign countries.” However,
the Commerce Department now judges that such cases have become more prevalent, citing Chi-
na’s support for overseas special economic zones as an example. U.S. Department of Commerce,
“Regulations Improving and Strengthening the Enforcement of Trade Remedies Through the Ad-
ministration of the Antidumping and Countervailing Duty Laws,” Federal Register 89:58 (March
25, 2024): 20827.
292
for AD/CVD investigations, removing the restriction on investigat-

ing transnational subsidies and clarifying when it can determine
a “particular market situation” exists, enabling it to take distorted
costs and inputs in cross-border trade into account in antidumping
proceedings.132 In May 2024, pursuant to an industry petition, the
Commerce Department launched AD/CVD investigations into solar
cells and modules produced in Cambodia, Malaysia, Thailand, and
Vietnam to assess potential unfair trade practices, including alleged
instances of transnational subsidies provided by Chinese policy
banks.* 133
Consumer Safety Enforcement inside China’s
Domestic Market
In the past 15 years, China has significantly strengthened and ex-
panded its domestic consumer product safety regulatory regime fol-
lowing a deadly food safety scandal. In 2008, an estimated 300,000
infants and young children across China fell ill and six babies died
after consuming milk powder containing melamine, an industrial
chemical used in plastics and fertilizer.134 The melamine was inten-
tionally added to the powder by the producer in order to fool tests
that measure protein content.135 Following the events of the scan-
dal, in 2009 the Standing Committee of the National People’s Con-
gress repealed the country’s 1995 Food Hygiene Law and replaced
it with the significantly expanded Food Safety Law.136 This revised
regulation contained 104 articles, created the country’s Food Safety
Commission, and established a national food recall system, among
other acts.137 The Chinese government has amended and expand-
ed the Food Safety Law several times, including in 2015 and most
recently in 2023.138 Alongside revising food safety for domestic pro-
duction, the Chinese government significantly expanded regulations
for cosmetics and medical devices as well.139 The government also
implemented a significant bureaucratic reorganization to consolidate
and streamline market regulation. In 2018, the government creat-
ed the State Administration for Market Regulation (SAMR), which
consolidated the function of several previously independent agencies
responsible for regulating a range of products, including food, drugs,
toys, and consumer goods.140 SAMR has a broad mandate, replacing
the China Food and Drug Administration to regulate drug safety su-
pervision and overseeing production permits for industrial products,
product quality inspections, the reporting system for product quality
and product recalls, and anti-counterfeiting efforts.141
Despite this bureaucratic reorganization and wide-ranging reg-
ulatory expansion, the Chinese government remains unable to ef-
fectively regulate consumer and food products, creating risks for
* The Commerce Department issued a preliminary affirmative determination in October 2024,
and it set countervailing duty rates on solar products from these four countries. The agency also
calculated preliminary countervailing duty rates for companies that benefited from policy lending
from Chinese banks under the Belt and Road Initiative under an application of “facts available”
for non-cooperative respondents. However, it also preliminarily assessed that none of the respon-
dents that complied with the investigation benefited from these Chinese programs. U.S. Depart-
ment of Commerce, Preliminary Affirmative Determinations in the Countervailing Duty Investi-
gations of Crystalline Photovoltaic Cells Whether or Not Assembled into Modules from Cambodia,
Malaysia, Thailand and Vietnam, October 1, 2024; U.S. Department of Commerce, International
Trade Administration, Decision Memorandum for the Preliminary Affirmative Determination in
the Countervailing Duty Investigation of Crystalline Silicon Photovoltaic Cells, Whether or Not
Assembled into Modules, from Malaysia, September 30, 2024, 46.
293
Chinese and U.S. consumers. A 2018 study conducted by research-

ers from Tsinghua University and University of Cambridge found
that 12 percent of toys purchased from Taobao—an e-commerce
website owned by Alibaba that operates almost exclusively in
China—contained lead levels exceeding China’s regulatory stan-
dard for paints in toy manufacturing.142 When compared against
U.S. lead standards, the percentage of offensive toys increased to
nearly 36 percent.143 In July 2024, Chinese state media reported
that shipping companies were using the same tanker trucks to
carry cooking oil and toxic liquids without cleaning the trucks in
between, leading to an investigation by Chinese authorities.144
In addition to exposing Chinese consumers to health and safety
risks, the Chinese government’s inability to set and uniformly
enforce product safety regulations has led to policy inconsistency,
which harms Chinese and international firms operating in Chi-
na alike. In a 2024 white paper, the American Chamber of Com-
merce in China (AmCham China) noted that the requirements
facing U.S. cosmetic companies to register and file a review for
foreign-made cosmetic products are “not sufficiently transparent,
with inconsistent standards of review, and sometimes unclear
conclusions, affecting the registration process of cosmetics” while
creating inefficiencies and raising costs.145
Instead of improving product safety, the Chinese government has
at times leveraged it to undercut foreign firms operating in Chi-
na while punishing foreign governments for undesirable policies.
In June 2021, China’s General Administration of Customs (GAC)
released a list of “quality and safety unqualified” products from 16
companies, including H&M, Nike, and Zara.146 The GAC’s announce-
ment was part of a broader campaign by the Chinese government
targeting U.S. and other foreign firms in retaliation for their state-
ments against forced labor in China’s western province of Xinjiang
as well as actions taken by their home governments. Six months
before the Customs Administration announcement, in January 2021,
CBP began banning cotton and tomato products from Xinjiang pur-
suant to an order by the Trump Administration.147 By March 2021,
Britain, Canada, and the EU had all joined the United States in
imposing sanctions on China for its abuses in the region.148 In re-
taliation, the Chinese government took a series of actions meant
to decrease the availability and profitability of major U.S., Euro-
pean, and Japanese clothing brands sold in the Chinese market.
Chinese state media fomented an ostensibly grassroots call for a
boycott of H&M, resurfacing a statement the company made the
prior year confirming that it had stopped sourcing Xinjiang cotton
due to forced labor concerns.149 H&M’s products were then removed
from Chinese e-commerce websites, and the addresses for its ap-
proximately 500 stores in China were removed from the ride-hailing
app Didi Chuxing.150 Apps associated with Nike and Adidas were
pulled, and Chinese celebrities exited endorsement deals with these
and other foreign companies.151 The accusations by China’s customs
agency of unsafe products further galvanized Chinese consumers,
who switched away from foreign brands in favor of domestic produc-
ers, resulting in U.S. firms like Nike losing market share to Chinese
competitors like Anta Sports and Li Ning.152
294
U.S. Import Regulations and Consumer Goods from

China
Trends in Health and Safety in China-Based Manufacturing
China is a primary source of consumer product imports for the
United States, with e-commerce becoming an increasingly import-
ant pathway for U.S. consumers to purchase goods from China.
Since 2000, the proportion of U.S. consumers shopping online in-
creased from 22 percent to 79 percent.153 At the same time, the
number of China-based sellers on U.S. e-commerce sites as well as
the number of U.S. users shopping on Chinese e-commerce web-
sites has increased substantially. In December 2023, almost 49
percent of Amazon’s top third-party sellers were based in China,
up from 18 percent in January 2017.154 Similarly, in 2022 nearly
half of all new third-party sellers on Walmart.com were based in
China.155 In parallel, Chinese e-commerce platforms Shein and
Temu have experienced a recent boom in popularity among U.S.
users. Between September 2022 and October 2023, the number of
monthly active U.S. users on Shein almost doubled from 27 mil-
lion to 51 million, while the number of Temu users increased from
just 1.5 million to over 133 million during the same period.156
The business models of these e-commerce platforms often facil-
itate the direct shipment of consumer goods from China-based
manufacturers to U.S. consumers.
The safety and quality of imported consumer goods from China
has historically been a concern for the United States, with product
issues reaching a peak in 2007. Dubbed the “Year of the Recall”
by Consumer Reports, in 2007 millions of units of Chinese-made
products were recalled for serious health and safety violations, in-
cluding one million cribs presenting strangulation risks, 175 mil-
lion pieces of children’s jewelry made with hazardous levels of lead,
and 175,000 Curious George plush dolls contaminated with lead,
among other products.* 157 While these recalls affected a variety of
goods, children faced a disproportionately high risk; of the 448 re-
calls issued by the Consumer Product Safety Commission (CPSC)
in 2007, 52 percent were for children’s products.† 158 Unfortunately,
the consequences of using these unsafe goods were severe in many
cases. In a 2007 recall notice for drop-side cribs, CPSC stated it was
aware of at least two infant deaths associated with the crib and
noted that a third was under investigation.159 By 2010, the number
of recalled drop-side cribs had increased to over nine million, and
the number of reported deaths rose to over 30 in the United States
alone.160 Flaws existed in both the design and materials of the cribs,
manufacturing of which had been outsourced to China; drop-side
cribs could be installed incorrectly by parents, and plastic materials
that were less sturdy than traditional wood and metal cribs could
* Product recalls were not limited to consumer goods and also included food products regulated
by the Food and Drug Administration (FDA), including five types of farmed fish and seafood
containing traces of antifungals and antibiotics. Kayla Webley, “List of Problem Chinese Imports
Grows,” NPR, July 10, 200.
† In 2005 and 2006, CPSC issued 321 and 320 recalls, respectively. In 2007, the number of re-
calls increased 40 percent to 448. Kids in Danger, “2007: The Year of the Recall: An Examination
of Children’s Product Recalls in 2007 and the Implications for Child Safety,” February 2008, 1;
U.S. Consumer Product Safety Commission, “Recalls [2005–2007].”
295
fail and break.* 161 Risks of unsafe Chinese-made products were

not just limited to human consumers. In 2007, pet food made with
melamine-tainted wheat gluten supplied by Chinese manufacturers
was linked to the death of as many as 8,500 pet cats and dogs.162
A significant legislative overhaul in consumer product safety reg-
ulations increased CPSC capacity and authority and preceded a
steady decrease in CPSC-issued recalls up to 2021. In 2008, Con-
gress passed the Consumer Product Safety Improvement Act (CP-
SIA) both as a response to the series of high-profile recalls made the
year prior and as the culmination of grassroots efforts to improve
product safety, particularly in goods made for children.163 CPSIA
provided CPSC with an expanded set of regulatory and enforcement
tools and included provisions addressing myriad issues like lead,
phthalates, toy safety, third-party testing and certification, and civil
and criminal penalties, among others.164 Critically, CPSIA created
the first comprehensive and publicly available consumer incident
database, which allows the public to report product hazards they
have experienced and research others’ reports of harm.165
CPSIA led to some progress in product safety, but issues persist,
particularly for Chinese-made goods. After CPSIA passed, product
recalls trended down through 2021.166 Since 2021, however, the
number of recalls has jumped. Between 2021 and 2023, the num-
ber of recalls issued by CPSC increased 47 percent, rising from 219
to 323.167 The annual number of recalls for products made in Chi-
na also increased by 44 percent over the same period, from 117 to
168.168 For well over a decade, Chinese-made goods have been the
source of roughly half of all recalls (see Figure 3).169
Figure 3: Recalls Issued by CPSC, 2011–2023
350 90%
80%
China’s share of total (percent)
300
70%
250
Number of recalls
60%
200 50%
150 40%
30%
100
20%
50
10%
0 0%
China Other countries (incl. United States) China share of total (RHS)
Source: U.S. Consumer Product Safety Commission, “Recalls–Manufactured In [2011–2023].”
* In 2010, CPSC voted to ban all drop side cribs from the U.S. market due to risks inherent in
their design. U.S. Consumer Product Safety Commission, CPSC Approves Strong New Crib Safety
Standards to Ensure a Safe Sleep for Babies and Toddlers, December 17, 2010.
296
In addition to recalls, CPSC has a variety of other tools to alert

producers and the public of unsafe products, including notices of vi-
olation (NOVs). An NOV is an official determination by CPSC given
to a company indicating when a mandatory product standard has
been violated.170 While recalls declined between 2009 and 2021, the
number of NOVs trended up over that time frame, especially for
products made in China (see Figure 4). In 2009, CPSC issued 963
NOVs in total, with 645 of those notices issued for products made
in China.171 By 2023, total NOVs had risen to 2,347, while NOVs
for Chinese products reached 1,724, accounting for roughly three-
fourths of the total NOVs that year.172 Since 2009, Chinese-made
goods have consistently accounted for between 60 and 80 percent
of NOVs.173
Figure 4: NOVs Issued by CPSC, 2009–2023
4,000 90%
3,500 80%
China's share of total (percent)

3,000 70%
Number of NOVs
60%
2,500
50%
2,000
40%
1,500
30%
1,000 20%
500 10%
0 0%
China Other countries (incl. United States) China share of total (RHS)
Source: U.S. Consumer Product Safety Commission, “Violations–LOA Date, Country [2009–
2023],” April 23, 2024.
According to CPSC, in 2019 in the United States, consumer prod-

ucts (domestically produced and imported) were involved in 50,900
deaths and over 36 million injuries.174 CPSC estimates that con-
sumer product-related incidents cost the United States $1 trillion
each year, including deaths, injuries, and property damage.175
These persistent and increasing concerns regarding the safe-
ty of consumer products from China are driven in part by rising
e-commerce imports bought from third-party sellers. Although it is
not possible to draw a causal relationship between the number of
Chinese-made goods entering the United States and rising recall
and NOV counts with the data presented, it should be noted that
these trends have occurred against a backdrop of rising e-commerce
shipments from China.176 In a 2019 investigative report, the Wall
Street Journal found 10,870 items for sale on Amazon that had been
declared unsafe or banned by federal regulators were deceptively
labeled, or lacked federally required warnings.* 177 Of the 1,934 sell-
* These products were listed between May and August of 2019. After Amazon was informed of the
items, 83 percent of the over 10,000 items listed were taken down or altered as of August 23, 2019.
297
ers of these goods whose addresses could be determined, 54 percent

were based in China.178 The true number of China-based sellers
could be higher, since Chinese producers may list a U.S. reshipping
warehouse as their location, giving consumers the impression that
a good is from a U.S. seller.179 China-based sellers have been con-
sistently linked to unsafe, hazardous, and low-quality products. For
example, in April 2024, CPSC issued a recall for children’s multipur-
pose helmets imported by the Chinese company Fengwang Sports
and sold exclusively on Temu.180 The helmets “do not comply with
the positional stability, dynamic strength of retention system, im-
pact attenuation, and certification requirements in violation of the
CPSC federal safety regulation” and can fail to protect riders in
the event of a crash.181 In 2023, a similar recall was issued for hel-
mets produced and sold by a Chinese company offered exclusively
through Amazon.182
Direct-to-consumer e-commerce platforms are also leading venues
for Chinese counterfeit goods entering the United States, undermin-
ing U.S. companies’ efforts to provide high-quality and safe goods to
consumers. According to data published by CBP, China and Hong
Kong are the largest sources of counterfeits entering the United
States, accounting for 83.6 percent of counterfeit seizures by value
in FY 2023.* 183 Of the estimated $2.76 billion in retail value of
counterfeits seized by CBP in FY 2023, products from China and
Hong Kong totaled $1.82 billion and $488 million, respectively.† 184
According to the Office of the U.S. Trade Representative’s 2023 Re-
view of Notorious Markets for Counterfeiting and Piracy, China is
the number one source of counterfeit products in the world.185 The
review named multiple online platforms, including Temu’s Chinese
domestic counterpart Pinduoduo and physical market locations in
China.186 Daniel Shapiro, senior vice president of brand relation-
ships and strategic partnerships at brand protection provider Red
Points, testified before the Commission that among e-commerce
platforms, Chinese marketplaces that ship internationally are by
far the largest source of counterfeits; just over 85 percent of all
China-originated IPR infringements reported by Red Points came
from Chinese e-commerce platforms like Alibaba, DHGate, JD.com,
Temu, Shein, and AliExpress.187 As of February 2024, Shein faced
almost 100 cases of copyright infringement in the United States,
while sellers on Temu have been accused of copying product photos,
descriptions, and even entire Amazon storefronts alongside offering
counterfeit products.188 Counterfeits present significant economic
harm to U.S. businesses, costing them over $200 billion annually
and resulting in the loss of more than 750,000 U.S. jobs.189
Alexandra Berzon, Shane Shifflett, and Justin Scheck, “Amazon Has Ceded Control of Its Site. The
Result: Thousands of Banned, Unsafe or Mislabeled Products,” Wall Street Journal, August 23, 2019.
* China is the largest source of counterfeits not only the for the United States but also globally.
An Organisation for Economic Co-operation and Development study that compiled counterfeit
seizure data across countries found that China and Hong Kong were the source for the vast
majority of counterfeit imported products between 2017 and 2019. Organisation for Economic
Co-operation and Development, European Union Intellectual Property Office, “Global Trade in
Fakes: A Worrying Threat,” June 22, 2021.
† Commonly seized Chinese-made counterfeits include handbags and wallets, clothing and ac-
cessories, and watches and jewelry. Together, these three product categories account for 65 percent
of all seized lines from China and Hong Kong and 81 percent of total seizure value from these
producers. U.S. Customs and Border Protection, Intellectual Property Rights, January 19, 2024.
298
Due to the illicit nature of these goods, counterfeits can present

heightened health and safety risks to U.S. consumers.190 In a study
published in 2022, 36 percent of counterfeit apparel items tested by
the American Apparel & Footwear Association failed to comply with
U.S. product safety standards.* 191 Tested items were found to con-
tain arsenic, lead, phthalates, and other toxic heavy metals known to
damage kidneys, bones, respiratory systems, and neurological devel-
opment.192 Similarly, in 2018, Chinese counterfeit cosmetics seized
from vendors in Los Angeles and Houston were found to contain
hazardous materials, including lead, arsenic, and human waste.193
These dangerous counterfeit cosmetics were labeled as reputable
U.S. brands, potentially misleading purchasers into believing they
were receiving authentic and safe products.194
Counterfeits pose a more acute challenge for technical compo-
nents that may be hidden from U.S. consumers’ view, such as auto
parts. In March 2023, CBP seized nearly $200,000 in counterfeit
auto parts shipped from China, including features vital to safely
operating airbag covers, front fenders, and bumpers.195 Counterfeit
materials have also been discovered in commercial jets. In one in-
stance uncovered in 2023, the certificates verifying the origin of ti-
tanium used to manufacture airplane fuselages were found to have
been forged by a supplier in China.196 In total, CBP seized counter-
feit automotive and aerospace products worth $7.6 million in 2023,
with $5.2 million and $2.2 million of this originating in China and
Hong Kong, respectively.197 The National Crime Prevention Council
estimates that over 350,000 serious injuries and 70 deaths occur
every year due to counterfeit products.198
China is a prominent source of counterfeit medications, and U.S.
households additionally face direct risks to their health from un-
safe pharmaceuticals from China. In FY 2023, CBP seized $86.6
million in counterfeit medications and personal care products that
originated in China and Hong Kong, accounting for 47 percent of
the total.199 According to the Organisation for Economic Co-opera-
tion and Development (OECD), China is the world’s second-largest
source of fake pharmaceuticals ranging from antibiotics to cancer
treatments.† 200 China’s growing position in the biopharmaceutical
industry may enable Chinese counterfeiters to more easily repli-
cate advanced drug discoveries, undercutting IP owners and pos-
ing health risks to U.S. households. (For more on China’s position
in biopharmaceutical supply chains, see Chapter 3, “U.S.-China
Competition in Emerging Technologies.”) For example, in December
2023, the U.S. Food and Drug Administration (FDA) warned of fake
Ozempic, a diabetes drug used to treat obesity, entering the United
States after seizing a shipment of counterfeit products.201 Though
the FDA has not announced the origin of the fake drugs, an investi-
gative report by Vanity Fair identified a shipment of 10,000 units of
fake Ozempic sent by air mail to the United States from China.202
* The American Apparel & Footwear Association tested 47 counterfeit items of clothing, foot-
wear, and other accessories and found that 17 products failed safety standards. American Apparel
& Footwear Association, “Fashion Industry Study Reveals Dangerous Chemicals, Heavy Metals in
Counterfeit Products,” March 23, 2022.
† India was the source of 53 percent of all seized counterfeit drugs by value worldwide, accord-
ing to the OECD’s dataset of global IPR seizures. Organisation for Economic Co-operation and
Development, EU Intellectual Property Office, “Mapping the Scale of the Fake Pharmaceutical
Challenge,” in Trade in Counterfeit Pharmaceutical Products, March 23, 2020, 33
299
Challenges Encountered by U.S. Regulators with Imports

from China
The Volume of Imports from China Burdens Regulators and
Increases Consumer Risks
U.S. regulators are overwhelmed by the volume of imports from
China and a lack of time and capacity required to properly inspect
goods entering the United States. This allows large numbers of po-
tentially unsafe or illicit goods to enter the U.S. market daily. In FY
2022, CBP processed $3.35 trillion in imports, including more than
33.4 million imported cargo containers at U.S. ports, not including
de minimis entries.203 According to CBP’s annual Trade and Trav-
el Report for FY 2022, a physical inspection of a cargo container
takes 120 minutes on average, while a technology-aided nonintru-
sive inspection takes eight minutes.204 Challenges with inspection
times are further compounded by a shortage of staff, particularly for
consumer products. There are currently 328 ports of entry located
throughout the United States.205 CPSC has 520 employees, includ-
ing 120 investigators and compliance officers located at 23 ports
with the highest volumes of consumer product imports as of March
2022.206 In testimony before the Commission, Jim Joholske, director
of the Office of Import Compliance for CPSC, noted that the agency
had “fewer than 50 investigators stationed at some of the largest
ports in the country” and further assessed that “the sheer volume
of imports from China remains overwhelming and difficult to moni-
tor.” 207 Given its staffing and resource capacity, CPSC seeks to posi-
tion its personnel to maximize the percentage of potentially unsafe
products it screens, including by deploying additional resources to
express courier facilities and international mail facilities.208 (For an
overview of U.S. consumer product safety enforcement throughout
the import process, see Figure 5.)
Chinese e-commerce platforms’ ability to take advantage of the
de minimis threshold also poses significant challenges to U.S. im-
port regulators. According to the latest available data published
by CBP, de minimis imports from China increased from 300 mil-
lion packages in FY 2018 to nearly 450 million in FY 2021—equal
to 58 percent of the United States’ total de minimis imports that
year.209 According to the U.S. International Trade Commission, 83
percent of total U.S. e-commerce imports benefited from this exclu-
sion in FY 2022.210 Limited staff resources across U.S. regulators
and insufficient shipment data (see textbox below) mean the vast
majority of these packages are not inspected for compliance with
U.S. regulations. De minimis shipments often arrive in the United
States via express couriers, consignment, and international mail.211
In the first three quarters of FY 2024, an average of nearly four
million de minimis shipments arrived in the United States each
day from all countries.212 According to CBP, in 2022, 80 percent of
all IPR-related shipment seizures arriving from China entered the
United States through international mail and express consignment,
the same channels used for shipping small e-commerce packages
directly to consumers.213 In addition, research suggests e-commerce
exporters are exploiting gaps in regulatory coverage for de minimis
shipments to bypass inspections. In a 2019 report, CPSC stated that
Figure 5: Points of Inspection in Manufacturing and Import Cycle for Children’s Products
PRE-ENTRY AT PORT OF ENTRY POST-ENTRY
NOT INSPECTED
CPSC learns of violation
• Manufacturers, importers,
Less than 1% of consumer product import entries are distributors, and retailers are
inspected by regulators each year required to immediately report
Estimated Total product safety issues
FY 2023 Inspected by CPSC • Consumers may report injury or
Shipments
harm directly to CPSC
Imports
48,797 105 million* • Hospitals report product-related
(excluding de minimis)
injuries to CSPC
De minimis 17,806 1 billion+
Test and Certification
Prior to arrival in the CPSC issues
United States, almost all INSPECTED notice of violation (NOV)
children’s products are
required to undergo CPSC may issue a NOV to companies
third-party testing and when their products are found to violate
300
certification that the mandatory standards. The NOV advises

product meets relevant the company of the violation and
safety regulations and recommends or specifies corrective
Determined Inadmissible and Inadmissible and Denial and actions.
standards. Admissible Reconditioned Exported Destruction
If a shipment meets all If a shipment fails to If a shipment is Both CBP and CPSC have
federal requirements and meet regulations or lacks determined to be the authority to seize and
has submitted all proper proper paperwork, it is inadmissible, denied destroy denied shipments Company takes a
paperwork, the shipment denied entry. If products entry, and cannot be if they determine that the corrective action
is released and allowed in the shipment are reconditioned, the goods products violate the law
entry. subsequently brought up may still be allowed to be and cannot be re- • Correct future production
to standards (i.e., exported out of the exported or • Stop sale and correct future
reconditioned) they are United States to another reconditioned. production
allowed to reattempt market. • Recall the product—consumer level
entry. • Recall the product—distribution level
Source: Various.214
* In 2023, the number of individual import line items to the United States was 105 million. This refers to the number of separate product lines entering the United
States through normal customs channels. U.S. Census Bureau, USA Trade Online.
301
“some industry stakeholders indicated that due to the small size

of their shipments, de minimis e-commerce sellers can disperse the
risk of having their products interdicted by various border manage-
ment agencies by sending multiple shipments to different ports.” 215
Limited Data on De Minimis Shipments and Ongoing

Data Pilots
The United States collects only limited data on de minimis
shipments,* posing challenges to identifying unsafe or illegal im-
ports. Unlike shipments entering through normal customs chan-
nels, CBP does not require de minimis entries to declare the HTS
code for the shipments’ contents, which is used for a variety of
purposes, including assessing import duties and preparing U.S.
trade statistics. Instead, these importers can provide a “specific”
description of the product, but often these are vague, inaccurate,
and difficult for regulators to process. CBP’s regulations also only
require de minimis importers to provide information on the ship-
per, which is frequently the entity arranging the shipment rather
than the manufacturer of the product.† 216
These data gaps compromise the enforcement of U.S. regulations
and laws. For instance, the lack of HTS data inhibits CPSC from
screening for products subject to high standards, like children’s
products, and inadequate data on the manufacturer prevents
targeting imports based on risk factors such as past violations.
As Mr. Joholske testified, “Without the same data as we have on
higher value shipments, CPSC cannot utilize its risk assessment
methodology to know what should be targeted for inspection.” 217
These issues pose challenges to the enforcement of other laws,
including the Uyghur Forced Labor Prevention Act.218
To mitigate these issues, CBP has initiated data pilots to be-
gin collecting additional information on de minimis imports, but
participation in these programs remains voluntary. In July 2019,
CBP launched its Section 321 Data Pilot, through which approved
carriers, brokers, freight forwarders, and online marketplaces
could submit additional data on de minimis shipments in advance
to CBP, including data elements not traditionally collected like
product images and URL links.219 CBP has extended this pilot to
run through August 2025.220 In August 2019, CBP began the En-
try Type 86 test, which enabled de minimis importers to file entry
releases electronically through the Automated Commercial En-
vironment—CBP’s online trade processing portal.221 Entry Type
86 is intended to provide CBP and other government agencies
greater visibility into de minimis imports, asking filers to submit
the shipment’s ten-digit HTS codes, among other expanded data
elements. This test currently has no sunset date. In its September
* CBP’s regulations require the following data fields for a shipment to be released under de
minimis: “(1) Country of origin of the merchandise; (2) Shipper name, address and country; (3)
Ultimate consignee name and address; (4) Specific description of the merchandise; (5) Quantity;
(6) Shipping weight; and (7) Value.” U.S. Customs and Border Protection, “Form of Entry,” 19
CFR 143.23(k).
† In contrast, importers that file for formal entries are required to provide a “Manufacturing
ID,” which is a unique code for the manufacturer or entity initiating the shipment. Fariha Ka-
mal, C.J. Krizan, and Ryan Monarch, “Identifying Foreign Suppliers in U.S. Merchandise Import
Transactions,” Federal Reserve International Finance Discussion Papers, August 2015, 4–5.
302
Limited Data on De Minimis Shipments and Ongoing

Data Pilots—Continued
13, 2024 announcement on its intent to propose rulemaking on
the de minimis exemption, the Administration indicated it would
require additional data elements on de minimis shipments, in-
cluding HTS codes.222 In FY 2023, CBP received filings on 785.7
million de minimis shipments through these two programs out of
a total of over one billion de minimis entries.223
Evasion of Regulations and Fraudulent Certification

In most cases, a permit or advanced inspection is not needed
to import goods into the United States; in the limited set of cases
where advanced testing and certification is required, these efforts
are subject to abuse and evasion by Chinese manufacturers.224 Fed-
eral law requires importers to verify some consumer products’ com-
pliance with safety regulations through testing, including all-ter-
rain vehicles, mattresses, bicycle helmets, and almost all children’s
products.225 Producers of these regulated goods must provide doc-
umentation of successful testing to retailers, distributors, and—
upon request—the government (for more on the approval process
for third-party testing laboratories, see textbox below).226 However,
only producers of children’s products are required to use CPSC-ap-
proved third-party labs; other products can be tested in-house or
by other qualified labs and test facilities that do not require CPSC
accreditation.227
Products regulated by other agencies require testing as well. The
U.S. Department of Transportation regulates the shipping of lithi-
um-ion batteries, and New York City recently started requiring bat-
teries to certify via labeling that they meet testing requirements.228
However, these certifications can be forged, resulting in significant
consequences for U.S. consumers. A 2023 investigation by CBS New
York found fake certification stickers for lithium-ion batteries for
sale on a Chinese e-commerce marketplace following an e-bike fire
in New York City.229 The New York City Fire Department stated
that lithium-ion batteries had been linked to more than 200 fires
and 17 deaths in New York City between January and November
2023.* 230
Issues have arisen with other types of third-party testing as well.
The FDA requires producers of medical devices to submit testing
data on device performance, which is part of a safety review process
that may also include mandatory onsite inspections by the FDA.231
In February 2024, the FDA issued a reminder for medical device
manufacturers to independently verify third-party-generated data
after the agency “identified an increase in submissions containing
unreliable data generated by third-party test labs, including from
numerous such facilities based in China and India.” 232 The FDA
encouraged manufacturers to contract testing to accredited labs un-
der the Accreditation Scheme for Conformity Assessment program,
* The unnamed Chinese marketplace removed the counterfeit stickers after being notified by
CBS New York. CBS New York Team, Walter Smith Randolph, and Tim McNicholas, “Online
Marketplace Removes Fake UL Labels after CBS New York Investigation,” November 17, 2023.
303
which is not currently required when testing medical devices.233 The

agency further noted, “When such data are submitted to the FDA,
the agency is unable to rely on them to grant marketing authoriza-
tion and it calls into question the data integrity of the entire file.” 234
Third-Party Conformity Bodies

In the United States, third-party conformity assessment bodies
must be accredited by a signatory member to the Internation-
al Laboratory Accreditation Cooperation-Mutual Recognition Ar-
rangement (ILAC-MRA), an international framework that aims
to standardize testing standards and allow the cross-border rec-
ognition of labs accredited by a foreign accreditation body.* 235
Third-party testers are also subject to periodic audits at least
every two years.236 These audits consist of a reassessment of
the lab’s management and technical requirements by the lab’s
accreditation body and an examination of this documentation by
CPSC.237 As of October 2024, 292 out of a total of 677 third-par-
ty testing laboratories approved by CSPC were located in China,
and almost all were accredited by the China National Accredita-
tion Service for Conformity Assessment.238 The majority of ac-
cepted Chinese testing labs are independently owned, but some
are also partially owned by manufacturers, private labelers, or
government entities.239
In some cases, U.S. regulators may conduct advanced inspections

of foreign manufacturers to ensure quality production, but these ef-
forts are sometimes undermined by a lack of capacity. While the
FDA is required to conduct mandatory in-country inspections of
overseas facilities for drugs, medical devices, biological materials,
and food products, it announced in March 2020 that it would stop
routine inspections of overseas and domestic producers because of
the COVID-19 pandemic.240 Due to staffing shortages and exacer-
bated by a backlog in the wake of the pandemic, the agency has
since struggled to resume regular inspections, leading to increased
risks to U.S. consumers.241 Following a series of deaths from bacte-
ria-tainted eyedrops,† a ProPublica analysis of FDA data revealed
that the agency inspected only 6 percent of the approximately 2,800
foreign manufacturing facilities where drugs and their ingredients
were produced in 2022.‡ 242 Even in cases where the FDA is able
to inspect foreign manufacturers, there are significant questions
* To be accepted by CPSC, labs must be independently accredited to ISO/IEC 17025—General

Requirements for the Competence of Testing and Calibration Laboratories by a member of the
ILAC-MRA. Applicants must also detail the scope of tests related to children’s product safety
that they intend to offer. The submission is then reviewed by CPSC upon initial acceptance
and then audited at least every two years going forward. U.S. Consumer Product Safety Com-
mission, CPSC-Accepted Laboratories Frequently Asked Questions; U.S. Consumer Product Safety
Commission, CPSC Form 223—Lab Accreditation; U.S. Consumer Product Safety Commission,
“Requirements Pertaining to Third Party Conformity Assessment Bodies,” Federal Register 77:
31084 (May 24, 2012).
† The eyedrops were produced by the India-based firm Global Pharma Healthcare. U.S. Food
and Drug Administration, Warning Letter: Global Pharma Healthcare Private Limited, October
20, 2023.
‡ By comparison, in 2019 the FDA inspected 37 percent of the approximately 2,500 overseas
manufacturers. Irena Hwang, “After Pandemic Delays, FDA Still Struggling to Inspect Foreign
Drug Manufacturers,” ProPublica, April 19, 2023.
304
regarding the reliability of the information gathered. In February

2024, the GAO released a report in which it concluded that the FDA
faces continued issues in overseeing foreign drug manufacturers due
to persistent staff vacancies, including in the FDA’s China office.243
Of particular concern, the report noted that the FDA’s practice of
announcing visits up to 12 weeks in advance, as is typically required
by foreign governments, and reliance on translators provided by the
foreign establishment being inspected “can raise questions about the
accuracy of information FDA investigators collect.” 244
Inefficient and Ineffective Recalls
If unsafe products are not stopped at the border, federal agen-
cies can issue recalls to remove them from the market, but the
recall process can be long, ineffective, and inefficient, particular-
ly when dealing with China-based manufacturers. Most recalls
are voluntary and issued as the result of negotiations between
CPSC and the retailer or manufacturer.* 245 CPSC cannot uni-
laterally recall a product without legal action.246 If a company
does not agree to a voluntary recall, CPSC must pursue a man-
datory recall through an administrative adjudicatory process or
by filing a federal court action.247 However, since U.S. regulators
cannot exercise jurisdiction over foreign firms to impose finan-
cial consequences, CPSC faces significant challenges in getting
China-based and other foreign firms to comply with U.S. regula-
tions.248 These firms can ignore communications from CPSC and
refuse to participate in the voluntary recall process, forcing CPSC
to either initiate legal proceedings or else to leave the product
unrecalled.249 In testimony for the Commission, Mr. Joholske
asserted that “CPSC has little ability to act against third-par-
ty sellers who are small manufacturers based overseas. Products
including baby mattresses, lithium ion batteries, magnets, baby
loungers, and more are left unrecalled because the manufacturer
cannot be held responsible.” 250
In cases where firms do not cooperate, CPSC can issue a uni-
lateral safety warning to alert the public of a product’s risks.251
The number of these warnings has increased in the past four years,
largely in response to unsafe goods sold via e-commerce by Chinese
and other foreign manufacturers.† 252 (For more on the role of e-com-
merce marketplaces in U.S. consumer product safety enforcment,
see textbox below.) Alongside e-commerce shipments, the number of
unilateral warnings issued by CPSC increased from three in 2020
to 38 in 2023.‡ 253 In remarks given at a seminar in 2024, CPSC
Chair Alexander D. Hoehn-Saric stated, “Once a rare occurrence,
these unilateral warnings are now an important part of our toolbox,
* The negotiation process between CPSC and a firm can be lengthy, taking between a few
months and a few years. Teresa Murray, “Safe at Home 2024,” U.S. PIRG Education Fund, March
2024, 6.
† CPSC cannot issue a recall for counterfeit products, since it does not regulate illegal goods.
This inability to systematically remove unsafe counterfeits leaves large swaths of potentially
dangerous and unregulated consumer goods from China on the market for use by U.S. consumers.
Teresa Murray, written testimony for U.S.-China Economic and Security Review Commission,
Hearing on Consumer Products from China: Safety, Regulations, and Supply Chains, March 1,
2024, 5; U.S. Customs and Border Protection, IPR Seizures by Trading Partner, February 10, 2024.
‡ CPSC issued only two unilateral warnings in the nine-year period spanning 2011 to 2019.
Matthew Cohen, “CPSC Enforcement Trend: Unilateral Press Releases,” Crowell, October 13,
2022.
305
especially for products sold by foreign manufacturers on e-commerce

websites.” 254 These warnings primarily target goods made in Chi-
na. According to data compiled by the U.S. Public Interest Research
Group’s Education Fund, of the 38 warnings issued by CPSC in
2023, at least 20 of the products were manufactured in China.255
Most were sold via e-commerce platforms, with four products being
sold on Temu exclusively.* 256 As an example, CPSC issued a public
warning to stop using baby loungers sold on several e-commerce
websites by the Chinese seller Poetint002 due to suffocation risk,
fall hazard, and failure to comply with federal regulations for in-
fant sleep products.257 Although CPSC notified Poetint002 that its
product violated the law, “the firm has not agreed to recall these
loungers or offer a remedy to consumers.” 258 Thousands of visual-
ly similar baby lounger products are still available on e-commerce
platforms from other sellers.
In cases where companies comply with CPSC requests and an
agreement for a voluntary recall is reached, low recall correction
rates stymie efforts to remove unsafe products from the market.
Examination of monthly progress reports on the status of recalled
items suggests that in most cases, recalls have little success in re-
moving unsafe goods from the U.S. market regardless of where the
product was manufactured. Among the 27 product recalls issued
before August 1, 2022, that CPSC has provided data on, 19 of the
products had a correction rate of below 50 percent.259 Among prod-
ucts recalled after August 1, 2022, with data available, only 27 out
of the 162 recalled products had a correction rate of 50 percent or
greater.260
Even if a recall is issued and is initially successful, many recalled
products continue to enter and circulate within the United States via
online retail sales, often involving Chinese producers. In 2007, the
Federal Government banned the sale of flat pool drain covers due to
numerous drowning and evisceration deaths that were caused when
people—primarily young children—became suctioned to the drain at
the bottom of a pool.† 261 Despite this ban, Chinese sellers continue
to offer flat pool drain covers directly to U.S. consumers through
online marketplaces.262 Since September 2022, CPSC issued seven
recalls on nearly identical drain covers that were in violation of the
federal safety standard.263 By the time the violations were detect-
ed, about 7,300 drains had been sold.264 In all seven instances, the
drains were made in China and were being sold by Chinese com-
panies directly to U.S. consumers through Amazon.265 These recent
recalls do not appear to have solved the issue. Using an image of
the drain cover from one CPSC recall alert in Google’s image search
produced a listing for an identical-looking drain for sale on Amazon
* Six warnings were for products sold exclusively on Amazon and one was for a product sold
exclusively on Walmart.com. Teresa Murray, “The CPSC’s Public Warnings for 2023 and by Year,
2020–2023,” in Safe at Home in 2024, U.S. PIRG Education Fund, March 2024, 26.
† In a 2019 report, CPSC stated that the agency was aware of 11 instances of circulation en-
trapments associated with pools, spas, and whirlpool bathtubs between 2014 and 2018. Of those
11 instances, two resulted in death. Although sobering, these statistics are lower than earlier
figures. From 1999 to 2008, CPSC reported 83 instances, with 11 reported deaths. U.S. Consum-
er Product Safety Commission, 2014–2018 Reported Circulation/Suction Entrapment Incidents
Associated with Pools, Spas, and Whirlpool Bathtubs, 2019 Report, May 2019; U.S. Consumer
Product Safety Commission, 1999–2008 Reported Circulation/Suction Entrapment Incidents As-
sociated with Pools, Spas, and Whirlpool Bathtubs, 2009 Memorandum, May 14, 2009.
306
between April and June 2024.* 266 Although not listed on the U.S.
version of the site, information provided by Amazon Mexico’s web-
page indicates the drain was made in China and sold by a Chinese
vendor.267
E-Commerce Marketplaces’ Role in Product Safety

As commerce has shifted online, CPSC faces new challenges in
upholding product safety rules. Traditionally, physical stores have
played a key role as sellers in ensuring the safety of consumer
products. Manufacturers, distributors, and retailers may face civil
liability † and regulatory consequences for harms caused to con-
sumers as part of the consumer product supply chain.268 CPSC
develops standards for firms involved in the supply chain for con-
sumer products, including retailers in physical stores, and has the
power to ban unsafe products.269 Retailers are expected to obtain
and review certificates of compliance as mandated by CPSC from
manufacturers and importers.270 Retailers must report harmful
products to CPSC immediately, ensure the products are no longer
sold in their stores, and, in some cases, notify affected custom-
ers.271 Regulators have the legal right to enter and inspect the
premises of a seller of consumer goods, which gives them a way to
monitor and enforce these regulations.272 The same laws that ap-
ply to brick-and-mortar stores also apply to retailers, distributors,
and manufacturers of products sold online.273 However, e-com-
merce marketplaces have traditionally argued that they do not
qualify as “retailers” or “distributors” under applicable law and
instead cite the fact that they only facilitate purchases between
third-party sellers and buyers without taking legal ownership of
the product at any point.‡ 274
E-commerce marketplaces may be incentivized to provide addi-
tional consumer protections as a way to compete with other plat-
forms.275 Select e-commerce marketplaces have policies in place
to remove recalled products from their websites.276 Critics ques-
* Commission staff reported this listing to Amazon three times for a potential violation of U.S.
safety standards, most recently on June 11, 2024. The listing had been removed by August 2024.
On October 3, 2024, CPSC issued an NOV to the seller, but the firm has not agreed to conduct
a recall. For a comparison of the drain sold online and the recalled product, see Appendix III,
“Comparison of Drain Cover for Sale on Amazon as of June 11, 2024, and Recalled Drain Cover
Linked to Evisceration and Drowning Deaths.” U.S. Consumer Product Safety Commission, CPSC
Warns Consumers to Immediately Stop Using Maxmartt Pool Drain Covers Due to Entrapment
Hazard; Violations of the Virginia Graeme Baker Pool and Spa Safety Act; Sold on Amazon.com,
October 3, 2024; Amazon, “Maxmartt Pool Floor Main Drain 2 Inch White Main Drain Water In-
let Draining Accessory Vinyl Pool Main Drain Liner for Swimming Pool,” June 11, 2024. https://
web.archive.org/web/20240611144909/https://www.amazon.com/Maxmartt-White-Swimming-
Draining-Accessory/dp/B083728PP2.
† Civil liability has played an outsized role in holding firms accountable because consumers
harmed by unsafe products can sue them to recover damages. In May 1997, the non-binding but
influential Restatement (Third) of Product Liability Law stated the typical legal approach that
a person injured by a defective product may sue the manufacturer and members of the chain of
distribution. The degree to which retailers are civilly liable, and the legal standard required to
prove harm, differ by state. Becca Trate, “From Cart to Claim: Addressing Product Liability in
Online Marketplaces,” Information Technology and Innovation Foundation, June 24, 2024, 3–4;
American Law Institute, “Restatement of the Law Third, Torts: Products Liability,” 1998.
‡ Under the Consumer Product Safety Act, the term “distributor” means “a person to whom a
consumer product is delivered or sold for purposes of distribution in commerce, except that such
term does not include a manufacturer or retailer of such product.” The term “third-party logistics
provider” means a person who solely receives, holds, or otherwise transports a consumer product
in the ordinary course of business but who does not take title to the product. U.S. Consumer
Product Safety Commission, Product Safety and Compliance: Best Practices for Buyers Exporting
Consumer Goods to the United States, September 2021.
307
E-Commerce Marketplaces’ Role in Product Safety—

Continued
tion these policies, however, pointing to numerous instances of
recalled products available for purchase on e-commerce market-
places.277 E-commerce marketplaces may enforce additional stan-
dards, like requiring sellers of children’s products in the United
States to upload certificates of compliance.278 While individual
sellers have been liable for products sold on marketplaces, lia-
bility for the marketplaces themselves in transactions involving
separate sellers has generally been limited.279 The high volume
of sellers with almost identical products, combined with the fact
that many are overseas beyond the reach of U.S. law enforcement,
makes the rules far more difficult to administer.
In July 2024, CPSC determined that Amazon was acting as a
distributor for products sold under the Fulfillment by Amazon
(FBA) program.280 Such a determination would make Amazon
responsible for the safety of a large portion of goods sold on the
platform by giving CPSC the ability to force Amazon to recall
or ban unsafe products.281 Under the FBA program, Amazon is
responsible for hosting the product listing on its site, handling
payment, warehousing, packaging and shipping, returns, and cus-
tomer service.282 CPSC initiated the complaint against Amazon
in 2021 for failing to provide adequate notification and support
to customers after it facilitated the sale through FBA of over
400,000 units of “hazardous” products, including “children’s sleep-
wear that fail to meet flammability requirements, carbon monox-
ide detectors that fail to alarm, and hair dryers that lack electro-
cution protection.” 283 Amazon argued that it was merely acting
as a “third-party logistics provider,” which would have shielded
it from liability.284 The CPSC ruling reasoned that even though
Amazon was not the legal owner of the goods, the role Amazon
played in facilitating the purchase went above and beyond that
of a logistics provider.285 Unless the CPSC ruling is overturned,
Amazon will be required to update its procedures for notifying
buyers about product hazards and to provide refunds or replace-
ments for the products.286
The implications of the ruling are still to be determined. The
ruling only applies to products sold on Amazon through FBA.
The ruling is also specific to Amazon and does not cover other
popular e-commerce marketplaces like eBay, Wayfair, Etsy, Shein,
or Temu.287 Different business models like Shein and Temu that
facilitate direct shipments from product manufacturers to the fi-
nal consumer may not share enough characteristics of FBA for
a similar argument to apply.288 Perversely, this could encourage
e-commerce marketplaces to move toward the model of allowing
international warehouses or manufacturers to ship directly to the
consumer to avoid liability under programs similar to FBA.289
Amazon plans to start a similar service geared toward Chinese
sellers in efforts to compete with Shein and Temu.290 Finally, the
decision gives CPSC the power to enforce its regulations against
Amazon but leaves unresolved the applicability of direct civil lia-
bility for harm to U.S. consumers.291
308
Case Study: The Safety Risks and Health Hazards

of Low-Quality Toys from China
Children’s toys available for purchase in the United States are
overwhelmingly sourced from China, giving China-based manufac-
turers an outsized role in ensuring the safety of products available
to young U.S. consumers. According to data provided by the U.S.
Census Bureau, China is the number one source of imported chil-
dren’s toys to the United States, accounting for three-quarters of all
toy imports in 2023.* 292 Given the country’s substantial role as a
source of imports, China-based manufacturers also play a significant
role in ensuring that toys are produced up to U.S. safety standards.
Children’s products and toys are among the most heavily regulated
goods in the U.S. market. All toys sold in the United States and
intended for use by children age 12 and under must be tested by
a third-party, CPSC-approved laboratory for compliance with appli-
cable federal safety requirements.293 Upon successful completion
of testing, the manufacturer or importer will issue a Children’s
Product Certificate † verifying a product’s compliance with regu-
lations based on the lab results.294 Although there may be addi-
tional requirements for some toys, most are subject to standards
prescribed by the Standard Consumer Safety Specification for Toy
Safety as specified by the international standards-setting organiza-
tion ASTM.295 These standards cover provisions for toys’ material
quality, flammability, toxicology, and stability and overload require-
ments, among other features.296 Critically, U.S. consumers cannot
externally observe many of these safety features, leaving them to
depend on manufacturers, importers, and retailers to appropriately
vet the quality of the products they sell.
Despite these extensive regulations, toys made in China continue
to present elevated health and safety risks to U.S. children. A re-
view of CPSC toy recalls issued from 2019 to 2023 reveals that 85
percent were for products made in China.‡ 297 Of the 16 lead- and
phthalate-related recalls conducted in the past five years, all but
one were for products made in China.298 Even in cases where a
finished toy was not imported from China, toy components manufac-
tured in China still present safety concerns. In May 2023, a small
U.S. bike manufacturer issued a recall for an electric bike with a
built-in seat for young children.299 Although the bike was designed
* Part of the decline may be due to some toy sales shifting to cross-border e-commerce channels
that utilize the de minimis exemption, for which the United States collects insufficient data.
† The Children’s Product Certificate must be furnished to CPSC upon request and currently can
be furnished electronically or physically. In practice, many importers and manufacturers email
the certificate to CPSC when requested. A new proposal by CPSC would change this process to
a mandatory e-filing system for foreign manufacturers when the product is imported. In a past
study, CPSC found that shipments accompanied by a certificate, or where a certificate was pro-
vided within 24 hours of request, are significantly less likely to violate safety rules than products
for which it took longer than 24 hours to provide the certificate or where no certificate was ever
provided, even after CSPC requested one. No shipments, including de minimis, would be exempt
from the e-filing requirement. CSPC anticipates that requiring e-filing of certificates will improve
its risk assessment methodology and ability to target high-risk shipments for inspection. On Sep-
tember 13, 2024, the Administration announced that CPSC intends to issue a final rule to enact
these changes. Sheila A. Millar and Antonia Stamenova-Dancheva, “CPSC Proposes Significant
Changes to Rule Governing Certificates of Compliance,” National Law Review, January 4, 2024;
U.S. Consumer Product Safety Commission, eFiling Certificate of Compliance Study Assessment,
August 28, 2018.
‡ Of 87 toy recalls, 74 were related to products manufactured in China. U.S. Consumer Product
Safety Commission, Recalls.
309
and assembled by the small business, the firm used yellow-painted

wood panels from China containing levels of lead that exceeded fed-
eral standards.300
Toy safety concerns have been exacerbated by the rise of Chi-
na-based e-commerce sellers and Chinese e-commerce websites,
which often sell recalled toys or other children’s products with
known safety issues. The continued production and resale of mag-
netic ball sets provides an example of how online sales undermine
consumer safety. Magnetic ball sets consist of numerous small,
round, powerful magnets that can be pulled apart or reconnected
to form different shapes. Often sold as a children’s toy, these sets
pose serious health and safety risks if ingested, as the small mag-
nets may connect while inside a person’s body, potentially result-
ing in serious injury or even death.301 More than 2,000 emergen-
cy room visits and at least seven deaths have been linked to these
products between 2017 and 2021.302 CPSC issued a warning in
2007 and then again in 2011 after the agency received more than
200 reports of children swallowing magnets, with at least 18 of
those cases resulting in emergency surgery.303 Between 2012 and
2014, CPSC issued six recalls for magnetic ball sets due to inju-
ry hazard; the agency then issued at least another five between
December 2023 and March 2024, with most of the products being
made in and offered online by China-based sellers.304 In addition
to these recalls, CPSC has issued at least 21 notices of violation
for magnet sets.305 In every case, the sets were sold online, and in
17 of the 21 instances, CPSC identified the responsible company
as based in China.306 Despite these well-known and documented
risks, magnet sets that do not comply with federal safety stan-
dards continue to be sold into the U.S. market via e-commerce
platforms by China-based sellers.
Counterfeit toys from China present acute risks for U.S. consum-
ers, since manufacturers of these products are unlikely to submit
their fraudulent goods to the extensive testing and certification
required by the Federal Government. Of the 165 toy-related coun-
terfeit shipment seizures conducted by CBP in FY 2022, 133 sei-
zures were from China or Hong Kong.* 307 In FY 2023, over half
of seized Chinese and Hong Kong counterfeit toy shipments were
found entering the United States through express consignment or
mail, venues commonly used for e-commerce imports.308 Although
information on the product safety of these recent seizures is not
available, past experience suggests these products likely posed sig-
nificant risks. In 2019, CBP and several other federal agencies and
international partners executed Operation Holiday Hoax, a sting op-
eration to prevent counterfeit goods from entering the United States
and other markets.309 After searching a shipment from China, the
joint team recovered 155,000 units of suspected counterfeit toys, lat-
er found to contain lead.310 Counterfeits may pose other hazards as
well, such as inappropriate age-labeling, which may mislead con-
sumers into purchasing a toy that carries an added but unidentified
risk for younger children.311
* CBP reported the total value of all toy-related seizures to equal $7.2 million. Of that total,
counterfeits from China and Hong Kong accounted for $6.3 million in value, or 87 percent. U.S.
Customs and Border Protection, IPR Seizures by Trading Partner, October 21, 2023.
310
Experiences in Quality Sourcing from China:

Lovevery’s Process
Ensuring safe manufacturing in China is possible, and many
U.S. producers and retailers are able to source quality goods from
China by implementing a rigorous review process. Lovevery, an
educational play products and toy company headquartered in Boi-
se, Idaho, is one example of a U.S. producer that is able to effec-
tively source from China by implementing a quality and safety
inspection process. A key feature of this process is testing con-
ducted by multiple unrelated parties at several stages of manu-
facturing. This distribution of responsibility creates an informal
check system that holds all production partners accountable for
their contribution.
• Partner expectations and testing: Lovevery sets testing and
safety requirements both for its product manufacturers as
well as the suppliers that provide inputs for finished goods.
This includes testing for chemical hazards at the supplier
level prior to shipping materials to the manufacturer.312 Sup-
pliers are also expected to inspect and sometimes test com-
ponents and raw materials that enter the factory before they
are used in final assembly.313 Once production begins, Lovev-
ery implements in-process testing for items that are critical
to either the quality or safety of the product, providing a sec-
ond layer of review conducted by the manufacturer.314
• Contracted audits: In addition to obtaining required product
certifications from CPSC-approved labs, Lovevery works with
contractors to audit China-based factories. These external au-
dits ensure raw materials are compliant with standards and
that nothing is introduced during manufacturing that may
compromise the product’s quality or safety.315 These audits
allow U.S.-based producers like Lovevery to review the quali-
ty of checks performed by manufacturers and suppliers.
This inspection process reduces the likelihood of an unsafe
product reaching the U.S. market, but it comes at a considerable
cost to U.S. firms—costs not incurred by those China-based man-
ufacturers that sell online directly to U.S. consumers with no re-
gard for safety regulations. Bryan Brown, group vice president of
safety, quality, and regulatory compliance for Lovevery, notes that
although critical to the production process for children’s products,
“using the right materials, adding extra steps in manufacturing,
building in redundancy for things such as small part contain-
ment as well as in-process destructive testing drives a higher
product cost.” 316 These higher costs create opportunity for some
unethical China-based manufacturers to undercut competition
by simply not following safety procedures or U.S. regulations. In
many instances, these China-based manufacturers will imitate or
attempt to entirely reproduce goods sold by U.S. companies. Mr.
Brown states that “in addition to the obvious issues of intellectual
property infringement and unfair competition, these [knockoff or
counterfeit] toys are simply not made to the same standard or,
311
Experiences in Quality Sourcing from China:

Lovevery’s Process—Continued
frankly, to any reasonable standard. They are almost always less
expensive and for that reason, consumers likely gravitate to them
for the perceived price value.” 317 Most often, these cheap and un-
safe goods are sold online via third-party e-commerce platforms
and enter the United States with limited if any vetting or ver-
ification, presenting significant physical risks to U.S. consumers
and substantial economic harm to U.S. firms.318

The rising popularity of online shopping among U.S. consumers,
in part due to the COVID-19 pandemic and the increasing use of
e-commerce platforms by China-based sellers, present a novel and
increasing challenge to the U.S. import regulatory regime. Online
shopping platforms have given Chinese manufacturers unprece-
dented access to the U.S. market, but many of the sellers on these
sites are unaware of, unable to, or unwilling to produce up to U.S.
regulatory standards. Moreover, since these manufacturers lie out-
side the jurisdiction of U.S. regulators, courts, and law enforcement,
these firms are not held accountable for the unsafe and sometimes
deadly goods they sell. This combination of unfettered access and
limited consequences allows China-based sellers to disregard critical
U.S. safety regulations. This may lead to rising instances of haz-
ardous products entering the United States from China, subjecting
unknowing U.S. consumers to a higher likelihood of product-related
mishaps, injuries, or even death. In addition, by refusing to follow
critical but costly U.S. product safety regulations, unethical Chinese
firms receive an unfair competitive edge vis-à-vis law-abiding firms.
This discrepancy in ability to enforce regulations may result in sig-
nificant economic harm to U.S. firms. Chinese state-owned entities
such as Sinosure have appeared to protect Chinese producers of
harmful or poor-quality products from legal or contractual recourse,
underlining how China continues to engage in practices that advan-
tage its domestic firms and are inconsistent at least in spirit with
the nondiscrimination obligation central to WTO commitments.
Challenges to enforcement of customs regulations and duties par-
allel the difficulties of monitoring product safety at the border. As
Chinese companies seek continued access to the U.S. market de-
spite rising trade tensions, U.S. customs authorities may struggle to
monitor and penalize efforts to evade tariffs and other restrictions
on imports. This task may grow more complicated as supply chains
continue adjusting to the evolving bilateral relationship between the
United States and China. With an increasing share of U.S. imports
being sourced outside of China, it may become more difficult to de-
tect instances of illegal transshipment of products from China. As
the volume of goods incoming from markets such as Vietnam and
Mexico increases, U.S. customs authorities may need to deploy addi-
tional resources to ensure that Chinese companies are not seeking
to merely reroute made-in-China products around U.S. trade restric-
tions or engage in other forms of duty evasion. Congress expanded
312
CBP’s power to investigate evasion specifically of AD/CVD orders

through the Enforce and Protect Act of 2015, but the agency lacks
equivalent authorities to investigate evasion of other duties, such
as Section 301 tariffs. With the majority of U.S. imports from China
now subject to Section 301 duties, a broader review of CBP’s tools
and penalties for enforcing U.S. trade policy may be merited given
the potential scale of Chinese duty evasion.
Given China’s stated policy to support its manufacturing sectors’
share in the economy, Chinese manufacturers may increasingly use
legitimate channels to remain intertwined with U.S. global value
chains. An increasing number of Chinese producers are shifting
their factories abroad, where they can produce for the U.S. market
and avoid China-specific tariffs. (For more on these supply shifts,
see Chapter 1, “U.S.-China Economic and Trade Relations (Year in
Review).”) In addition, a growing portion of China’s manufacturing
sector is engaged in producing inputs and components and export-
ing them for final assembly outside of China. As downstream pro-
ducers will continue to face challenges in ensuring Chinese import-
ed components comply with safety and regulatory standards, this
could create new risk vectors for U.S. businesses and households
that are difficult to uncover. U.S. households purchasing products
from factories in Mexico, Vietnam, and elsewhere that utilize inputs
from China may not be aware of the enhanced safety risk. U.S. agen-
cies will need to continually develop and deploy updated assessment
tools and techniques to ensure parts, components, and materials em-
bedded in key U.S. imports do not raise safety or trade law evasion
concerns.
313
Appendix I: United States’ Top 15 Trading

Partners’ De Minimis Thresholds
De Minimis
Trading Partner Threshold Notes
Mexico $50 The $50 threshold is for shipments
from countries outside of United
States-Mexico-Canada Agreement
(USMCA). For shipments from Canada
and the United States the threshold is
$117.
Canada $15 The $15 threshold is for shipments
from outside of USMCA. For shipments
from Mexico and the United States, the
threshold is $150.
China $7
Germany $155
Japan $140 The de minimis threshold varies by

harmonized system codes; some imports
are dutiable under the $140 de minimis
value.
South Korea $150 The $150 threshold is the general de
minimis threshold. For shipments from
the United States, the threshold is
$200.
United Kingdom $160
Taiwan $60
Vietnam $43
Netherlands $155
India N/A India does not support a de minimis

exemption. All imports are subject to
duty and tax.
Italy $155
Ireland $155
France $155
Brazil $50 Brazil’s de minimis exemption applies

only to postal shipments to individu-
als. In June 2024, Brazil introduced a
20 percent tax on e-commerce imports
valued under $50.
Note: These data include information on the United States’ top 15 trading partners, ordered in
terms of total trade based on data provided by the U.S. Census Bureau as of January 2024. This
group of trading partners accounts for 75 percent of the United States’ total trade. Data on the
de minimis thresholds come from the Global Express Association (GEA), which is the U.S. Inter-
national Trade Administration’s suggested source for finding information on de minimis values by
trading partner. Reported thresholds are approximations, and U.S. dollar equivalents are based
on the exchange rate the day the threshold was entered into the GEA database.
Source: Various.319
Appendix II: Authorities for Combating Evasion of U.S. Customs Duties:
Antidumping and Countervailing Duties vs. Section 301 and
Other Trade Measures
Panel A: Antidumping and Countervailing Duty Enforcement
Recent Enforcement
Tool Description Timeline Actions Enforcement Body
Scope and When a product subject to an AD/CVD order Statutory In 2023, the Commerce Commerce Department,
Circumvention is altered or transformed in a minor way requirement Department reached either self-initiated or on
Inquiry and sold as new merchandise, the Commerce to issue a final final affirmative de- request from an interest-
Department can conduct an investigation to determination terminations in seven ed party.
determine if the product is also subject to the within 300 days circumvention inquiries
AD/CVD order. This can include minor alter- after initiation. involving AD/CVD orders
ations that take place outside of the dutied on China.320
country (including in the United States or a
third-party country) using inputs subject to an
314
AD/CVD order.
Enforce and When an importer attempts to evade paying Statutory In FY 2022, CBP reached Customs and Border Pro-
Protect Act an AD/CVD duty when importing into the requirement an affirmative determina- tection on request from
(EAPA) United States (including through misclassifi- to issue a final tion in 53 EAPA inves- an interested party filing
cation, misvaluation, or transshipment), CBP determination tigations, covering about through the e-Allegation
may investigate if evasion took place and bill within 300 days $100 million in evasion portal.
the importer for any additional duties due. after initiation. of all AD/CVD orders
(including those involving
China).321
Panel B: Custom Duty Enforcement (Including Section 301 Duties)
Recent Enforcement
Tool Description Timeline Actions Enforcement Body
Traditional The Tariff Act of 1930 authorizes CBP to No statutory In FY 2022, CBP collected CBP and U.S. Court of
Customs investigate and issue penalties for evasion of deadlines. $19.3 million from pen- International Trade
Enforcement customs duties, including through misclassifi- alties and liquidated dam-
cation, misvaluation, or transshipment. CBP ages on shipments from
has broad authority to make seizures and en- all countries.325
force any fines on imports.322 The U.S. Court of
International Trade has exclusive jurisdiction
on all civil actions initiated by the U.S. govern-
ment arising out of an import transaction.323
Enforcement actions under the Tariff Act of
1930 usually result in lower damages than a
False Claims Act lawsuit—the latter provides
for treble damages—and has a shorter statute
of limitations of five years, compared to six
under the False Claims Act.324
315
Reverse False Under the False Claims Act, a party can It takes on av- In 2023, three cases al- Usually prosecuted by
Claims Act be held liable for knowingly providing false erage 3.1 years leging China Section 301 the U.S. Department of
Lawsuit statements to the U.S. government. Evasion to complete a duty evasion under the Justice Civil Division,
of tariffs, including through misclassification, False Claims Act False Claims Act resulted frequently after a lawsuit
misvaluation, or providing false country of customs fraud in settlements of $5.2 is filed by a private whis-
origin (i.e., transshipment), may be prosecuted case.329 million.330 tleblower on behalf of the
as a “reverse false claim” lawsuit, wherein the government, known as a
defendant is charged with knowingly retaining qui tam lawsuit.*
funds owed to the government.326 Defendants
are liable to three times the damages owed to
the government.327 The False Claims Act has
a whistleblower provision, incentivizing private
citizens to file a suit on behalf of the govern-
ment in return for a portion of any settlements
or judgments.328
* A qui tam lawsuit allows the private individual who filed the lawsuit to receive a portion of the proceeds if the defendant is found liable. Bryan Lemons, “An
Overview of ‘Qui Tam’ Actions,” Federal Law Enforcement Training Centers.
316
Appendix III: Comparison of Drain Cover for

Sale on Amazon as of June 11, 2024, and
Recalled Drain Cover Linked to Evisceration
and Drowning Deaths
Image 1: Drain cover manufactured in Image 2: Recalled drain cover imported
China and previously for sale on Ama- from China and sold on Amazon.
zon by a China-based seller.
Source: Amazon, “Maxmartt Pool Floor Main Source: U.S. Consumer Product Safety Com-
Drain 2 Inch White Main Drain Water Inlet mission, Pool Drain Covers Recalled Due to
Draining Accessory Vinyl Pool Main Drain Violation of the Virginia Graeme Baker Pool
Liner for Swimming Pool.” https://web.archive. and Spa Safety Act and Entrapment Hazard;
o r g/w e b/2 0 2 4 0 51714 0 6 5 5/h t t p s:/www. Imported by Vijayli-US (Recall Alert), April
amazon.com/Maxmartt-White-Swimming- 27, 2023.
Draining-Accessory/dp/B083728PP2.
317
1. U.S. Census Bureau, Trade in Goods with China.
2. U.S. Census Bureau, “Annual Country by 5-Digit End-Use Code, Annual Totals,
2014–2023.”
2014–2023.”
2014–2023.”
5. Tan Haiyan and Zheng Minyin, “Seeking Pathways in Cross-Border E-Com-
merce, the Second Generation of Factories Ride the Waves Overseas” (寻路跨境电商，
厂二代“顺风”出海), 21st Century Business Herald, May 6, 2024. Translation; China’s
State Council, State Council Information Office Holds Press Conference on Import
and Export Situation in the First Three Quarters of 2023 (国务院新闻办就2023年前
三季度进出口情况举行发布会), October 13, 2023. Translation; China’s State Council,
State Council Information Office Holds Press Conference on Import and Export Sit-
uation in the First Three Quarters of 2019 (新闻办就2019年前三季度进出口情况举行发
布会), October 14, 2019. Translation.
6. Eszter Beretzky et al., “Signed, Sealed, and Delivered: Unpacking the Cross-Bor-
der Parcel Market’s Promise,” McKinsey, March 17, 2022.
7. China General Administration of Customs, 2023 China Cross-Border E-Com-
merce Import and Export Situation (2023年中国跨境电商进出口情况), May 20, 2024.
Translation.
Translation.
9. Tan Haiyan and Zheng Mingyin, “Finding a Path in Cross-Border E-Commerce,
the Second Generation of Factories ‘Smoothly’ Going Overseas” (寻路跨境电商，厂二
代“顺风”出海), 21st Century Business Herald, May 6, 2024. Translation.
Translation.
Translation; China General Administration of Customs, Customs Statistics.
12. John Niggl, “What Does Corruption in Your China QC Inspection Process Look
Like?” China Briefing, July 18, 2017.
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of Banned, Unsafe or Mislabeled Products,” Wall Street Journal, August 23, 2019.
178. Jon Emont, “Amazon’s Heavy Recruitment of Chinese Sellers Puts Consumers
at Risk,” Wall Street Journal, November 11, 2019.
180. U.S. Consumer Product Safety Commission, Gasaciods Children’s Helmets Re-
called Due to Risk of Head Injury; Violation of Federal Safety Regulation for Bicycle
Helmets; Imported by Fengwang Sports; Sold Exclusively on Temu.com, April 18, 2024.
181. U.S. Consumer Product Safety Commission, Gasaciods Children’s Helmets Re-
called Due to Risk of Head Injury; Violation of Federal Safety Regulation for Bicycle
Helmets; Imported by Fengwang Sports; Sold Exclusively on Temu.com, April 18, 2024.
182. U.S. Consumer Product Safety Commission, Multi-Purpose Kids Bike Hel-
mets Recalled Due to Risk of Head Injury, Failure to Meet Bicycle Helmet Standard
Requirements; Sold by Ecnup Exclusively on Amazon.com (Recall Alert), August 24,
2023.
183. U.S. Customs and Border Protection, Intellectual Property Rights (IPR) Sei-
zures by Fiscal Year (FY), FY2019–FY2023, March 22, 2024.
184. U.S. Customs and Border Protection, Intellectual Property Rights, January 19,
2024.
185. Office of the U.S. Trade Representative, 2023 Review of Notorious Markets for
Counterfeiting and Piracy, January 2024, 42.
186. Office of the U.S. Trade Representative, 2023 Review of Notorious Markets for
Counterfeiting and Piracy, January 2024, 24, 28, 33, 36, 42–45.
325
187. Daniel Shapiro, written testimony for U.S.-China Economic and Security Re-
188. Nicholas Megaw, “Shein Battles Counterfeiting Lawsuits as Online Retailer
Pursues U.S. IPO,” Financial Times, February 2, 2024; Andrew R. Chow, “Designers
Are Accusing Temu of Selling Copies of Their Work,” Time Magazine, January 16,
2024; Jennifer Ortakales Dawkins, “Temu Sellers Are Now Even Copying Product
Photos, Descriptions, and Entire Amazon Storefronts, Lawsuits Allege,” Business In-
sider, July 11, 2023.
189. Vega Bharadwaj et al., “U.S. Intellectual Property and Counterfeit Goods—
Landscape Review of Existing/Emerging Research,” Library of Congress, February
2020, 9; Office of the U.S. Intellectual Property Enforcement Coordinator, Intellectual
Property Spotlight, March/April 2012, 4.
190. U.S. Customs and Border Protection, The Truth behind Counterfeits, August
30, 2024; Teresa Murray and R.J. Cross, “Trouble in Toyland 2023,” U.S. PIRG Edu-
cation Fund, November 2023, 31.
191. American Apparel & Footwear Association, “Fashion Industry Study Reveals
Dangerous Chemicals, Heavy Metals in Counterfeit Products,” March 23, 2022.
192. American Apparel & Footwear Association, “Fashion Industry Study Reveals
Dangerous Chemicals, Heavy Metals in Counterfeit Products,” March 23, 2022.
193. Shelley Childers, “Counterfeit Makeup Found in Houston with Lead and Arse-
nic,” ABC 13, April 18, 2018; Elle, “The LAPD Confiscated $700,000 Worth of Makeup
Laced with Feces,” April 16, 2018.
194. Shelley Childers, “Counterfeit Makeup Found in Houston with Lead and Arse-
nic,” ABC 13, April 18, 2018; Elle, “The LAPD Confiscated $700,000 Worth of Makeup
Laced with Feces,” April 16, 2018.
195. U.S. Customs and Border Protection, Philadelphia CBP Seizes Nearly $200K
in Counterfeit Auto Parts from China, March 31, 2023.
196. Mark Walker, “F.A.A. Investigating How Questionable Titanium Got into Boe-
ing and Airbus Jets,” New York Times, June 14, 2024.
198. National Crime Prevention Council, “You’re Smart. Buy Smart.”
200. Organisation for Economic Co-operation and Development, EU Intellectual
Property Office, “Mapping the Scale of the Fake Pharmaceutical Challenge,” in Trade
in Counterfeit Pharmaceutical Products, March 23, 2020, 33.
201. U.S. Food and Drug Administration, FDA Warns Consumers Not to Use Coun-
terfeit Ozempic (Semaglutide) Found in U.S. Drug Supply Chain, December 21, 2023.
202. Katherine Eban, “Why Counterfeit Ozempic Is a Global-Growth Industry,”
Vanity Fair, June 2024.
Year 2022, 10.
Year 2022, 19.
205. U.S. Customs and Border Protection, At Ports of Entry, March 7, 2024.
206. U.S. Government Accountability Office, Consumer Product Safety Commission:
Action Needed to Improve Preparedness for Product Examination Disruptions, Octo-
ber 2022, 5; U.S. Consumer Product Safety Commission, About CPSC FAQ.
207. Jim Joholske, written testimony for U.S.-China Economic and Security Review
208. Jim Joholske, oral testimony for U.S.-China Economic and Security Review
209. U.S. Customs and Border Protection, E-Commerce, August 22, 2024; U.S. Cus-
toms and Border Protection, Section 321 De Minimis Shipments Fiscal Year 2018 to
2021 Statistics, October 2022, 3.
210. George Serletis, “U.S. Section 321 Imports Surge with Rising E-Commerce
Shipments from China,” U.S. International Trade Commission, November 2023.
211. George Serletis, “U.S. Section 321 Imports Surge with Rising E-Commerce
Shipments from China,” U.S. International Trade Commission, November 2023.
213. U.S. Customs and Border Protection, The Truth behind Counterfeits, May 31,
2024; U.S. Customs and Border Protection, Intellectual Property Rights (IPR) Seizures
by Fiscal Year (FY), FY2019–FY2023.
326
214. U.S. Consumer Product Safety Commission, Children’s Product Certificate; U.S.
Consumer Product Safety Commission, FAQs - Certification and Third Party Testing;
U.S. Consumer Product Safety Commission, International Video and Podcast Series;
U.S. Consumer Product Safety Commission, Annual Performance Report Fiscal Year
2023, March 11, 2024, 5; U.S. Customs and Border Protection, FY 2023 CBP Trade
Sheet, June 2024; Jim Joholske, oral testimony for U.S.-China Economic and Security
and Supply Chains, March 1, 2024, 23; U.S. Customs and Border Protection, Baby
Walkers, Autism Balance Chairs, Baby Changing Tables, Step Stools, and Toys Seized
by CBP and CPSC at LA/LB Seaport, April 29, 2024; U.S. Consumer Products Safety
Commission, Regulated Products Handbook, January 2005; U.S. Consumer Product
Safety Commission, Violations; U.S. Consumer Product Safety Commission, Duty to
Report to CPSC: Rights and Responsibilities of Businesses.
215. U.S. Consumer Product Safety Commission, Office of Import Surveillance,
CPSC e-Commerce Assessment Report, November 2019, 8.
216. U.S. Department of Homeland Security, Privacy Impact Assessment for the
E-Commerce “Section 321” Data Pilot, September 26, 2019, 3.
218. U.S. Customs and Border Protection, Testimony of Eric Choy for a January 11
Hearing on Forced Labor, January 11, 2024.
219. U.S. Customs and Border Protection, “Section 321 Data Pilot: Modification
of Data Elements, Expansion of Pilot to Include Additional Test Participants, and
Extension of Pilot,” Federal Register 88:32 (February 16, 2023).
220. U.S. Customs and Border Protection, “Section 321 Data Pilot: Modification
of Data Elements, Expansion of Pilot to Include Additional Test Participants, and
Extension of Pilot,” Federal Register 88:32 (February 16, 2023).
221. U.S. Customs and Border Protection, “Test Concerning Entry of Section 321
Low-Value Shipments through the Automated Commercial Environment (ACE) (Also
Known as Entry Type 86); Republication with Modifications,” Federal Register 89:10
(January 16, 2024).
222. White House, Biden-Harris Administration Announces New Actions to Protect
American Consumers, Workers, and Businesses by Cracking Down on De Minimis
Shipments with Unsafe, Unfairly Traded Products, September 13, 2024.
223. U.S. Customs and Border Protection, Intellectual Property Rights, August 7, 2024.
224. U.S. Customs and Border Protection, Tips for New Importers and Exporters,
March 6, 2024; U.S. General Services Administration’s Technology Transformation
Services, How to Get an Import License or Permit, December 6, 2023.
225. U.S. Consumer Product Safety Commission, Rules Requiring a General Cer-
tificate of Conformity (GCC)—General Use/Non-Children’s Products; U.S. Consumer
Product Safety Commission, Third Party Testing Guidance.
226. U.S. Consumer Product Safety Commission, Testing & Certification; Certifi-
cates of Compliance, 15 C.F.R. § 2062.
227. U.S. Consumer Product Safety Commission, Rules Requiring a General Cer-
tificate of Conformity (GCC)—General Use/Non-Children’s Products; U.S. Consumer
Product Safety Commission, Third Party Testing Guidance; U.S. Consumer Product
Safety Commission, General Certificate of Conformity (GCC) FAQ.
228. CBS New York Team, Walter Smith Randolph, and Tim McNicholas, “Online
Marketplace Removes Fake UL Labels after CBS New York Investigation,” Novem-
ber 17, 2023; U.S. Department of Transportation, Transporting Lithium Batteries,
October 12, 2023.
Marketplace Removes Fake UL Labels after CBS New York Investigation,” November
17, 2023.
Marketplace Removes Fake UL Labels after CBS New York Investigation,” November
17, 2023.
231. Stuart Goldman, “Medical Device Testing Requirements for 510(k) Submis-
sions,” In Compliance, May 31, 2017; U.S. Food and Drug Administration, “Quality
System Regulation,” Federal Register 61:52654 (October 7, 1996).
232. U.S. Food and Drug Administration, Fraudulent and Unreliable Laboratory
Testing Data in Premarket Submissions: FDA Reminds Medical Divide Manufactur-
ers to Scrutinize Third-Party Generated Data, February 20, 2024.
327
235. U.S. Consumer Product Safety Commission, CPSC Form 223—Lab Accred-
itation; International Laboratory Accreditation Cooperation, “ILAC MRA and
Signatories.”
236. Jim Joholske, written response to question for the record for the U.S.-China
Economic and Security Review Commission, Hearing on Consumer Products from
China: Safety, Regulations, and Supply Chains, March 1, 2024, 4–5.
237. U.S. Consumer Product Safety Commission, “Requirements Pertaining to
Third Party Conformity Assessment Bodies,” Federal Register 77:31084 (May 24,
2012).
238. U.S. Consumer Product Safety Commission, List of CPSC-Accepted Testing
Laboratories.
239. U.S. Consumer Product Safety Commission, List of CPSC-Accepted Testing
Laboratories.
240. U.S. House of Representatives Energy & Commerce Committee, E&C Repub-
licans Press FDA over Inadequate Inspection of Drug Manufacturing in India and
China, July 18, 2023; Sheila Kaplan and Katie Thomas, “F.D.A. Halts Overseas In-
spections of Drugs and Devices, Citing Coronavirus,” New York Times, March 10,
2020; U.S. Food and Drug Administration, Guide to International Inspections and
Travel, May 14, 2019.
241. Mary Denigan-Macauley, “DRUG SAFETY: FDA Has Faced Persistent Chal-
lenges Overseeing Foreign Drug Manufacturing,” U.S. Government Accountability Of-
fice, February 6, 2024, 3.
242. Kelsey Ables and Marlene Cimons, “What to Know about the Eyedrop Recall
Linked to 4 Deaths and Vision Loss,” Washington Post, May 22, 2023; Irena Hwang,
“After Pandemic Delays, FDA Still Struggling to Inspect Foreign Drug Manufactur-
ers,” ProPublica, April 19, 2023.
lenges Overseeing Foreign Drug Manufacturing,” U.S. Government Accountability Of-
fice, February 6, 2024, 4.
lenges Overseeing Foreign Drug Manufacturing,” U.S. Government Accountability
Office, February 6, 2024, 3; Mark Abdoo, Judith McMeekin, and Douglas C. Throck-
morton, written response to question for the record for the U.S. Senate Committee
on Finance, Hearing on COVID–19 and Beyond: Oversight of the FDA’s Foreign Drug
Manufacturing Inspection Process, June 2, 2020, 62.
and Supply Chains, March 1, 2024, 5; Patrick Furbush, “A Review of CPSC and
NHTSA Safety Information Transparency and Recall Authority,” National Association
of Attorneys General, August 2, 2021.
247. Patrick Furbush, “A Review of CPSC and NHTSA Safety Information Trans-
parency and Recall Authority,” National Association of Attorneys General, August 2,
2021; Consumer Product Safety Act § 2061, 2064, Pub. L. No. 92–573 (October 27,
1972).
and Supply Chains, March 1, 2024, 6; U.S. Consumer Product Safety Commission,
Guidelines and Requirements for Mandatory Recall Notices, January 21, 2010.
Supply Chains, March 1, 2024, 27; Alexander D. Hoehn-Saric, “Remarks of Chair Al-
exander D. Hoehn-Saric,” American Apparel and Footwear Association (AAFA) 2024
328
Product Safety and Compliance Seminar, Consumer Product Safety Commission, Feb-
ruary 15, 2024; U.S. Consumer Product Safety Commission, Newsroom News Releases.
253. Teresa Murray, “Safe at Home 2024,” U.S. PIRG Education Fund, March 2024,
8; U.S. Consumer Product Safety Commission, Newsroom News Releases.
254. Alexander D. Hoehn-Saric, “Remarks of Chair Alexander D. Hoehn-Saric,”
American Apparel and Footwear Association (AAFA) 2024 Product Safety and Com-
pliance Seminar, American Apparel and Footwear Association, February 15, 2024.
255. Teresa Murray, “The CPSC’s Public Warnings for 2023 and by Year, 2020–
2023,” in Safe at Home in 2024, U.S. PIRG Education Fund, March 2024, 26.
6; Teresa Murray, “The CPSC’s Public Warnings for 2023 and by Year, 2020–2023,” in
Safe at Home in 2024, U.S. PIRG Education Fund, March 2024, 26.
257. U.S. Consumer Product Safety Commission, CPSC Warns Consumers to Imme-
diately Stop Using “Baby Loungers” Due to Suffocation Risk and Fall Hazard; Failure
to Meet Federal Safety Regulation for Infant Sleep Products, December 21, 2023.
6–7; U.S. Consumer Product Safety Commission, CPSC Warns Consumers to Immedi-
ately Stop Using “Baby Loungers” Due to Suffocation Risk and Fall Hazard; Failure to
Meet Federal Safety Regulation for Infant Sleep Products, December 21, 2023.
259. U.S. Consumer Product Safety Commission, MPR Data—Recalls Prior to Au-
gust 1, 2022, June 20, 2023.
260. U.S. Consumer Product Safety Commission, MPR Data—Recalls August 1,
2022 to Present, October 9, 2024.
261. Jill Riepenhoff et al., “Defective: Dangerous Consumer Products Find Their
Way into America by Ship and through Online Retailers,” WDBJ7, August 28, 2023.
262. Jill Riepenhoff et al., “Defective: Dangerous Consumer Products Find Their
Way into America by Ship and through Online Retailers,” WDBJ7, August 28, 2023.
263. U.S. Consumer Product Safety Commission, Pool Drain Covers Recalled Due
to Violation of the Virginia Graeme Baker Pool and Spa Safety Act and Entrapment
Hazard; Imported by Vijayli-US (Recall Alert), April 27, 2023; U.S. Consumer Product
Safety Commission, Pool Drain Covers Recalled Due to the Violation of the Virginia
Graeme Baker Pool and Spa Safety Act and Entrapment Hazard; Imported by Liusin
(Recall Alert), April 27, 2023; U.S. Consumer Product Safety Commission, Pool Drain
Covers Recalled Due to Violation of the Virginia Graeme Baker Pool and Spa Safety
Act; Imported by Pickloud-US (Recall Alert), April 27, 2023; U.S. Consumer Product
Safety Commission, Pool and Spa Drain Covers Recalled Due to Violation of the Vir-
ginia Graeme Baker Pool and Spa Safety Act, September 22, 2022; U.S. Consumer
Product Safety Commission, Wadoy Pool and Spa Drain Covers Recalled Due to Vio-
lation of the Virginia Graeme Baker Pool and Spa Safety Act; Imported by Find4Fix;
Sold Exclusively at Amazon.com (Recall Alert), September 22, 2022; U.S. Consumer
Product Safety Commission, Pool and Spa Drain Covers Recalled Due to Violation of
the Virginia Graeme Baker Pool and Spa Safety Act; Imported by Chyir Myd; Sold Ex-
clusively at Amazon.com (Recall Alert), September 22, 2022; U.S. Consumer Product
ginia Graeme Baker Pool and Spa Safety Act: Imported by Angzhili; Sold Exclusively
at Amazon.com (Recall Alert), September 22, 2022.
329
266. Amazon, “Maxmartt Pool Floor Main Drain 2 Inch White Main Drain Water
Inlet Draining Accessory Vinyl Pool Main Drain Liner for Swimming Pool,” June
11, 2024. https://web.archive.org/web/20240611144909/https://www.amazon.com/
Maxmartt-White-Swimming-Draining-Accessory/dp/B083728PP2; U.S. Consumer
Product Safety Commission, Pool Drain Covers Recalled Due to Violation of the Vir-
ginia Graeme Baker Pool and Spa Safety Act and Entrapment Hazard; Imported by
Vijayli-US (Recall Alert), April 27, 2023.
267. Amazon.com, “Maxmartt Pool Floor Main Drain 2 Inch White Main Drain Wa-
ter Inlet Draining Accessory Vinyl Pool Main Drain Liner for Swimming Pool,” Feb-
ruary 8, 2024. https://web.archive.org/web/20240208191509/https://www.amazon.
com/Maxmartt-White-Swimming-Draining-Accessory/dp/B083728PP2; Amazon.
com.mx, “Maxmartt.” https://web.archive.org/web/20240517144843/https://www.
amazon.com.mx/sp?ie=UTF8&seller=A32J5050ZG4WRI&asin=B08JC338ND&ref_=
dp_merchant_link&isAmazonFulfilled=1%2A.
268. Becca Trate, “From Cart to Claim: Addressing Product Liability in Online
Marketplaces,” Center for Data Innovation, June 24, 2024, 3.
269. U.S. Consumer Product Safety Commission, Regulations, Laws, & Standards.
270. U.S. Consumer Product Safety Commission, Retailers: Product Safety and
Your Responsibilities.
271. Kenneth Ross, “How Manufacturers and Retailers Can Collaborate to Provide
Quality Products and Conduct Effective Recalls,” In Compliance, May 1, 2024; U.S.
Consumer Product Safety Commission, Guidelines for Retailers and Reverse Logistics
Providers, April 12, 2013; U.S. Consumer Product Safety Commission, Retailers: Prod-
uct Safety and Your Responsibilities.
272. U.S. Consumer Product Safety Commission, Retailers: Product Safety and
Your Responsibilities.
Marketplaces,” Information Technology & Innovation Foundation, June 24, 2024, 4;
U.S. Consumer Product Safety Commission, Common E-Commerce Safety Violations
Found by CPSC; U.S. Consumer Product Safety Commission, Stopping the Online
Sale of Recalled Products.
274. U.S. Consumer Product Safety Commission, CPSC Docket No.: 21–2 Decision
and Order, July 30, 2024, 29; Becca Trate, “From Cart to Claim: Addressing Product
Liability in Online Marketplaces,” Center for Data Innovation, June 24, 2024, 1–2.
Marketplaces,” Information Technology & Innovation Foundation, June 24, 2024, 2.
Marketplaces,” Information Technology & Innovation Foundation, June 24, 2024,
8–13; Amazon, “Recalls and Product Safety Alerts.”
277. Alyssa Lukpat, “Facebook Marketplace Lets Users Sell Recalled Baby Prod-
ucts, Lawmakers Say,” Wall Street Journal, August 22, 2023; Teresa Murray, “Trouble
in Toyland 2022,” U.S. PIRG Education Fund, November 2022, 1, 28; Alexandra Ber-
zon, Shane Shifflett, and Justin Scheck, “Amazon Has Ceded Control of Its Site. The
Result: Thousands of Banned, Unsafe or Mislabeled Products,” Wall Street Journal,
August 23, 2019.
278. Yvette Shen, “Amazon Toys & Children’s Products Requirements Guide for
Sellers,” Compliance Gate, September 27, 2022.
279. Robert E. Tonn and William A. Ringhofer, “CPSC Finds Amazon Responsi-
ble for Hazardous Products Sold by Third-Party Sellers,” Holland & Knight, August
330
1, 2024; Becca Trate, “From Cart to Claim: Addressing Product Liability in Online
Marketplaces,” Information Technology & Innovation Foundation, June 24, 2024, 6–8.
280. Sherwet H. Witherington and Charles A. Samuels, “Game Changer: Amazon.
com Is Legally Responsible for Third-Party Seller Recalls (For Now)” August 8, 2024;
U.S. Consumer Product Safety Commission, CPSC Finds Amazon Responsible under
Federal Safety Law for Hazardous Products Sold by Third-Party Sellers on Amazon.
com, July 30, 2024.
com Is Legally Responsible for Third-Party Seller Recalls (For Now)” August 8, 2024;
U.S. Consumer Product Safety Commission, CPSC Finds Amazon Responsible under
Federal Safety Law for Hazardous Products Sold by Third-Party Sellers on Amazon.
com, July 30, 2024.
and Order, July 30, 2024, 2, 8–9, 34.
and Order, July 30, 2024, 1, 11–13, 17; U.S. Consumer Product Safety Commission,
CPSC Sues Amazon to Force Recall of Hazardous Products Sold on Amazon.com,
July 14, 2021.
284. Robert E. Tonn and William A. Ringhofer, “CPSC Finds Amazon Responsible
for Hazardous Products Sold by Third-Party Sellers,” Holland & Knight, August 1,
2024; U.S. Consumer Product Safety Commission, CPSC Docket No.: 21–2 Decision
and Order, July 30, 2024, 6.
and Order, July 30, 2024, 20, 26.
286. U.S. Consumer Product Safety Commission, CPSC Finds Amazon Responsible
under Federal Safety Law for Hazardous Products Sold by Third-Party Sellers on
Amazon.com, July 30, 2024.
com Is Legally Responsible for Third-Party Seller Recalls (For Now),” August 8, 2024.
288. Tracy Qu and Sherry Qin, “Amazon Takes On Chinese Rivals Temu and Shein
with Plans for New Discount Service,” Wall Street Journal, June 27, 2024; Becca
Trate, “From Cart to Claim: Addressing Product Liability in Online Marketplaces,”
Information Technology & Innovation Foundation, June 24, 2024, 15.
289. Tracy Qu and Sherry Qin, “Amazon Takes On Chinese Rivals Temu and
Shein with Plans for New Discount Service,” Wall Street Journal, June 27, 2024;
John Deighton, “How SHEIN and Temu Conquered Fast Fashion—and Forged a New
Business Model,” Harvard Business School, April 25, 2023.
290. Tracy Qu and Sherry Qin, “Amazon Takes On Chinese Rivals Temu and Shein
with Plans for New Discount Service,” Wall Street Journal, June 27, 2024.
291. Duncan Fairgrieve et al., “Product Liability and Online Marketplaces: Com-
parison and Reform,” International and Comparative Law Quarterly 73:2 (2024):
477–504.
292. U.S. Census Bureau, “USA Trade Online–Imports for Consumption [2019–
2023].”
293. U.S. Consumer Product Safety Commission, Toy Safety Business Guidance &
Small Entity Compliance Guide.
294. Tetra Inspection, “What Is a Children’s Product Certificate and How to Ob-
tain It;” U.S. Consumer Product Safety Commission, Toy Safety Business Guidance &
295. ASTM, “Standard Consumer Safety Specifications for Toy Safety,” October 13,
2023; U.S. Consumer Product Safety Commission, Toy Safety Business Guidance &
296. ASTM, “Standard Consumer Safety Specification for Toy Safety,” October 13,
2023.
297. Richa Naidu, “Toy Manufacturers’ Shift from China Is Not Child’s Play,” Reu-
ters, January 15, 2024; U.S. Consumer Product Safety Commission, Recalls.
298. Richa Naidu, “Toy Manufacturers’ Shift from China Is Not Child’s Play,” Reu-
ters, January 15, 2024; U.S. Consumer Product Safety Commission, Recalls.
299. U.S. Consumer Product Safety Commission, Bunch Bikes Recalls the Preschool
Electric Bicycles Due to Violation of the Federal Lead Paint Ban; Lead Poisoning
Hazard (Recall Alert).
300. Emily Iverson, “5 Small Businesses Riding High on the E-Bike Craze,” U.S.
Chamber of Commerce, July 26, 2023; Bunch Bikes, “The Original 3.0—Electric Cargo
Bike for Families”; U.S. Consumer Product Safety Commission, Bunch Bikes Recalls
the Preschool Electric Bicycles Due to Violation of the Federal Lead Paint Ban; Lead
Poisoning Hazard (Recall Alert).
331
301. U.S. Consumer Product Safety Commission, CPSC Warns High-Powered Mag-
nets and Children Make a Deadly Mix, November 10, 2011.
302. Emily Schmall, “7 Deaths Linked to Small Magnets Found in Toys, U.S.
Warns,” New York Times, December 9, 2023.
303. U.S. Consumer Product Safety Commission, CPSC Warns High-Powered Mag-
nets and Children Make a Deadly Mix, November 10, 2011.
304. U.S. Consumer Product Safety Commission, Recalls; U.S. Consumer Product
Safety Commission, High-Powered Magnetic Ball Sets Recalled Due to Ingestion Haz-
ard; Violation of the Federal Safety Regulation for Toy Magnet Sets; Sold Exclusive-
ly on Walmart.com through Joybuy, March 7, 2024; U.S. Consumer Product Safety
Commission, Getallfun Recalls High-Powered Magnetic Ball Sets Due to Ingestion
Hazard; Failure to Meet Federal Safety Regulation for Toy Magnet Sets, March 7,
2024; U.S. Consumer Product Safety Commission, DailySale Recalls High-Powered
Magnetic Balls Due to Ingestion Hazard; Violation of the Federal Safety Regulation
for Toy Magnet Sets, February 1, 2024; U.S. Consumer Product Safety Commission,
High-Powered Magnetic Balls Recalled Due to Ingestion Hazard; Sold Exclusively
on Walmart.com through Joybuy, December 28, 2023; U.S. Consumer Product Safe-
ty Commission, XpressGoods Recalls High-Powered Magnetic Balls Due to Ingestion
Hazard; Failure to Meet Federal Safety Regulation for Toy Magnet Sets, December 7,
2023.
305. U.S. Consumer Product Safety Commission, Magnets; U.S. Consumer Prod-
uct Safety Commission, CPSC Warns Consumers to Immediately Stop Using Allvre
High-Powered Magnetic Ball Sets Due to Ingestion Hazard; Failure to Meet Federal
Safety Regulation for Toy Magnet Sets; Sold Exclusively at Temu.com, December 7,
2023.
306. U.S. Consumer Product Safety Commission, Magnets; U.S. Consumer Prod-
uct Safety Commission, CPSC Warns Consumers to Immediately Stop Using Allvre
High-Powered Magnetic Ball Sets Due to Ingestion Hazard; Failure to Meet Federal
Safety Regulation for Toy Magnet Sets; Sold Exclusively at Temu.com, December 7,
2023.
307. U.S. Customs and Border Protection, IPR Seizures by Trading Partner, Octo-
ber 21, 2023.
308. U.S. Customs and Border Protection, IPR Seizures by Trading Partner, Octo-
ber 21, 2023.
309. National Intellectual Property Rights Coordination Center, “Operation Holi-
day Hoax” Seizes Counterfeit Toys Worth More than $5M, November 6, 2019.
310. U.S. National Intellectual Property Rights Coordination Center, “Operation
Holiday Hoax” Seizes Counterfeit Toys Worth More than $5M, November 6, 2019.
311. Teresa Murray and R.J. Cross, “Trouble in Toyland 2023,” U.S. PIRG Educa-
tion Fund, November 2023, 32.
312. Bryan Brown, Group VP, Safety, Quality and Regulatory Compliance, Lovev-
ery, interview with Commission staff, May 2, 2024.
318. Yuka Hayashi, Shen Lu, and Richard Vanderford, “U.S. Trade Loophole Fuels
Rise of China’s New E-Commerce Firms,” Wall Street Journal, October 26, 2023.
319. Reuters, “Brazil’s Lula Signs into Law 20% Tax on International Purchases of
up to $50,” June 27, 2024; Global Express Association, “De Minimis Thresholds;” U.S.
Census Bureau, Top Trading Partners—January 2024, January 2024.
320. U.S. Department of Commerce, International Trade Administration, “An-
tidumping and Countervailing Duty Centralized Electronic Service System (AC-
CESS)–Unpublished FR Notices and Associated Decision Memoranda filed since
07/01/2021,” 2024.
Year 2022, June 2023, 11–12.
322. U.S. Customs and Border Protection, Customs Administrative Enforcement
Process: Fines, Penalties, Forfeitures and Liquidated Damages, February 2004.
323. Erika Kelton, “Privatizing Customs Fraud Enforcement under the False
Claims Act,” Phillips & Cohen, May 12, 1999.
332
324. Kirsten Mayer and Timothy Cahill, “False Claims Act Enforcement of Cus-
toms Duties—Emerging Trends,” Bloomberg Law, October 16, 2014.
325. Olga Torres, “Import Violations: What You Need to Know about 19 USC 1592,”
Torres Trade Law, December 12, 2023.
326. Olga Torres, “United States: Trade Violations under the False Claims Act,”
Mondaq, February 7, 2024.
327. Kirsten Mayer and Timothy Cahill, “False Claims Act Enforcement of Cus-
toms Duties—Emerging Trends,” Bloomberg Law, October 16, 2014.
328. Olga Torres, “United States: Trade Violations under the False Claims Act,”
Mondaq, February 7, 2024.
329. Jonathan Tycko, “A Statistical Analysis of the Government’s Settlement of
False Claims Act Lawsuits Alleging Evasion of Customs Duties,” National Law Re-
view, August 3, 2023.
29, 2024.
PART III
COMPETITION AND CONFLICT
CHAPTER 5: CHINA AND THE MIDDLE EAST
Abstract
The Middle East is a region of strategic importance to China due
to its energy resources, location astride key trade routes, and pos-
sible receptivity to Chinese efforts to construct an alternative, illib-
eral world order. As China has deepened its trade and investment
interests in the Middle East over the past decade, it has also built
a variety of diplomatic partnerships and sought to present itself as
a neutral arbiter of regional disputes while expanding its military
activity in the region. Chinese engagement with the Middle East
is selective and transactional, focused on advancing its own inter-
ests; Beijing appears to have little desire to play a significant role
in advancing regional security or to meaningfully contribute to a
resolution of ongoing disputes, including the recent Israel-Hamas
war. Instead, China appears content for the moment to free-ride on
the U.S. and allied regional security infrastructure—including, most
recently, the defense of maritime shipping from Houthi attacks—
while blaming the United States for promoting instability. China
also works to undermine U.S. ties with key Middle Eastern partners
while supporting adversarial countries like Iran. Chinese strategists
likely also assess that the turmoil in the Middle East deflects a por-
tion of U.S. attention and resources away from the Indo-Pacific. In
the short run, China benefits from its relationships in the Middle
East focused on energy trade and securing infrastructure contracts
for its state-owned enterprises. In the long term, Beijing aims to
expand market share for renewable energy and high-value exports,
gain supporters in its bid for global leadership, and potentially es-
tablish new outposts capable of supporting its military for increased
power projection. China’s involvement in the Middle East thus pres-
ents U.S. policymakers with an array of economic, normative, and
geopolitical challenges.
Key Findings
• China’s engagement with the Middle East has expanded during
the tenure of General Secretary of the Chinese Communist Par-
ty (CCP) Xi Jinping and is driven partly by deepening strategic
rivalry with the United States. In contrast to the Indo-Pacific,
where China clearly seeks to displace the United States and
consolidate a position as the dominant power, the Middle East
is a region Chinese leaders view as a source of intractable se-
curity challenges and value primarily for its resources and eco-
(333)
334
nomic potential. While China does not have the willingness and
ability to replace the United States as a major contributor to
regional security, it is nonetheless eager to instrumentalize the
region in its efforts to construct a new, illiberal world order at
the United States’ expense. China offers the region’s autocratic
governments a vision of a new regional security architecture
under the Global Security Initiative and is deepening its dip-
lomatic relations with U.S. partners and adversaries alike to
erode Washington’s influence.
• Beijing’s reaction to the Israel-Hamas war has illustrated both
the limits of its diplomatic influence in the Middle East and
its willingness to exploit regional tensions for geopolitical gain.
China has played no significant role in the U.S.- and Arab-facil-
itated negotiations between Israel and Hamas, having lost its
credibility as a neutral actor by refusing to directly condemn
the terrorist group for the October 7th attacks. It has not con-
tributed to coalition efforts to protect maritime shipping from
Houthi attacks, and in contravention of international maritime
law and norms it has declined to use its naval ships deployed
in the region to respond to distress signals from non-Chinese
vessels. Rather, Beijing has sought to appeal to Arab states and
burnish its image as the self-declared leader of what it calls the
“Global South” by portraying itself as an ardent supporter of
Palestinian national liberation and condemning Israel and the
United States as oppressors.
• China is the largest trading partner for many countries in the
region, with growth in total trade and direct investment be-
tween China and the Middle East outpacing that of China with
the rest of the world over the past five years. While China ben-
efits from infrastructure contracts and expanding market share
for its exports to the region, its principle economic objective re-
mains securing steady flows of energy resources, with between
40 and 50 percent of China’s total imported energy coming from
the region.
• China and Iran have a similar interest in opposing the U.S.-
led rules-based international order, but the relationship is to
a large degree one of convenience. Just as it is using Russia’s
diplomatic isolation to extract favorable terms on energy deals,
China is opportunistically leveraging its consumption market to
purchase discounted oil from Iran while going to great lengths
to avoid the appearance of sanctionable transactions through
the use of smaller purchases and shell companies.
• China’s military activities in the Middle East advance its eco-
nomic interests while allowing the People’s Liberation Army
(PLA) to gain operational experience and lay the foundation for
a more robust future military presence.
• China is emerging as a global competitor in niche sectors of the
Middle Eastern arms market. China is crucial to the develop-
ment of the Iranian drone industry. Although the U.S. Depart-
ment of the Treasury and the Department of Commerce have
placed sanctions on a number of Chinese companies, Chinese
335
actors are crucial to supplying components that enable Iran to

build drones, which it sells to Russia and to its Middle Eastern
proxies such as the Houthis. China continues to either directly
or indirectly provide regional actors with technologies that con-
travene its voluntary but non-binding commitment to adhere to
the Missile Technology Control Regime (MTCR). This includes
Chinese state-owned enterprises and non-state actors’ contin-
ued occasional and covert role in supplying Iran’s ballistic mis-
sile program.
• The Gulf is emerging as a new arena in U.S.-China technology
competition, with concerns that close ties between sanctioned
Chinese entities and technology firms in the region may be facil-
itating transfer of leading-edge technology subject to U.S. export
controls. Countries and companies in the Gulf may be compelled
to choose between technology infrastructure and partnerships
with China’s tech ecosystem or those with the United States
and its allies. Increased deployment of Chinese-made surveil-
lance technology is also a point of concern given its potential
to enhance suppression tactics commonly used by authoritarian
governments.
Recommendations
• Congress direct the Office of the Director of National Intel-
ligence to produce and provide to the U.S. Department of
the Treasury within six months a detailed study of Chinese
purchases of Iranian oil over the span of the last five years.
The study shall include analysis of China’s use of transship-
ment points and shell companies as methods to insulate itself
from sanctions. Congress should further direct that within
six months of receipt of the study, the Treasury Department
must make a determination if sanctionable activity is occur-
ring and report its findings to Congress.
• Congress direct the U.S. member on the International Maritime
Organization (IMO) Council to use their voice and vote to re-
quire China to abide by its treaty obligations under the IMO
conventions, including by upholding safety regulations on the
use of Automatic Identification System transponders.
Introduction
In March 2023, media reporting claimed that China had success-
fully brokered an agreement between Iran and Saudi Arabia to
restore diplomatic relations, ending a seven-year dispute between
bitter rivals and fueling speculation that Beijing could someday re-
place the United States as chief peacemaker and predominant pow-
er in the Middle East.1 Chinese officials were quick to hail their role
in the talks, portraying the deal as a model for resolving “hotspot
issues” and a major victory for General Secretary Xi’s Global Se-
curity Initiative.2 The events set in motion by Hamas’s attack on
Israel in October 2023 shattered this narrative, however, revealing
China’s unwillingness to involve itself in a high-stakes regional cri-
sis or bear the costs of contributing to security for the wider region.
336
This chapter evaluates the nature and extent of China’s engage-

ment with Middle Eastern countries.* It first examines China’s ob-
jectives toward and views of the region before surveying China’s en-
gagement with Middle Eastern partners in the diplomatic, economic,
technology, and military realms. It concludes with implications for
the United States. This chapter draws on the Commission’s April
2024 hearing on “China and the Middle East,” consultations with
experts, and open source research and analysis.
China’s Diplomatic Activities in the Middle East:
Wide, Varied, and Designed to Enhance Beijing’s
Influence
China’s economic engagement with the Middle East region has
been growing since the opening-up and reform era of the late
1970s, but the diplomatic and security aspects of its engagement
have deepened significantly over the past decade. During the Mao
era, China supported the national liberation movements of Arab
countries, as well as the Palestinian cause, but ties were lim-
ited as China turned largely inward in the 1960s and 1970s.3
In the late 1970s, Deng Xiaoping’s reforms laid the foundation
for expanding economic relations with Middle Eastern countries,
with total two-way goods trade between China and the region
rising from $3 billion in 1992 to $444.2 billion in 2023.4 Xi has
expanded China’s footprint in the region during his tenure, par-
ticularly by recruiting Middle Eastern states as partners for his
signature initiatives. For example, 21 Arab states, along with the
Arab League, have formally signed onto the Belt and Road Initia-
tive (BRI), 17 Arab states have endorsed Xi’s Global Development
Initiative, 15 have become members of the Asian Infrastructure
Investment Bank, and 14 have participated in the China-Arab
Cooperation Initiative for Data Security.† 5 In his written testi-
mony before the Commission, Jonathan Fulton, an associate pro-
fessor at Zayed University and nonresident senior fellow at the
Atlantic Council, assessed that “all in all, Chinese diplomacy has
been highly active and quite successful laying the groundwork for
a deeper presence in the Middle East.” 6
China has developed a broad and systematic diplomatic ap-
proach to the Middle East, utilizing a variety of bilateral and
multilateral formats for engagement.7 Beijing defines its diplo-
matic relationships using different types of partnerships, which
Chinese scholar Xiang Haoyu, a research fellow at the Ministry of
Foreign Affairs-affiliated think tank China Institute of Interna-
tional Studies, asserts can be flexibly adapted to the counterpart
country’s conditions and needs (see Table 1).8 China has bilateral
diplomatic relations with all Middle Eastern countries, which in-
clude comprehensive strategic partnerships at the top level of the
* Although the “Middle East” is a broad term often used to encompass North Africa, the Caucus-
es, and South and Central Asia, this chapter will primarily, but not exclusively, focus on China’s
relations with the following countries: Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Leba-
non, Oman, Qatar, Saudi Arabia, Syria, Turkey, the United Arab Emirates, and Yemen.
† Xi’s first diplomatic tour of the region took place in January 2016; he arrived first in Saudi
Arabia and then traveled to Egypt and Iran. During the visit, China inked Comprehensive Stra-
tegic Partnership agreements with both Iran and Saudi Arabia. Jonathan Fulton, “Friends with
Benefits: China’s Partnership Diplomacy in the Gulf,” Project on Middle East Political Science,
March 2019.
337
diplomatic hierarchy, followed by strategic partnerships, friendly

cooperative partnerships, and an “innovative comprehensive part-
nership” with Israel exclusively.9 At the multilateral level, China
uses the China-Arab States Cooperation Forum (CASCF), made
up of Arab League members, and the Forum on China-Africa Co-
operation, which includes nine Arab League members, to map
out cooperation priorities with regular ministerial-level meetings
as well as sub-ministerial-level, issue-specific working groups.10
China also plays an influential role in BRICS and the Shanghai
Cooperation Organization (SCO), which have both admitted Mid-
dle Eastern states as members in recent years.* 11 (For more on
China’s activities in BRICS and the SCO in 2024, see Chapter 2,
“U.S.-China Security and Foreign Affairs (Year in Review).”)
Table 1: Types of China’s Diplomatic Partnerships in the Middle East
Type of Diplomatic
Partnership Scope Partners
Comprehensive Strategic Close cooperation in a Egypt, Iran, Saudi
Partnership wide range of areas and Arabia, the United Arab
coordination on regional Emirates (UAE), Bahrain
and international affairs
Strategic Partnership Coordination on regional Iraq, Jordan, Kuwait,
and international affairs, Oman, Palestinian
including military Authority, Qatar, Syria,
Turkey
Friendly Cooperative Lowest tier, focused on Lebanon, Yemen
Partnership strengthening coopera-
tion on bilateral issues
including trade
Innovative Comprehensive Technology-focused Israel
Partnership
Source: Various.12
China also conducts diplomatic engagement on specific regional

issues through the appointment of special envoys. Beijing appointed
its first special envoy on the Middle East Issue focused on Israel
and Palestine in 2002 and a special envoy on the Syrian issue in
2016.13 Dr. Fulton assesses that the envoys are designed to pres-
ent China “as an actor with influence and interest in these issues,
although the impact of each has been marginal.” 14 For example, in
October 2023, Special Envoy Zhai Jun embarked on a tour aimed at
promoting peace talks between Israel and Hamas.15 Dr. Fulton said
the visit was intended primarily to “demonstrate China’s solidarity
with Arab causes” and promote an alternative vision for the region
from that offered by the United States.16 As of this writing, however,
neither the envoy nor China’s mediation efforts have contributed to
any substantive progress on talks between the two sides.17
* According to Dr. Fulton’s written testimony before the Commission, BRICS expanded for the
first time in 2023 to include Saudi Arabia, Egypt, Iran, the UAE, and Ethiopia, providing the
organization with a presence in the Middle East and North Africa (MENA) and Horn regions,
while the SCO admitted Iran in the same year. Bahrain, Egypt, Kuwait, Qatar, Saudi Arabia, and
the UAE are all dialogue partners of the SCO but are still not full members. Jonathan Fulton,
written testimony before the U.S.-China Economic and Security Review Commission, Hearing on
China and the Middle East, April 19, 2024, 3.
338
China’s Interests in and Views of the Middle East

China has varied economic and strategic interests in the Middle
East. In terms of economic goals, China seeks access to resources
and markets across the region, buying energy, increasing trade, and
winning infrastructure construction contracts.18 According to writ-
ten testimony before the Commission by Dawn C. Murphy, an asso-
ciate professor at the U.S. National War College, Beijing’s broader
diplomatic aims in the region include ensuring silence or supportive
statements from Arab states on Beijing’s actions in Xinjiang and
Hong Kong, garnering support for China’s stance on Taiwan and the
South China Sea, and promoting Xi’s signature initiatives like BRI,
the Global Development Initiative, and the Global Security Initia-
tive.19 China views the Middle East as part of a broader vision of a
new global order that is led by China and safe for illiberal, author-
itarian regimes like itself.20 China’s engagement with Middle East-
ern countries is illustrative of its broader effort to counterbalance
the United States and position itself as the leader of a new world
order based on its state-centered, authoritarian, self-proclaimed al-
ternative to Western liberalism.21
China has sought to appeal to Middle Eastern governments on
the basis of its values, which are framed as promoting sovereignty,
territorial integrity, self-determination, and noninterference in the
domestic affairs of states rather than the liberal norms of democ-
racy, free markets, human rights, and international institutions.22
According to Dr. Fulton, by making these non-democratic values the
normative framework of its global initiatives, China has created an
attractive option for “governments and societies long frustrated by
the inconsistent promotion of liberal values from the west, or by
those that reject liberalism altogether.” 23 For example, China’s re-
action to the Israel-Hamas war—and in particular its support of the
Palestinian cause and condemnation of Israel as an extension of the
United States—has also been designed to reinforce its identity as
the leader of what it refers to as the “Global South.” 24 (For more on
China’s usage of the term “Global South,” see Chapter 2, “Security
and Foreign Affairs (Year in Review)”)
However, China does not appear to wish to take up the U.S. role
of major security contributor or build a network of alliances in the
Middle East.25 According to Yun Sun, director of the China Program
at the Stimson Center, China instead envisions a new system in the
Middle East that would “displace U.S. dominance without replacing
it.” 26 China views the Middle East as an arena of strategic com-
petition with the United States, where its increased engagement
will facilitate the rise of an illiberal world order and accelerate the
decline of U.S. influence. Jon B. Alterman, director of the Middle
East Program at the Center for Strategic and International Studies,
asserts that Beijing is seeking to “peel the region away from the
United States.” 27 At the same time, Dr. Alterman notes that China’s
“spectacular absence” of diplomatic engagement on Arab and Israe-
li issues, Red Sea navigation, and other issues where Beijing has
equities “is a sign that China’s not replacing [the United States] in
the Middle East and doesn’t want to play a larger role.” 28 Dr. Fulton
articulates that China’s economic interests in the region have not
required a corresponding political or security role, and Beijing has
339
shown no indication that it will do so, instead benefiting from the

“U.S. security architecture that underpins the region’s fragile status
quo.” 29
Finally, China continues to view the Middle East as a source of
instability and intractable security challenges, which it is not nec-
essarily willing or able to resolve. Chinese experts and analysts as-
sess the region as one of frequent crises, including conflict between
Israel and its neighbors, terrorism, political movements for democ-
ratization such as the Arab Spring, and potential threats to China’s
energy imports.30 China has also blamed the United States for the
region’s security problems, most recently asserting that Washing-
ton’s support for Israel in its war with Hamas has been a destabi-
lizing force.31
Consistent with these interests and concerns, Chinese diplomatic
activities in the Middle East can be divided into three lines of effort
that will be explored in the following pages. The first is advancing
Chinese global leadership. The second is undermining U.S. relations
with key Middle Eastern partners, notably Saudi Arabia and the
UAE. The third is supporting U.S. adversaries, with a particular
focus on Iran.
Building Middle Eastern Support for Chinese Global
Leadership
The Middle East has become an important arena for the CCP to
advance its vision of a new China-led global order. A major aspect
of this effort is China’s increasing efforts to portray itself as a neu-
tral mediator in regional conflicts. In addition, China is heavily pro-
moting Xi’s three major initiatives—the Global Development, Global
Security, and Global Civilization Initiatives—as the framework for
implementing this bid for global leadership. Finally, China engages
the Middle East through multinational Beijing-led venues such as
the CASCF.
China Attempts to Paint Itself as a Responsible, Neutral Party
in Mediation Efforts
Beijing’s push to position itself as a conflict mediator in the
Middle East is part of a larger strategy to portray itself as a
global leader, although the effectiveness of these efforts is debat-
able.32 According to Dr. Murphy, China’s efforts to mediate dis-
putes in the region are not new, but Beijing has recently shown
a “willingness to publicize its behavior” and may encroach on the
United States’ regional interests.33 China’s role in the Saudi Ara-
bia-Iran rapprochement could be seen as a significant win for
China, but according to Dr. Fulton, most of the groundwork was
already laid before Beijing’s involvement, and the rapprochement
itself was the result of domestic political and economic pressures
within Saudi Arabia and Iran.* 34
* China’s hosting of the final round of negotiations emerged from Xi’s December 2022 state
visit to Riyadh and a subsequent visit by Iranian President Ebrahim Raisi to Beijing in February
2023, although Oman and Iraq had played a major role in prior rounds of negotiation, hosting five
previous rounds of talks. The National, “Years of Secretive Talks behind Saudi-Iran Rapproche-
ment,” March 10, 2023; Jonathan Fulton, “Iran’s Economic Future Is Uncertain. It’s No Surprise
Why Raisi Visited China,” Atlantic Council, February 22, 2023; Maziar Motamedi, “Iran, Saudi
Arabia Hold Fifth Round of Talks in Baghdad,” Al-Jazeera, April 23, 2022.
340
The Israel-Hamas War and the Limits of China’s Mediation

Diplomacy
In the decade leading up to the current conflict between Hamas
and Israel, Beijing sought to balance its relations with both sides
and paint itself as a neutral party, but ultimately it demonstrated
its limited approach through hollow rhetoric. In 2013, China offered
a proposal for a two-state solution during nearly simultaneous sep-
arate meetings with Israeli Prime Minister Benjamin Netanyahu
and Palestinian President Mahmoud Abbas in Beijing.35 At the
time, Yitzhak Shichor, a professor of political science and Asian
studies at the University of Haifa, criticized China’s vague propos-
al,36 asserting that “it’s not really a plan, just a collection of slogans
trying to satisfy everybody.” 37 During 2017, China again met with
President Abbas and hosted the first Palestinian-Israeli Peace Sym-
posium since 2006.38 In 2021, Foreign Minister Wang Yi raised a
repackaged peace plan at the UN and during state visits to Middle
Eastern countries, which continued to be used as a high-profile and
rhetorical framing opportunity rather than an actionable proposal.39
In April 2023, just a month after China’s efforts to broker a peace
deal between Saudi Arabia and Iran, then Chinese Foreign Minister
Qin Gang held two separate phone calls with his Israeli and Pal-
estinian counterparts offering to facilitate peace talks between the
two sides.40 In a further attempt to boost Beijing’s standing in the
region, China signed a strategic partnership agreement with Pal-
estinian Authority President Mahmoud Abbas during a June 2023
meeting, which included an economic and technological cooperation
pact, a deal on mutual visa exemption for diplomatic passports, and
the establishment of a diplomatic friendship between the Chinese
city of Wuhan and Ramallah.41 At a time of comparatively strained
relations between Israel and the United States, Prime Minister Ne-
tanyahu announced during a June 2023 meeting with U.S. members
of Congress that China had invited him to travel to Beijing.42 The
trip, originally planned for October 2023, was canceled after the out-
break of war in Gaza.43
Beijing’s response to Hamas’s October 7th terrorist attack dam-
aged over a decade of relationship-building with Israel and exposed
its cynical use of the conflict to align itself with Arab countries at
the expense of Israel and its people.44 Moreover, Beijing’s response
to the attack has also been intended to burnish its image as the
self-declared leader of low- and middle-income countries—countries
it increasingly refers to as the “Global South”—and further its ri-
valry with the United States.45 Dr. Fulton argues that Beijing’s
response to events since the October 7th Hamas terrorist attack
have made China appear transactional and self-interested rather
than evoking an image of a responsible extra-regional power.46 On
October 8th, China’s foreign ministry initially issued a statement
that called on “relevant parties to remain calm, exercise restraint
and immediately end the hostilities,” failing to place the onus of
responsibility on Hamas for the attacks.47 The following day, Chi-
nese foreign ministry spokesperson Mao Ning expressed sympathy
for the victims but still failed to condemn Hamas.* 48 Spokesperson
* On October 13th, Israel’s foreign ministry expressed “deep disappointment” to China’s envoy
to the Middle East over Beijing’s lack of a clear and unequivocal condemnation of Hamas. Re-
341
Mao’s initial statement was made at the same time a U.S. biparti-
san congressional delegation of six senators met with Xi in Beijing,
during which time the delegation urged China to issue a stronger
condemnation of the attack.49 Minister Wang called for solidarity
among Muslim countries in a call to the Iranian foreign minister
just days later.* 50 Wang said in an October 15th call with his Saudi
counterpart that Israel’s actions in Gaza went “beyond the scope of
self-defense,” criticizing the actions as “collective punishment.” 51 On
October 23, 2023, Wang Yi spoke separately with high-level diplo-
mats from Israel and the Palestinian Authority, reportedly stating
that Israel’s “reasonable security concerns” could only be addressed
though a political settlement and expressing sympathy for the peo-
ple of Palestine while failing to condemn Hamas by name.† 52 In No-
vember 2023, China convened a special meeting of BRICS, attended
by Xi, to discuss the Israel-Hamas war.‡ 53 During the March 2024
National People’s Congress and Chinese People’s Political Consulta-
tive Conference, also known as the Two Sessions, Minister Wang told
a reporter that China supported full UN membership for Palestine,
taking a subtle jab at the United States by calling for “individual
Security Council members to refrain from placing obstacles in its
way.” 54 Dr. Murphy asserts that Beijing has utilized its presence in
the UN Security Council (UNSC) to further this aim, stating that “it
is likely Beijing’s position on the Israel-Hamas war and its UNSC
voting on this issue will positively resonate with the Arab World,
the Muslim-majority world, and many countries in the Global South
more broadly.” 55
In subsequent months, China has focused on promoting intra-Pal-
estinian unity and has also held meetings with Israel that do not
appear to have created any discernible outcomes for advancing a
resolution to the conflict.56 In March 2024, Chinese diplomat Wang
Kejian made a multi-stop trip to the Middle East, meeting with rep-
resentatives from the Israeli Foreign Ministry and Palestinian Au-
thority, followed by a meeting in Qatar with Hamas political chair-
man Ismail Haniyeh (since killed while in Iran).57 In April 2024,
China hosted Hamas and Fatah officials, two rival factions, for talks
aimed at intra-Palestinian reconciliation, a follow-up to meetings
uters, “Israel Says ‘Deeply Disappointed’ Over Lack of China Condemnation of Hamas Attack,”
October 13, 2023.
* China condemned Israel’s April 2024 strike on the Iranian Embassy in Damascus but not
Iran’s missile and drone attacks—its first direct attack on Israel from Iranian soil—with Minis-
ter Wang Yi stating in a call with his Iranian counterpart that Iran’s attack was a limited act
of self-defense. Xinhua, “Chinese, Iranian FMs Hold Phone Talks on Israel-Iran Tensions,” April
16, 2024; China’s Ministry of Foreign Affairs, Wang Yi Has a Phone Call with Foreign Minister
of Iran Hossein Amir-Abdollahian, April 15, 2024; Wall Street Journal, “Iran’s Direct Attack on
Israel Is a First,” April 15, 2024.
† On October 8, 2024, following the one-year anniversary of the Hamas terrorist attack, a
foreign ministry spokesperson again paid lip service to Israel’s “reasonable security concerns”
without mentioning Hamas or acknowledging its role in the conflict. China’s Ministry of Foreign
Affairs, Foreign Ministry Spokesperson Mao Ning’s Regular Press Conference on October 8, 2024,
October 8, 2024.
‡ The virtual meeting was chaired by President Cyril Ramaphosa of South Africa and attend-
ed by Brazilian President Luiz Inácio Lula da Silva, Russian President Vladimir Putin, Crown
Prince of Saudi Arabia Mohammed bin Salman, Egyptian President Abdel Fattah al-Sisi, Iranian
President Ebrahim Raisi, President Sheikh Mohamed bin Zayed Al Nahyan of the UAE, Ethio-
pian Prime Minister Abiy Ahmed Ali, the foreign ministers of Argentina and India, and Chinese
Foreign Minister Wang Yi and Director of the CCP General Office Cai Qi. China’s Embassy in the
United States of America, Xi Jinping Attends the Extraordinary Joint Meeting of BRICS Leaders
and Leaders of Invited BRICS Members on the Situation in the Middle East with Particular
Reference to Gaza, November 22, 2023.
342
between the two in Russia in February.58 That same month, Zhai

Jun, China’s Special Envoy on the Middle East Issue, met with Is-
raeli Ambassador to China Irit Ben-Abba Vitale to discuss the con-
flict; then, in June 2024, the two exchanged views on China-Israel
relations and “international and regional issues of mutual interest
and concern.” 59 Further rounds of talks between Palestinian fac-
tions were held in Beijing in July 2024, in which 14 groups signed
what was dubbed the “Beijing Declaration,” agreeing to recognize
unity under the framework of the Palestine Liberation Organiza-
tion, a nationalist umbrella organization composed of disparate fac-
tions that represents the Palestinians at international fora.60 How-
ever, experts doubt that this reconciliation in preparation for the
post-war rebuilding of Gaza represents the end of the rivals’ deep
divisions given the statement’s lack of a follow-up plan.61
Beijing Cultivates Middle Eastern Support for Chinese
Initiatives and Global Leadership
China is utilizing Xi’s foreign policy frameworks—the Global Se-
curity Initiative, the Global Development Initiative, and the Global
Civilization Initiative—in diplomacy with Middle Eastern countries
to cultivate support for Chinese leadership in matters of security,
development, and culture.62 Beijing has worked to attach the initia-
tives to various projects in order to advance their implementation
across the Middle East. It is not clear how effective these initiatives
have been in the region; Dr. Fulton says that although the three
initiatives have been appearing in joint communiques across the re-
gion and have been cited by local actors as useful contributions from
China, they do not appear to be widely understood yet, and many
local governments are not aware of them.63
Global Security Initiative
The Global Security Initiative was first introduced by Xi in an
April 2022 speech at the Boao Forum and described as a proposal
to address “deficits in peace, development, security, and governance”
through adherence to six core concepts and principles that reflect
China’s preferences for regime security and state sovereignty.* 64
According to M. Taylor Fravel, a professor of political science at the
Massachusetts Institute of Technology, China is utilizing the initia-
tive to criticize and discredit the United States and its alliances,
opening up space for Chinese-led alternatives.65 Sheena Chestnut
Greitens, an associate professor at the University of Texas at Aus-
tin, sees the Global Security Initiative as the externalization of Xi’s
Comprehensive National Security Concept and an effort to “create
new forms of global security governance that bypass or reduce the
importance of the U.S. alliance system, thereby blunting Washing-
ton’s ability to contain China or foment ‘color revolutions’ inside
it.” 66 (For more on the Comprehensive National Security Concept,
* These six principles are commitment to: (1) the vision of common, comprehensive, cooperative,
and sustainable security; (2) respecting the sovereignty and territorial integrity of all countries;
(3) abiding by the purposes and principles of the UN Charter; (4) taking the legitimate securi-
ty concerns of all countries seriously; (5) peacefully resolving differences and disputes between
countries through dialogue and consultation; and (6) maintaining security in both traditional and
non-traditional domains. China’s Ministry of Foreign Affairs, The Global Security Initiative Con-
cept Paper, February 21, 2023.
343
see Chapter 7, “China’s New Measures for Control, Mobilization,

and Resilience.”)
The Global Security Initiative lists the establishment of a “new
security framework” in the Middle East among its priorities for in-
ternational cooperation.* 67 Minister Wang reportedly introduced the
concept during the second China-led Middle East Security Forum in
September 2022.68 Minister Wang describes the new security archi-
tecture as emphasizing the leading role of Middle Eastern countries
in regional security affairs, abiding by the UN Charter, and focusing
on Israel-Palestine peace talks.69 According to Dr. Fravel, the frame-
work could be interpreted as an effort to undermine U.S. leadership
in the region, given its emphasis on resisting outside interference
and sanctions.70 Beijing presented the March 2023 normalization
of relations between Iran and Saudi Arabia in Beijing as a model
for resolving “hotspot issues” † and a major victory for the Global
Security Initiative, crediting it with a “wave of reconciliation” across
the region.71
Global Development Initiative
The Global Development Initiative is China’s development frame-
work that Beijing claims aims to unite countries under the concepts
of common development and “win-win cooperation.” 72 This initiative
focuses on smaller-scale development projects ‡ implemented by the
Ministry of Foreign Affairs in partnership with existing and new-
ly established multinational institutions, in contrast to BRI’s large
state-owned enterprise-driven infrastructure projects, but together
they act as drivers of China’s “South-South cooperation” strategy.§ 73
According to Chen Yunnan, a research fellow at the London-based
Overseas Development Institute, a global affairs think tank, the
Global Development Initiative is “conveniently free of the negative
optics and baggage that the BRI has accumulated over the years
with its spotty environmental record and especially, the polemical
* The Global Security Initiative is frequently mentioned during China’s diplomatic meetings
and has been written into numerous bilateral and multilateral documents. Xi also promoted
the initiative during his second major diplomatic tour of the Middle East in December 2022,
mentioning it in speeches given at the first China-Gulf Cooperation Council and China-Arab
States Summits. China Institute of International Studies, “Report on the Implementation of the
Global Security Initiative,” July 2024, 10. China’s Ministry of Foreign Affairs, Building on Past
Achievements and Jointly Creating a Brighter Future of China-GCC Relations, December 9, 2022;
China’s Ministry of Foreign Affairs, Carrying Forward the Spirit of China-Arab Friendship and
Jointly Building a China-Arab Community with a Shared Future in the New Era, December 9,
2022; Saudi Press Agency, “Riyadh Declaration - The First Arab-China Summit,” December 9,
2022; China’s Ministry of Foreign Affairs, Carrying Forward Our Millennia-Old Friendship and
Jointly Creating a Better Future, December 8, 2022.
† Xi stated in June 2024 that international hotspot issues include Ukraine, the Israel-Hamas
conflict, the Korean Peninsula, Iran, Myanmar, and Afghanistan at an event in Beijing celebrat-
ing the 70th anniversary of the “Five Principles of Peaceful Coexistence.” Shi Jiangtao, “China’s
Xi Jinping Calls on Nations to Unite against ‘Iron Curtains of Confrontation,’ ” South China
Morning Post, June 28, 2024.
‡ According to Manoj Kewalramani, a fellow in China studies and chair of the Indo-Pacific
Studies Programme at the Takshashila Institution, Global Development Initiative projects cover
domains including poverty reduction, food security, pandemic and vaccines, climate change, in-
dustrialization, the digital economy, digital connectivity, and development finance. Manoj Kewal-
ramani, “China as a Rising Norm Entrepreneur: Examining the GDI, GSI and GCI,” Trends in
Southeast Asia 2:2024 (January 2024).
§ China often uses the term “South-South cooperation” to refer to its engagement with develop-
ing countries. According to China’s Ministry of Foreign Affairs, “South-South cooperation” is “an
important component of Deng Xiaoping Theory” that is necessary for developing countries to sup-
port and “enhance solidarity” with one another. China’s Ministry of Foreign Affairs, A “Dialogue
of the Century” on South-South Cooperation, August 29, 2022.
344
accusations of predatory lending and debt traps that it has been

unable to shake.” 74
Since the Global Development Initiative was announced in 2021,
17 Arab countries have endorsed it and 12 Arab states have joined
the initiative’s “Group of Friends.” 75 A June 2023 progress report
on the initiative, published by the State Council-affiliated Center
for International Knowledge on Development, said that the Chi-
na-led Global Clean Energy Cooperation Partnership—which has
encouraged participation by members of the Arab League, the SCO,
BRICS, and others to make a joint effort in the development of green
and low-carbon energy—will be developed under the Global Devel-
opment Initiative framework, without providing further details on
how the initiative will enhance or change the partnership.76 During
a May 2024 speech, Minister Wang said China has initiated 30 de-
velopment cooperation projects involving Arab countries under the
Global Development Initiative.* 77
Global Civilization Initiative
The Global Civilization Initiative is a Chinese framework intend-
ed to combat Western countries’ promotion of “universal values”
by advocating for the respect of a “diversity of civilizations.” 78 The
Global Civilization Initiative, launched in March 2023, is intended
to create an alternative framework to liberal values and norms.† 79
During Xi’s March 2023 speech announcing the initiative to the Chi-
nese Communist Party High-Level Dialogue with Political Parties,
he stated that countries must “refrain from imposing their own val-
ues or models on others.” 80 According to R. Evan Ellis, a research
professor at the U.S. Army War College Strategic Studies Institute,
“By promoting the relativism of values and arguing against calling
out bad behavior and seeking to stop it, the concept appeals to re-
gimes that desire to do what they wish.” 81
While the initiative remains somewhat nebulous, an official read-
out from the July 2023 China-Arab States Political Parties Dialogue
suggests it will take the form of exchanges and cooperation between
local governments, think tanks, universities, nongovernmental or-
ganizations, and media entities.82 The readout also stated that the
CCP is “willing to invite” 200 leaders of Arab political parties, politi-
cal organizations, and think tank and media representatives to visit
China for exchanges every year, but it did not outline specific details
regarding which countries will be invited, what kinds of activities
they will participate in, or how long the CCP will carry out the ex-
changes.83 In May 2024, Xi announced that China would establish
* The first batch of Global Development Initiative projects, published in 2022, listed projects
involving Middle Eastern countries that focus on issues such as pandemic response, poverty
reduction, green development, and food security and are sponsored by the China International
Development Cooperation Agency, China’s Ministry of Commerce, and various UN organizations.
Wang Yi has stated that a total of 45 development cooperation or aid projects were “underway or
under consideration” in the region. China’s Ministry of Foreign Affairs, Let Us Take Real Action to
Build a China-Arab Community with a Shared Future, May 30, 2024; China’s Ministry of Foreign
Affairs, List of First-Batch Projects of GDI Project Pool, September 21, 2022.
† According to R. Evan Ellis, a research professor of Latin American studies at the U.S. Army
War College Strategic Studies Institute, “The emphasis on ‘civilizations’ arguably prioritizes Chi-
na, as well as other states with linkages to ancient empires, including Beijing’s current illiberal
partners Russia and Iran (Persia), and Global South countries China is courting (Egypt and
Turkey) while deprivileging the voice of the United States as a relatively new and heterogeneous
actor in ‘civilizational’ terms.” R. Evan Ellis, “The Trouble with China’s Global Civilization Ini-
tiative,” Diplomat, June 1, 2023.
345
a China-Arab Center of the Global Civilization Initiative and work

with Arab countries to “achieve the goal of 10 million two-way visits
of tourists in the next five years.” 84 If these exchanges come to fru-
ition, this may indicate that Beijing sees the Middle East as a key
region for expanding the use of the Global Civilization Initiative as
a new brand and tool for greater soft power influence.
China Garners Support from Middle East on Repressive

Uyghur Policies
Although systematic elimination of Muslim religious expression
is a central part of the human rights crisis taking place in the
Xinjiang Uyghur Autonomous Region (XUAR), the governments
of Muslim majority countries have remained largely silent on the
matter.85 China’s efforts have been successful in garnering the
support of Arab countries in the Middle East, some of which have
even issued statements of support of China’s policies in the region
and have cooperated in returning Uyghurs to China, where they
face prohibitions on Muslim religious practices, arbitrary deten-
tion, and torture in contravention of international law.86
Prior to the beginning of the crackdown in 2016, Uyghurs fre-
quently traveled to the Middle East for business, for education,
or to undertake the Hajj. Many Uyghurs were subsequently sent
for “reeducation” * in the camps simply for traveling to one of 26
“sensitive countries,” which included Egypt, Iran, Iraq, Saudi Ara-
bia, Syria, Turkey, and the UAE.87 Yet, many of these countries
have made statements of support for China’s policies through
UN letters or during state visits.88 Middle Eastern diplomats
and journalists are given tours of the region and encouraged to
repeat Chinese narratives.89 Furthermore, some Middle Eastern
countries—including Egypt, Qatar, Saudi Arabia, Syria, and the
UAE—have been cooperating with the Chinese security services
in locating, detaining, or providing for the refoulement of Uy-
ghurs.90
As a country with cultural affinity for Uyghurs and other Tur-
kic peoples, Turkey’s policies are somewhat different, and it re-
mains home to a large Uyghur diaspora. Even so, Turkey has
increased its cooperation with China in recent years, limiting in-
formation about the crisis in the media, constricting Uyghur ac-
tivism, and increasing the threat of deportation.91 In June 2024,
Turkish Foreign Minister Hakan Fidan made the first high-level
visit to XUAR by a Turkish official since 2012, announcing great-
er counterterrorism cooperation and trade while avoiding overt
criticism of Beijing’s human rights abuses.† 92
* In May 2014, Beijing launched its “Strike Hard Campaign against Violent Terrorism” in Xin-
jiang. According to Human Rights Watch, “Since at least 2014, the Chinese government has sub-
jected Turkic Muslims to various crimes against humanity, including mass arbitrary detention,
torture and deaths in detention, and enforced disappearances.” Human Rights Watch, “ ‘Break
Their Lineage, Break Their Roots’: China’s Crimes against Humanity Targeting Uyghurs and
Other Turkic Muslims,” April 19, 2021.
† Foreign Minister Fidan commented during his visit that Xinjiang’s cities of Urumqi and Kash-
gar are “Turkic and Islamic cities,” which observers asserted could have been a subtle rejection
of China’s claims over the region. The Chinese media did not react to Fidan’s comments. Arslan
and Erkin Tarim, “In China, Turkish Foreign Minister Calls Urumqi and Kashgar ‘Turkic’ Cities,”
Radio Free Asia, June 6, 2024; Kasim Kashgar, “Turkish Diplomat’s Visit to Uyghur Region in
China Raises Concerns,” Voice of America, June 6, 2024.
346
China Garners Support from Middle East on Repressive

Uyghur Policies—Continued
The leaders of Middle Eastern countries have evidently deter-
mined that it is not in their interest to condemn crimes against
humanity taking place in XUAR against a Muslim population.
Obtaining silence or support from Middle Eastern countries for
Chinese policies in Xinjiang, as well as Hong Kong and Taiwan,
is a high priority in China’s engagement with the region, as Dr.
Murphy pointed out in her testimony before the Commission.93
Dr. Fulton observes that Middle Eastern countries have little in-
centive to jeopardize their economic interests and trade relations
and that China appears to have successfully framed the issue as
one similar to Middle Eastern governments’ concerns about polit-
ical Islam and terrorism.94
Beijing Engages China-Arab States Cooperation Forum to Bolster

Regional Legitimacy
Although China conducts diplomatic activities in a range of differ-
ent multilateral institutions and platforms, the CASCF, established
in 2004, serves as China’s primary multilateral coordination mech-
anism with the League of Arab States,* including the Gulf Coopera-
tion Council (GCC) countries.95 The CASCF holds ministerial meet-
ings every two years, and other senior officials meet on an annual
basis to implement any action plans that have been developed.96
The CASCF is used by China for several key purposes:
• The forum emphasizes political cooperation with China, partic-
ularly China’s “Five Principles of Peaceful Coexistence” † and
the concept of “South-South Cooperation.” 97 The Five Principles
of Peaceful Coexistence “represent a very conservative interpre-
tation of Westphalian norms of sovereignty, territorial integrity,
and non-interference,” Dr. Murphy said.98 They stand in con-
trast to the liberal, rules-based international order’s attention
to human rights and democratic values, and in doing so they
appeal to the region’s autocratic governments.
• According to Dr. Murphy, the CASCF “explicitly includes coop-
eration on key Arab political issues,” such as the Middle East
peace process and more recently discussion of the ongoing con-
flict in Gaza.99
• China uses the forum to solicit support for various issues im-
portant to China internationally. Dr. Murphy notes that one ex-
ample of this type of behavior was the inclusion of wording in
the CASCF documents supporting China’s position on territorial
and maritime disputes in the South China Sea in 2016.100 Chi-
* The League of Arab States includes Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan,
Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Somalia,
Sudan, Syria, Tunisia, the United Arab Emirates, and Yemen. Diplomatic Service of the European
Union, League of Arab States (LAS) and the EU, August 3, 2021.
† The Five Principles are: mutual respect for territory and sovereignty, mutual nonaggression,
mutual noninterference in internal affairs, equality and mutual benefit, and peaceful coexistence.
China’s Ministry of Foreign Affairs, Build a New International Order on the Basis of the Five
Principles of Peaceful Coexistence.
347
na likewise has used the forum to seek statements of support

from Middle Eastern states for its policies in Xinjiang, provid-
ing diplomatic cover for China’s human rights abuses against
Uyghurs and other Turkic peoples.101 (See the “China Garners
Support from Middle East on Repressive Uyghur Policies” text-
box above for more on these efforts.)
• China has also used the forum as a primary multilateral mech-
anism to coordinate economic activities with the Middle East.102
The most recent ministerial-level meeting of CASCF was held in
late May through early June 2024 and focused on issues such as
further economic and technological cooperation as well as a poten-
tial ceasefire in Gaza.103 China and the Arab states also issued a
21-point joint statement at the forum criticizing Israel and the Unit-
ed States, further demonstrating Beijing’s one-sided actions as it
has attempted to portray itself as a neutral mediator of the war.104
China Expands Engagement with Key U.S. Partners in the
Middle East
China is seeking to bolster its relations and influence with Arab
states in order to expand economic ties and promote its vision of
an alternative world order, and in the course of doing so it seeks
to exploit tensions in these countries’ relationships with the United
States. China places a particularly high priority on its relationships
with Saudi Arabia, the UAE, and Egypt, all of which have signed
comprehensive strategic partnership agreements with China and
hosted visits by Xi at least once—Egypt in 2016, the UAE in 2018,
and Saudi Arabia in 2016 and 2022.* 105 Minister Wang also made
stops during a six-country Middle East tour in 2021 and traveled
to Egypt during a four-country tour of African countries in 2024.106
China Seeks to Become Alternative Strategic Partner for Saudi
Arabia
China and Saudi Arabia have shown mutual interest in deepening
their relationship, as Riyadh has sought to court Beijing, and China
has attempted to portray itself as an essential strategic partner to
Saudi Arabia.107 Dr. Alterman asserts that China has sought to do
so “partly in the wake of Saudi concerns that the United States has
been abandoning the Middle East as it pivots toward Asia, and part-
ly by marketing the idea that the Chinese experience in economic
growth holds lessons for Saudi Arabia’s own ambitious economic di-
versification efforts.” 108 Saudi Arabia’s desire to draw closer to Chi-
na grew following the diplomatic fallout caused by the murder of
Jamal Khashoggi in 2018.109 Dr. Alterman notes, however, that this
motivation has dampened in recent years partly due to the Biden
Administration’s reassurance that the United States is not hostile
toward Saudi Arabia and because China’s regional diplomacy “is no
substitute for the United States.” 110 Despite this more recent U.S.
effort, Saudi Arabia has still pursued engagement with China, see-
ing BRI as a way to advance its Vision 2030 agenda.111 Prior to
* Before Xi’s 2016 visit to Saudi Arabia, Egypt, and Iran, the Ministry of Foreign Affairs pub-
lished the Arab Policy Paper, which laid out the blueprint for cooperation in a variety of areas,
emphasizing cooperation on energy, investment, and high technology. China’s Ministry of Foreign
Affairs, China’s Arab Policy Paper, January 13, 2016.
348
Xi’s 2022 visit to the country, Saudi Arabian state media said the
Kingdom was keen to develop bilateral relations with China as part
of its strategic plan to boost partnerships with “all influential coun-
tries and international powers.” 112 The two sides enhanced their
Comprehensive Strategic Partnership, issuing a joint declaration on
economic and defense cooperation in December 2022.113 During the
2022 trip, Xi also attended the first Arab-China Summit for Coop-
eration and Development held in Riyadh in what the Ministry of
Foreign Affairs called the “highest-level diplomatic event between
China and the Arab world since the founding of the People’s Repub-
lic of China.” 114
China’s relations with Saudi Arabia have been rooted in econom-
ic interests, although there is also a small, somewhat limited mili-
tary strand that runs through bilateral ties.115 Dr. Alterman notes
that since the 1990s, Saudi Arabia has engaged more deeply with
Chinese firms when it sought low-cost construction options amid
a slumping economy, with Chinese firms building some of Saudi
Arabia’s most important infrastructure projects, including light rail,
desalination plants, and industrial projects, as well as contributing
to the country’s information technology (IT) systems.116 Saudi Ara-
bia occasionally sought to procure Chinese weapons and technology
as alternatives to those the United States would not provide, like
CSS-2 missiles in the 1980s, with China now selling Saudi Arabia
drones, helping Riyadh build ballistic missiles, and being involved
in domestic surveillance efforts.117
China-Saudi Cooperation on Ballistic Missiles

Saudi Arabia is diversifying its own arms procurement in re-
sponse to Iran’s growing military capabilities, including by acquiring
Chinese ballistic missile technology and expertise. Although China
is not a member of the Missile Technology Control Regime (MTCR),
China’s government nevertheless made a formal voluntary commit-
ment in 2000 to abide by its export restrictions on ballistic missile
components and technology.118 Despite this, China has played a key
role in Saudi Arabia’s missile procurement efforts.119 In the late
1980s, China first delivered liquid-propelled Dong Feng-3A (DF-3A)
missiles to Saudi Arabia, yet the transfer was not publicly acknowl-
edged until 2014.120 China has reportedly also transferred addi-
tional Dong Feng-class missiles to Riyadh since 2018.* 121 Although
U.S. intelligence agencies have raised concerns about the transfers,
the United States was reluctant to impose consequences on Saudi
Arabia in 2021, a strategic partner in the region, according to the
Wall Street Journal.122 The Arms Control Association asserts that
although not illegal, China’s assistance to Saudi Arabia “contradicts
its vow to abide by the MTCR,” as China is not a member of the ex-
port control regime but has pledged to adhere to its guidelines pro-
hibiting the export of missiles capable of delivering a 500-kilogram
payload more than 186 miles (300 kilometers).123 In December 2021,
* Dong Feng ballistic missiles, produced by the China Aerospace Science and Industry Corpo-
ration, have a range of approximately 170 miles to 9,320 miles. The missiles have the capability
to engage targets at short, medium, intermediate, and intercontinental ranges and are equipped
with diverse warhead-carrying capabilities, enabling strong deterrence abilities. Army Technology,
“Dongfeng (DF) Ballistic Missiles, China,” August 15, 2022.
349
China-Saudi Cooperation on Ballistic Missiles—Continued

analysts from the James Martin Center for Nonproliferation Stud-
ies, affiliated with the Middlebury Institute of International Studies
at Monterey, assessed that satellite images of a missile facility near
Al-Dawadmi, Saudi Arabia, indicate the facility was likely built with
Chinese assistance.124 During the same month, reports emerged
that U.S. intelligence agencies had assessed that Saudi Arabia was
producing ballistic missiles domestically with Chinese assistance.125
It remains unclear whether the missile being produced at the iden-
tified site is a Chinese design, but given China’s large transfers of
ballistic missile technology to Riyadh, it is certainly possible.126
UAE Carrying Out Balancing Act between the United States and
China
China views the UAE as a country where the United States is
gradually losing its influence, and one with whom Beijing has an
opportunity to deepen its cooperation. According to a 2020 article
by Chinese scholar Tong Fei, an associate researcher at the Chi-
nese Academy of Social Sciences’ Institute of West-Asian and Afri-
can Studies, as the United States has shifted its focus to Asia, Arab
countries—including the UAE—have pursued alternative partners,
particularly in the economic realm.127 The UAE is home to an es-
timated quarter million Chinese nationals, and Chinese firms are
active there in construction and other fields.128 Dr. Tong asserts that
“since adopting an eastward foreign policy, the UAE has made deep-
ening its comprehensive strategic partnership with China a top pri-
ority in its diplomatic goals.” 129 In his testimony to the Commission,
Dr. Alterman noted that “the Abu Dhabi government increasingly
has sought to strike an ‘active neutrality’ posture in the world,”
growing its ties with both China and Russia and confident that it is
powerful enough to advance its own interests.130
Despite the UAE’s willingness to work with Beijing, Chinese ex-
perts still assess that there are challenges in their diplomatic re-
lations that need to be overcome. Dr. Tong assesses that although
the UAE hopes to take advantage of BRI, strengthen investment
cooperation with China, get rid of excessive dependence on oil, and
accelerate its economic diversification process, the two countries
have little understanding of each other due to regional differences
and separate ideologies.131 Dr. Tong argues that government offi-
cials and ordinary people in the UAE not only lack a deep under-
standing of China but also have doubts about Beijing’s Middle East
policy.132 Furthermore, Dr. Tong states that “some UAE elites hope
that China can assume more peace and security responsibilities in
the Middle East and become a force that can compete with the Unit-
ed States in the Middle East” but that the UAE has concerns about
China’s cooperation with Iran, which it views as a threat.133 Dr.
Tong also asserts that some within the UAE are dissatisfied with
the trade deficit with China, as China has used BRI to obtain en-
ergy from the UAE but is unwilling to buy petrochemical products
the UAE wants to sell to China.134 Dr. Tong assesses that because
of this, “it can be said that the mutual political trust in the coopera-
350
tion between the two sides is still relatively fragile.” 135 (For more on
the challenges that China and the UAE’s technological cooperation
face under increasing U.S. scrutiny, see the section on “China-Middle
East Technology Relations” within this chapter.)
The Reach of Chinese Media in the Middle East

Over the past decade, China has dramatically increased its ef-
forts to build what it calls “discourse power”—the ability to shape
global public opinion in the way it does domestically—through its
media presence in Middle Eastern countries.136 It has been pour-
ing resources into expanding the reach of foreign-facing media
outlets in the region.137 Chinese government-connected entities
and their proxies have been holding summits, tours, and train-
ings with foreign journalists, encouraging them to echo Chinese
narratives while also controlling local traditional and new media
outlets.138 China has become increasingly adept at utilizing local
languages to communicate its preferred narratives, focusing on
economic cooperation and providing positive stories on China.139
In addition to Arabic-language versions of official media such
as CGTN, overseas Chinese networks like China-Arab TV serve
official narratives as well, partnering with China’s Central Pro-
paganda Department to strengthen cooperation in film and TV
production in order to “transmit China’s voice” and “promote Chi-
na’s image among Arab countries.” 140 In 2022, the China Media
Group, a Chinese state media organization, and the Saudi Min-
istry of Media launched a joint partnership initiative to promote
relations between Arab countries and China at the Arab-Chinese
Media Cooperation Forum.141 The initiative focuses on promoting
the presence of Chinese media in Arab channels and translating
Chinese television shows into Arabic for broadcast in the Palestin-
ian Territories, Algeria, Jordan, Sudan, Iraq, and Saudi Arabia.142
Chinese experts and state media have pushed a narrative that
frames the United States’ supposedly declining influence in the re-
gion as an opportunity for Beijing to increase its engagement. For
example, a July 2022 article by Tang Zhichao, a professor at the
University of the Chinese Academy of Social Sciences, argued that
the Obama, Trump, and Biden Administrations were “obsessed with
strategic competition among major powers and implemented a pol-
icy of strategic contraction from the Middle East to achieve a shift
to the Asia-Pacific region,” which he claims created a vacuum in re-
gional power and security.143 Dr. Tang argues in a February 2024 ar-
ticle that during the 30 years of the post-Cold War era, “the United
States’ hegemonic position in the Middle East has gradually fallen
from high to low,” which has prompted regional countries to “increas-
ingly strengthen their strategic autonomy, providing an important
opportunity for the strategic cooperation between China, Russia and
Middle Eastern countries to be enhanced.” 144 Gao Wencheng, a Xin-
hua news reporter, also said in June 2023 that recently, “failure” has
become a common keyword when the international media discusses
the United States’ Middle East policy, claiming the United States
has lost the “hearts of the people” in the region due to “wanton bul-
lying.” 145
351
Supporting Iran and Terrorist Groups to Undermine the

United States
China and Iran share strong opposition to the U.S.-led liberal in-
ternational order.146 As it does with other countries in the region,
China takes an opportunistic approach to its relationship with
Iran.147 China will show solidarity with Iran to the degree that it
comes at little cost to Beijing; at the same time, it takes advantage
of Iran’s isolated position, buying discounted oil and failing to fully
deliver on promised investments.148 Dr. Alterman argues that China
leverages tensions between the United States and Iran, preferring
“a world in which the United States is bogged down in the Middle
East and alienates much of the Global South through its actions
there.” 149 China has shown support to Iran through its rhetorical,
military, and economic actions, all of which serve to undermine U.S.
interests in the region.
Beijing Props Up Tehran with Rhetorical and Diplomatic
Support
China has played a significant role in easing Iran’s diplomatic iso-
lation in recent years, particularly through its efforts to shield Iran
from further sanctions over its nuclear program. China vocally crit-
icized the re-imposition of sanctions by the United States in 2018
after the United States withdrew from the Joint Comprehensive
Plan of Action.150 It has stated opposition to sanctions on Iran and
condemned the United States’ Iran policy, with Xi stating during a
February 2023 meeting with then Iranian President Ebrahim Raisi
that China “opposes external forces interfering in Iran’s internal
affairs and undermining Iran’s security and stability.” 151 A likely
motivation was that the 2018 sanctions dampened the potential for
Chinese trade and investment with Iran despite continued engage-
ment by China’s more risk-tolerant companies.152
China has also eased Iran’s isolation by drawing it into China-led
multilateral institutions, with Iran finally achieving its longstand-
ing goal of joining the SCO in 2023.* 153 In 2010, the SCO intro-
duced a membership criteria preventing states with UN sanctions
from joining—a move some assess was aimed at preventing Iran’s
accession.154 Despite these initial impediments, Iran’s Supreme Na-
tional Security Council announced in August 2021 that the “political
obstacles” to accession were resolved through dialogue with Russia,
according to Nicole Grajewski, a fellow at the Carnegie Endowment
for International Peace.155 In addition to smoothing out its differ-
ences with Tajikistan, Dr. Grajewski said, Iran mustered enough
support from China to back its accession.† 156 Presently, Iran is the
* Iran first applied for full membership in the SCO in 2008 and became an observer state in
2005. The SCO is mainly a platform for security cooperation, conducting military exercises, and
fighting what China calls the “three evils of terrorism, separatism and extremism,” serving as
what scholar Nicole Bayat Grajewski calls a “regime-preservation network” to help coordinate in-
ternal repression. While the organization is presently little more than a “talking shop,” according
to Dr. Fulton, it could become a “a key platform for institutionalizing authoritarian cooperation
and resilience.” Jonathan Fulton, “Iran Joining the SCO Isn’t Surprising. But Beijing’s Promotion
of Illiberal Norms in Eurasia Should Get More Attention,” Atlantic Council, July 13, 2023; Nicole
Bayat Grajewski, “Iran and the SCO: The Quest for Legitimacy and Regime Preservation,” Middle
East Policy 30:2 (Summer 2023).
† Then Iranian Foreign Minister Hossein Amir-Abdollahian thanked his Chinese counterpart,
Wang Yi, for supporting the country’s membership bid in September 2021. Nicole Grajewski,
352
only Middle Eastern country to have full membership in the SCO,

opening up potential closer coordination with China and Russia.* 157
Iran’s accession into the BRICS organization † on January 1, 2024,
represents another instance of entrance into alternative multina-
tional institutions, having received some rhetorical support from
Beijing. While Russia was the original organizer, BRICS has be-
come a high-profile vehicle of China’s “South-South” Cooperation
strategy, with Minister Wang calling on it to “oppose attempts to
instigate a new Cold War” at the June 2024 ministerial meeting
in Russia.158 In July 2023, Chang Hua, China’s then ambassa-
dor to Iran, said in an interview with Iranian media that “Chi-
na supports Iran’s membership in the BRICS organization . . . .
Although the agreement of other BRICS members is necessary,
we support Iran’s aspiration to join the organization.” 159 General
Secretary Xi met with then President Raisi on the sidelines of
the BRICS Summit in August 2023, saying China “stood ready
to strengthen cooperation with Iran on BRICS and other multi-
lateral platforms.” 160 Although BRICS membership may serve to
further align Iran with China and Russia, other members of the
organization might have concerns about the possibility of being
drawn into an anti-U.S. bloc.
China’s Transfer of Dual-Use Technology to Iran and Its
Terrorist Groups Threatens U.S. National Security
Interests
China’s transfer of dual-use technologies and components to Iran
and its terrorist proxies—including parts used in armed drones and
ballistic missiles—undermines U.S. national security interests and
stability in the region.‡ In 2023 and 2024, the Treasury Department
placed sanctions on networks of Chinese suppliers and Hong Kong
front companies selling components to the Iranian ballistic missile
and unmanned aerial vehicle (UAV) programs, including the produc-
ers of the Shahed drone used by Russia in Ukraine and in attacks
on shipping in the Red Sea.161 The Department of Commerce’s Bu-
reau of Industry and Security has also placed Chinese and Hong
Kong companies on the Entity List in 2023 and 2024 for supplying
dual-use components for Iran’s UAV industry.162 U.S. Assistant Sec-
retary of State for Near Eastern Affairs Barbara Leaf testified in
2022 that Iranian proxies are using Chinese UAVs, and the Chinese
government is not attempting to curtail the sales.163 According to
“Iranian Membership in the Shanghai Cooperation Organization: Motivations and Implications,”

Washington Institute for Near East Policy, September 15, 2021.
* Full members of the SCO include: China, India, Iran, Kazakhstan, Kyrgyzstan, Pakistan,
Russia, Tajikistan, and Uzbekistan. Observer states include Afghanistan, Belarus, and Mongolia.
Dialogue partners include Armenia, Azerbaijan, Bahrain, Cambodia, Egypt, Kuwait, Maldives,
Myanmar, Nepal, Saudi Arabia, Sri Lanka, Turkey, the UAE, and Qatar. Shanghai Cooperation
Organization, “General Information,” January 9, 2017.
† The intergovernmental organization originally comprised Brazil, Russia, India, China, and
South Africa, with Iran entering alongside Egypt, Ethiopia, and the UAE in January 2024. Russia
organized and hosted the first summit in 2009, with meetings held annually going forward. The
organization is now sometimes referred to as BRICS+. Marc Jütten and Dorothee Falkenberg,
“Expansion of BRICS: A Quest for Greater Global Influence?” European Parliamentary Research
Service, March 2024.
‡ According to a 2024 U.S. Department of Justice press release, four Chinese nationals were
indicted and charged with several crimes for illegally exporting and smuggling U.S.-origin elec-
tronic components used in UAVs and ballistic missiles to Iran. U.S. Department of Justice, Chi-
nese Nationals Charged with Illegally Exporting U.S.-Origin Electronic Components to Iran and
Iranian Military Affiliates, January 31, 2024.
353
Iranian media reports, China has supplied Iran with access to the
BeiDou satellite navigation system, a rival to the U.S. GPS system,
which could bolster drone and missile performance and targeting
through its advanced navigation and communication system.* 164
Chinese military equipment and components have allegedly
been obtained by Hamas and the Houthis, highlighting the po-
tential danger of Chinese products supporting the operations of
non-state actors in the region. After October 2023, the Associated
Press and the Israel Defense Forces reported that Hamas was
using China-origin weapons in Gaza.165 Although China claims
it does not sell weapons to non-state actors, reports indicate the
Chinese-made weapons may have been sold elsewhere in the Mid-
dle East and then smuggled to Hamas terrorists.166 An investi-
gation by Israeli Defense Forces found that Hamas has obtained
advanced weapons and technology made in China, including car-
tridges and rifle sights for M16 assault rifles, automatic grenade
launchers, and communication devices.167
Chinese components have also appeared in weapons used by
Iran and its Houthi proxies in attacks on Saudi Arabia. Drones
used in a September 2019 attack on two Saudi Aramco facili-
ties claimed by the Houthis but attributed to Iran by the United
States and a UN investigation were later revealed to be Shahed
131 drones, which utilize motors resembling the MDR-208 sin-
gle rotor UAV engine, made by Beijing MicroPilot UAV Flight
Control Systems, a Chinese company.† 168 Iran has supplied these
and other UAVs and missiles to the Houthis for their attacks on
targets across the Middle East.169 While one Chinese military
blogger has speculated that the Houthi rebels were potentially
using Chinese missile technology previously shared with Iran, to
date there has been no public evidence that the Chinese govern-
ment is directly transferring weapons to the Houthis.170 However
there is evidence that weapons used by Houthi rebels contain
Chinese-made parts.‡ 171 Furthermore, in June 2024, the Trea-
sury Department announced that Ali Abd-al-Wahhab Muham-
mad al-Wazir, a China-based Houthi-affiliated individual, played
a “key role in procuring materials that enable Houthi forces to
manufacture advanced conventional weapons inside Yemen.” 172
He utilized his China-based company, Guangzhou Tasneem Trad-
ing Company Limited (Guangzhou Tasneem), a subsidiary of
Hong Kong-based Tasneem Trading Company Limited, to obtain
these items and ship them to Yemen.173
* A 2015 Iranian media report stated that BeiDou was establishing ground stations in Iran and
had signed an MOU with Iran Electronics Industries, a state-owned company owned by Iran’s
Ministry of Defense and subject to U.S sanctions. Mehr News Agency, “Chinese BeiDou BDS to
Transfer Satellite Tech. to Iran,” October 18, 2015; U.S. Department of the Treasury, Treasury
Designates Iranian Military Firms, September 17, 2008.
† The Ukrainian military claims Russia is also sourcing engines from Beijing MicroPilot UAV
Flight Control Systems for its Iranian Shahed attack drones. The Wall Street Journal reports
that Russia has launched more than 4,000 Iranian Shahed drones. Benoit Faucon et al., “The
Russian Drone Plant That Could Shape the War in Ukraine,” Wall Street Journal, May 28, 2024.
‡ The UN panel report that identified the Chinese-origin components also identified UAV and
missile components sourced from Iran, Japan, Belarus, Germany, and the Czech Republic via a
network of intermediaries. Farzin Nadimi, “The UN Exposes Houthi Reliance on Iranian Weap-
ons,” Washington Institute for Near East Policy, February 13, 2020.
354
China Increases Purchases of Sanctioned Oil from Iran

China has increased imports of Iranian oil in recent years by
constructing a parallel network of shippers, refineries, and finan-
cial institutions to obscure imports and bypass U.S. sanctions.174
Taken in conjunction with its increased purchases of sanctioned
Russian oil, China is constructing what researchers at the At-
lantic Council have dubbed an “axis of evasion” that undermines
U.S. sanctions, profiting in the near term from discounted ener-
gy imports while establishing an alternative trade and payment
system that may buffer it from future economic sanctions.175
According to estimates by the nonprofit United Against Nuclear
Iran and others who track data on Iranian oil exports, China im-
ported 1.1 million barrels per day (bpd) from Iran in 2023, up 9
percent from the year prior.176 If correct, this would mean China
is now responsible for purchasing nearly 90 percent of Iranian
crude exports,* which would account for nearly 10 percent of to-
tal Chinese crude imports, making Iran the fourth-largest sup-
plier to China in 2023, just behind Iraq.177 Chinese customs did
not report any oil imports from Iran in 2023, so it appears oil is
imported through transshipment facilities in Malaysia, the UAE,
and Oman and relabeled as “Middle Eastern” oil.178 China is es-
timated to have imported 1.4 million bpd on average through the
first five months of this year.179
The sanctioned oil is transported by a so-called “dark fleet”
of older tankers that use a variety of tactics to avoid detection,
such as turning off signaling systems when making Iranian port
calls, sending fake location information (known as “spoofing”),
and conducting ship-to-ship transfers outside authorized trans-
fer zones using the cover of bad weather to hide operations, a
practice that heightens the risk of an environmentally costly ac-
cident.180 According to testimony before the Commission by Erica
Downs, senior research scholar at Columbia University’s Center
on Global Energy Policy, independent refineries known as “tea-
pots” purchased all the Iranian crude oil imported into China in
2023.181 China’s large state-owned oil companies have curtailed
their involvement in purchasing and processing Iranian oil since
late 2019 after the re-imposition of sanctions following the U.S.
withdrawal from the Joint Comprehensive Plan of Action.182
Congress and the Administration have taken a number of re-
cent actions intended to address the issue. Since 2021, over 180
entities and individuals have been sanctioned for their involve-
* Iran’s estimated revenue from oil exports was $12 billion over the first three months of the gov-
ernment’s fiscal year starting in March 2024. For comparison, the country’s gross domestic product in
2023 was $401.5 billion and the government’s budget for 2024 is estimated to be $49.2 billion, about
equivalent to expected total revenue from oil exports. In other words, China’s oil purchases from Iran
appear to equate to nearly 90 percent of Iran’s entire government budget, though due to associated
costs oil export revenue is believed to directly fund 45.4 percent of the government’s operating budget.
Given the scale of China’s oil purchases from Iran, and lack of alternative buyers due to sanctions,
Beijing appears to have immense capacity to influence Tehran. There is little evidence that China
has used this leverage with respect to Iran’s support for proxies in the Middle East—such as Houthi
attacks on shipping (other than perhaps protecting Chinese flagged ships) and Hezbollah—or Iran’s
direct attacks on Israel. Iran International, “Iran Faces 26% Oil Revenue Deficit Despite Surging
Exports,” October 5, 2024; Dalga Khatinoglu, “Iran’s Oil Exports Hit a 5-Year High in 2024,” Iran
International, July 1, 2024; World Bank Group, “Iran, Islamic Rep.”; Iran International, “Iran’s Gov-
ernment Plans to Increase Taxes amid Economic Crisis,” November 11, 2023.
355
China Increases Purchases of Sanctioned Oil from Iran—

Continued
ment in the trade of sanctioned Iranian oil.183 Congress included
two sanctions measures as part of the supplemental appropria-
tions package enacted in April 2024: (1) the Stop Harboring Ira-
nian Petroleum (SHIP) Act directs the president to sanction for-
eign persons involved in activity related to Iranian oil, to include
refineries and port owners and operators; and (2) the Iran-China
Energy Sanctions Act of 2023 expands the definition of “signifi-
cant financial transactions” in the fiscal year (FY) 2012 National
Defense Authorization Act to include those by Chinese financial
institutions that involve Iranian oil exports, and it also directs
the president to make an annual determination on whether fi-
nancial institutions have engaged in such activity.184
China’s Economic, Trade, and Investment Interests

in the Middle East
China replaced the United States as the Middle East’s largest
trade partner in 2010, and China-Middle East economic ties have
deepened in the years since.185 Economic relations feature prom-
inently in China’s engagement with countries in the region, with
Chinese companies increasing their physical presence in key logis-
tical nodes of the global supply chain and seeking to shore up ac-
cess to critical resources.186 In January 2016, the State Council of
the People’s Republic of China presented an Arab Policy Paper that
outlined its priorities and approach to economic cooperation with
key Middle Eastern countries and served as a template for policy
toward most of the region.187 The paper called for establishment of
a “1+2+3 cooperation pattern” with energy cooperation at the core;
infrastructure construction and expanding trade and investment as
the “two wings”; and nuclear energy, space satellites, and new en-
ergy as “three breakthroughs” that together would be the defining
elements of relationships with Arab countries.188 Based on China’s
behavior in the region and these expressions of its plans, it seems
likely that in the short to medium term China will continue to as-
sign top priority to ensuring steady access to the region’s energy
resources and will seek to benefit from increased market access and
infrastructure contracts.189 In the long term, as a transition away
from fossil fuels alters the region’s position in global trade, China
will seek to evolve cooperation with key countries in the region to
advance toward its goals of establishing emerging technologies like
artificial intelligence (AI), advanced computing, and clean energy as
central economic growth drivers.190
Trends in Trade and Investment
China has become the largest trading partner for many countries
in the region, with growth in total trade and direct investment be-
tween China and the Middle East outpacing that of China with the
rest of the world over the past five years.191 In 2022, China was the
top origin country for goods imports for ten out of 15 Middle Eastern
countries, an increase from five a decade earlier and zero in 2002.192
356
As an export destination for goods, China ranked first for six coun-
tries in 2022, up from three in 2012 and zero in 2002.193
Energy Relations
Energy trade remains a mainstay of China-Middle East economic
engagement, comprising roughly 85 percent of total exports from
the region to China by value in recent years.194 China became a
net importer of crude oil in 1993; since that time, imported energy
from the Middle East has provided a sizable share of the fuel Chi-
na consumes.195 While exports from Persian Gulf countries * to the
United States and the EU have trended downward since the ear-
ly 2000s, China’s crude oil imports from the region have increased
from about 34 million metric tons at the turn of the century to about
257 million metric tons in 2021 (see Figure 1).196 The Middle East
has consistently accounted for 40–50 percent of China’s total oil and
gas imports dating back to the mid-1990s.197 China’s imports of hy-
drocarbons from the region have continued to grow in recent years,
as have two-way investments and long-term agreements to lock in
consistent supply over the coming decades.198 However, as China
and key suppliers in the Gulf move to transition segments of their
economy to clean and renewable energy, the dynamic of dependen-
cy is set to shift, where China may become a supplier of batteries,
solar, and nuclear energy systems to the region and Gulf countries
may find themselves in competition with Chinese firms to build out
energy infrastructure in third countries.199
Trade of Hydrocarbons Remains Substantial
China’s rapid rise, vast population, and industrialization have
made it the world’s largest consumer of energy, largest producer and
consumer of coal, and largest emitter of carbon dioxide from burn-
ing hydrocarbons.200 In 2021, coal provided the majority of China’s
energy for consumption (55 percent), followed by petroleum (19 per-
cent), natural gas (9 percent), hydropower (8 percent), non-hydro re-
newables (7 percent), and nuclear energy (2 percent).201 For oil and
natural gas, China remains heavily reliant on imports, primarily
from Russia and the Middle East.† 202 Virtually all of China’s energy
imports from the region are shipped through key maritime choke-
points, including the Strait of Hormuz and the Strait of Malacca, a
point of concern for PLA military planners.203 (For further discus-
sion on China’s oil stockpiling and related measures, see Chapter 7,
“China’s New Measures for Control, Mobilization, and Resilience.”)
Oil Exports to Chinese Market Steadily Rise
With limited domestic production capacity of its own, China relies
on imported oil to power large parts of its transportation and indus-
* The Persian Gulf includes eight countries—Bahrain, Iran, Iraq, Kuwait, Saudi Arabia, Oman,
Qatar, and the UAE—which together sit atop half the world’s known oil reserves. Though all but
Iran are members of the Arab League, the “Gulf Arab states” or “Arab Gulf” often also excludes
Iraq, referring solely to the six Gulf Cooperation Council (GCC) members. RAND Corporation,
“Persian Gulf Region,” 2024; Simon Henderson, “Understanding the Gulf States,” Washington
Institute for Near East Policy, March 31, 2014.
† Oil and liquified natural gas (LNG) make up the majority of imports to China from Middle
Eastern countries, from 99 percent of total dollar value of imports from Iraq on the high end to
69 percent with the UAE on the low end in 2023. Erica Downs, written testimony for U.S.-China
Economic and Security Review Commission, Hearing on China and the Middle East, April 19,
2024, 1.
357
trial sectors.204 China’s imports of crude oil nearly doubled over the
past decade from just over six million bpd in 2014 to 11.3 million
bpd in 2023, a record high.205 According to Chinese customs data,
flows from the Middle East over this time period increased from
3.2 million bpd in 2014 to 5.2 million bpd in 2023, 46 percent of
China’s total crude imports.206 Saudi Arabia became China’s largest
crude oil supplier in 2018 and remained so until Russia replaced it
in 2023 due to China’s substantial purchases of discounted oil sub-
ject to sanctions in other markets.207 In 2023, Russia supplied 19
percent of China’s imported crude oil, followed by Saudi Arabia (15
percent), Iraq (11 percent), Malaysia (10 percent), and the UAE and
Oman (both 7 percent).208 However, it is believed that a significant
portion attributed to Malaysia, the UAE, and Oman is relabeled oil
from Iran.209 For instance, Malaysia’s total crude oil production in
2023 was 501,000 bpd, yet Chinese customs reported importing 1.1
million bpd, suggesting a sizable portion of the difference was oil
transshipped through the country.210
Figure 1: Crude Oil Imports from Persian Gulf Countries, 2000–2022
300
250
Metric Tons (millions)
200
150
100
50
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
China United States
Source: UN Comtrade database.

Note: Persian Gulf countries include Bahrain, Kuwait, Iran, Iraq, Oman, Saudi Arabia, Qatar,
and the UAE.
Saudi Arabia has sought to increase investment and joint ven-

tures in downstream refining capacity with Chinese petrochemical
companies to lock in long-term purchase contracts as global demand
for traditional crude oil products like gasoline and diesel is set to
decline. The Saudi government is prepared to spend $100 billion
by 2030 on downstream energy products—such as petrochemical
products used in textile manufacturing—as part of the National In-
vestment Strategy, which seeks to diversify the economy away from
reliance on traditional crude oil exports, also detailed in the Saudi
national plan “Vision 2030.” 211 Since 2022, Saudi Arabia’s state oil
358
company Saudi Aramco * has embarked on a campaign to sign ma-

jor investment deals in China toward achieving the stated goal of
converting four million bpd † of crude oil to chemical products by
2030.212
Table 2: Recent Announced Investment between Saudi Aramco and
Chinese Partners
Date of Chinese Planned

Announcement Company Investment Status
April 22, 2024 Hengli Aramco to take 10 per- Negotiations
Petrochemical cent stake in company ongoing
January 2, 2024 Rongsheng Cross-acquisition talks: Negotiations
Petrochemical Rongsheng to acquire 50 ongoing
percent stake in Aramco
Jubail Refinery Co.
(SASREF), and Aramco
to take max 50 percent
stake in Rongsheng’s
Ningbo Zhongjin Petro-
chemical complex
October 11, 2023 Shandong Yulong Aramco to take 10 per- Negotiations
Petrochemical Co. cent stake in Shandong ongoing
Yulong
September 27, Shenghong Aramco to take 10 per- Negotiations
2023 Petrochemical cent stake in company ongoing
March 27, 2023 Rongsheng Aramco purchased 10 Completed in
Petrochemical Co. percent stake for $3.4 July 2023
billion (Aramco’s largest
foreign acquisition
ever) 213
March 11, 2023 Huajin Aramco $12 billion joint venture Completed in
Petrochemical Co. where Aramco holds a 30 March 2023
(HAPCO) percent stake
Source: Fanny Zhang, “Saudi Aramco Eyes Stake in Hengli Petrochemical; Prowls for More
China Investments,” Independent Commodity Intelligence Services, April 23, 2024.
China Diversifies Energy Imports with Natural Gas Contracts

China has steadily increased the portion of natural gas in its en-
ergy consumption profile, and in recent years it has inked long-term
contracts with top producers such as Qatar to guarantee supply over
the coming decades. In 2022, Chinese consumption of natural gas
stood at 364.6 billion cubic meters (bcm), the third largest behind
the United States (881 bcm) and Russia (408 bcm).‡ 214 Even though
China’s imports provide only a minority of the country’s gas con-
* Saudi Aramco is the largest energy company in the world and one of the largest global com-
panies overall, with a market capitalization of $1.84 trillion. In 2023, the company reported
revenue of $440 billion and profit of $121 billion, down from a record $161 billion in 2022, which
was the largest ever by a publicly traded company. Julie Pinkerton, “The 10 Most Valuable Com-
panies in the World by Market Capitalization,” U.S. News, June 12, 2024; Jon Gambrell, “Aramco
Announces $121 Billion Profit in 2023, Saudi Oil Giant’s 2nd Highest on Record,” PBS News,
March 10, 2024.
† In 2023, Saudi Aramco had an output of 12.8 million bpd. Jon Gambrell, “Aramco Announces
$121 Billion Profit in 2023, Saudi Oil Giant’s 2nd Highest on Record,” PBS News, March 10, 2024.
‡ China is estimated to have the sixth-largest proven natural gas reserves in the world at 297
trillion cubic feet (tcf), behind Russia (1,321 tcf), Iran (1,134 tcf), Qatar (871 tcf), the United
States (447 tcf), Turkmenistan (480 tcf), and ahead of Saudi Arabia (213 tcf). British Petroleum,
“BP Statistical Review of World Energy,” 2021, 34.
359
sumption, it topped Japan as the number one importer of liquid

natural gas (LNG) in 2021, importing over 100 bcm that year before
falling back to the number two slot in 2022.215
Positioned in the Persian Gulf atop the world’s largest natural gas
field, Qatar is one of the top exporters of LNG, consistently supply-
ing about 80 million metric tons to world markets annually.216 Qatar
was the second-largest source for LNG to China in 2023, supplying
16.7 million tons, or about a quarter of LNG imports.217 According
to testimony from Dr. Downs, this is set to increase following sepa-
rate deals signed in late 2022 and 2023 between QatarEnergy and
two Chinese state-owned energy giants, Sinopec and China National
Petroleum Corporation (CNPC).218
Gas imports from Qatar will continue to play a critical role in
China’s natural gas mix. With consumption projected by Chinese
officials to increase, decision-makers in Beijing seek to expand do-
mestic production capacity while maintaining a stable and diver-
sified mix of imports from trusted suppliers.219 The 2023 Natural
Gas Development Report issued by China’s National Energy Admin-
istration (NEA), CNPC, and the State Council, among others, for the
first time specified the goal of continuing to meet above 50 percent
of demand with domestic supply.220 The 14th Five-Year Plan calls
for national storage capacity of 55 to 60 bcm by 2025, and Chi-
nese shipbuilders are increasing production of large LNG carriers
from 7 percent of global orders in 2021 up to 30 percent in 2022.221
Analysis coauthored by hearing witness Dr. Downs predicts China
will seek to secure a baseline of domestic production and pipeline
imports while maintaining the ability to dial up or dial down LNG
imports in response to global gas prices.222
Figure 2: Chinese Imports of Crude Oil (2023) and Natural Gas (2022) by
Source Country
Source: China’s General Administration of Customs; U.S. Energy Information Administration,

China, November 14, 2023.
Note: Imports from Iran are not reported in official statistics, though it is estimated that Ira-
nian crude oil shipments were equivalent to those from Iraq for 2022, with large portions trans-
shipped and attributed to Malaysia, Oman, and the UAE.
360
China Positions Itself on Clean Energy Investment

China has become a leading manufacturer of clean energy tech-
nologies at the same time wealthy Gulf states aim to transition
their economies from dependence on fossil fuel exports, presenting
natural opportunities for increased integration of Chinese compa-
nies in the region.223 The International Energy Agency estimates
renewable energy capacity to grow by 62 gigawatts (GW) between
2023 and 2028 in the Middle East and North Africa (MENA) region,
more than three times the growth during the previous five-year pe-
riod.224 And an estimate by UBS Investment Bank projects total an-
nual energy-related trade between China and the region to increase
by $423 billion by the year 2030, with renewables accounting for
$77 billion of this additional trade.225
Nuclear
Chinese construction companies have partnered with Gulf coun-
tries to build nuclear reactors. The UAE leads the region in adopting
nuclear power, with its multi-reactor Barakah power plant coming
partially online in 2020. The first nuclear power plant in the Arab
world, it is expected to meet up to 25 percent of the country’s daily
energy needs once fully operational.226 In May 2023, the Emirates
Nuclear Energy Corporation reached agreements with three Chi-
nese nuclear energy companies to support its nuclear energy pro-
gram, and Saudi Arabia is reportedly considering similar partner-
ships with China to build reactors capable of supplying 17 GWe * of
nuclear capacity by 2040.227
Batteries/Electric Vehicles
Chinese automotive companies are rapidly expanding market
share in the region as adoption of electric vehicles (EVs) is set to
rise. The market for EVs in GCC countries is estimated to be $4.4
billion in 2024 and is expected to grow to $10.4 billion by 2029.228
Chinese carmakers of all types have made rapid inroads in the Gulf,
going from less than 1 percent market share for new vehicle sales
in 2017 to 12 percent in 2022, paving the way for expansion of EV
sales as adoption rates increase.229 In the UAE, Chinese EV sales
were up 92 percent year-over-year during the first five months of
2024, admittedly from a small base.230 China’s lithium battery ex-
ports have also accelerated in recent years to GCC countries, in-
creasing 26 percent year-over-year in 2022 and another 99 percent
in the first three quarters of 2023.231 In Israel—where the EV mar-
ket is projected to grow from $3 billion in 2023 to $12.9 billion by
2032—Chinese EVs accounted for 68 percent of all EV sales from
January to May of 2024.232
Saudi Arabia has staked out a path to become an EV manufac-
turing hub, with the country’s largest sovereign wealth fund, Pub-
lic Investment Fund (PIF), taking a majority ownership position in
California-based luxury EV maker Lucid Motors in 2021, paving the
way for opening the first manufacturing facility in the country in
* GWe is an abbreviation for “gigawatt electric,” a unit of electrical output equivalent to 1,000
megawatts or 1 billion watts. In 2022, 94 operable nuclear reactors in the United States had a
combined net capacity of 97.0 GWe, producing 18.6 percent of the country’s electricity; China had
56 reactors with a combined net capacity of 54.4 GWe, producing 5 percent of the country’s total
electricity. World Nuclear Association, “Nuclear Power in the World Today,” September 11 2024.
361
2023.233 The UAE has also moved to build an EV manufacturing

sector through collaboration with Chinese automakers.234 In Febru-
ary, it was reported that Shanghai-based carmaker Nio had agreed
to license its technology to Forseven, an EV startup owned and con-
trolled by Abu Dhabi investment fund CYVN Holdings.235 CYVN
Holdings became the single-largest shareholder in Nio after a $2.2
billion dollar investment in December 2023, bringing its stake in the
company to 20.1 percent.236 In July 2024, China’s largest EV maker
BYD agreed to a $1 billion deal to build a manufacturing plant in
Turkey that reportedly will produce 150,000 vehicles annually.237
(For more information on U.S.-China technology competition relat-
ing to battery technology, see Chapter 3, “U.S. China Competition in
Emerging Technologies.”)
Solar
The Middle East is set to become a sizable market for Chinese
solar exports as countries scale up deployment of renewable ener-
gy. Solar photovoltaic (PV) is expected to account for 85 percent of
increased renewable energy capacity in the Middle East between
2023 and 2028.238 China’s Silk Road Fund has a 24 percent eq-
uity interest in the world’s largest solar energy plant in Dubai,
in partnership with the Dubai Electricity and Water Authority
(DEWA).239
Clean Hydrogen
Nascent technology being funded by Gulf countries as part of their
national transition strategies presents collaborative opportunities
for Chinese companies in new energy systems. Riyadh-headquar-
tered ACWA Power is a private company that is a major developer
and operator of power generation and desalination plants across the
Middle East, including solar and green hydrogen projects.240 The
company has a number of partnerships and joint ventures with Chi-
nese guidance funds and state-owned enterprises, including the Silk
Road Fund, Power Construction Corporation of China, State Power
Investment Corporation, and Bank of China.241
Economic Statecraft
Geographically positioned at a crossroads for global trade, the
Middle East has become a priority for Chinese transportation and
trade infrastructure investment in recent years. Every country in
the region except Israel and Jordan have signed a memorandum
of understanding (MOU) to participate in BRI.242 However, China’s
investments in the region extend beyond traditional development
finance and are intended to secure access to energy resources and
trade infrastructure like ports in key locations. In testimony before
the Commission, Karen Young, senior research scholar at Colum-
bia University’s Center on Global Energy Policy, described China’s
statecraft objective as follows: “The goal for China is not to be a
security umbrella, a regional alliance or solely to gain a market
for exports. China is after energy resources and strategic locations
for its trade and transport security, which means it is invested in
certain choke points in the Middle East, Horn of Africa, and Indian
Ocean.” 243
362
Port and Special Economic Zone Investments

In efforts to become a preeminent trade and logistics hub for both
the European market and emerging markets in Asia and Africa,
Gulf countries have been expanding port infrastructure positioned
along strategic waterways. Chinese companies have been increas-
ingly involved in construction and operation of port infrastructure
throughout the region. Notable investments include:
• Suez Canal (Egypt): Chinese private and state-owned compa-
nies have signed numerous deals seeking to acquire operating
concessions and ownership stakes in port and industrial activity
along the Suez Canal, through which 12 percent of the world’s
trade flows annually.244 The Tianjin Economic-Technological
Development Area (TEDA) Suez Economic and Trade Cooper-
ation Zone is a 176-square-mile industrial area built jointly by
the governments of China and Egypt.245 The project was an-
nounced in 2000, undergoing significant expansion in 2016 with
substantial Chinese investment after being held up as a model
BRI project.246 Last year, Chinese companies signed deals worth
more than $8 billion to operate and manage assets in the Suez
Canal Economic Zone.247 With respect to ports, Hong Kong-
based Hutchison Ports invested more than $1.5 billion for up to
38-year operating concessions in Egyptian ports, including oper-
ation of a terminal at Abu Qir Naval Base.248 Shanghai-based
COSCO Shipping Lines Co. acquired a 20 percent stake in East
Port Said at the north end of the canal and a 25 percent stake
in a terminal at Ain Sokhna Port on the south end.249
• Port of Duqm (Oman): Strategically positioned near the Strait
of Hormuz and the Bab-al-Mandeb, this port is owned by the
Government of Oman and operated by a government entity.250
The Chinese consortium Oman Wanfang committed to a $3.7
billion investment over 30 years to build a Special Economic
Zone.251
• Port of Aden (Yemen): China Merchants Port Holdings is one of
the firms involved in operations of this port.252
• Khalifa Port (UAE): In 2021, U.S. intelligence agencies warned
of suspected Chinese projects to construct military facilities at
this port 50 miles north of Abu Dhabi.253 The UAE maintained
that the construction carried out by COSCO was commercial in
nature, though it announced it would halt the project shortly
thereafter following stern warnings from U.S. officials.254 (For
more on the potential use of dual-use facilities for military
purposes, see “China’s Military and Security Presence in the
Region” later in this chapter.) In 2024, the China Harbor Engi-
neering Company was awarded a contract to upgrade the Ras al
Khaimah Saqr Port, another UAE port north of Dubai.255
RMB and Alternative Payments Make Inroads, Albeit Minor
China seeks to protect itself from exposure to potential future
U.S. sanctions and views energy markets and trade with countries
in the Middle East as one avenue through which it might dislodge
the U.S. dollar’s dominance in international finance. (For more on
363
China’s efforts to create an alternative to the dollar-based trade

and financing system, see Chapter 7, “China’s New Measures for
Control, Mobilization, and Resilience.”) In the run-up to the 25-year
strategic partnership agreement signed in 2021, the central bank
of Iran listed the renminbi (RMB) as the Islamic Republic’s main
reserve currency.256 The adoption of the RMB by Iran for a sub-
stantial portion of its foreign exchange reserves and cross-border
payments is unique given the imposition of harsh sanctions ban-
ning Iranian banks from the SWIFT payment system since 2018.257
There are currently practical limits to these efforts, however. China
has pushed RMB-denominated oil contracts, cross-border payment
agreements, and currency swap lines with countries in the region,
most recently signing a three-year currency swap agreement with
Saudi Arabia worth nearly $7 billion.258 The currencies of all GCC
countries except Kuwait are pegged to the dollar, and this along
with China’s capital controls and the decades-old oil-for-security
partnership with the United States creates a strong incentive for
Arab Gulf countries to continue pricing their energy exports and
accruing foreign exchange reserves in dollars.259 According to testi-
mony from Dr. Downs before the Commission, no country in the re-
gion besides Iran has accepted RMB for payment for energy exports,
though Iraq and the UAE have both shown interest in introducing
the RMB for non-oil private sector cross-border payments.260
BRI and Development Finance Expands, Bucking Global
Trend
As China has pulled back development financing globally in re-
cent years, in the Middle East such investment has continued and
in some places increased (see also the “Digital Silk Road” section be-
low). Between 2005 and 2022, 266 projects were initiated across the
region under the umbrella of BRI, according to data collected by the
International Institute for Strategic Studies.261 With its extensive
oil reserves and participation in BRI, Iraq has become a top destina-
tion for Chinese energy and infrastructure investment.262 In 2021,
Iraq was the top recipient of BRI funding, receiving about $10.5 bil-
lion.263 Iraqi oil exports to China increased 47.5 percent from 2021
to 2022, and as of the start of this year, two-thirds of Iraq’s current
oil production is operated and overseen by Chinese companies.264
The United States has coordinated a program to counter Chi-
na’s BRI and establish alternate trade routes through the Mid-
dle East. The Partnership for Global Infrastructure and Invest-
ment (PGII) was announced at the G7 summit in Japan in May
2023.265 Under the auspices of this framework, the United States,
India, the EU, France, Germany, Italy, Saudi Arabia, and the UAE
signed an MOU five months later to build two economic corridors
connecting South Asia and Europe via the Middle East, brand-
ed the India-Middle East-Europe Economic Corridor (IMEC).266
The proposal calls for building rail and shipping lines to connect
existing infrastructure to move goods between India, the UAE,
Saudi Arabia, Jordan, Israel, and Europe.267 Telecommunications
lines, undersea cables, and a clean hydrogen pipeline are also
envisioned in the proposal.268
364
China-Middle East Technology Relations

As the technology competition between the United States and
China has intensified, the Middle East is emerging as a key stake-
holder and potential conduit for Chinese end users to gain access
to leading-edge technology. Chinese technology companies have
had market presence in the region for decades and are working
to deploy telecommunications equipment and other underlying
technology infrastructure across the region in both wealthy and
underdeveloped countries. Emerging technologies like AI and ad-
vanced computing play a central role in the ambitious national
strategies of GCC countries as they seek to diversify their econo-
mies away from reliance on fossil fuel. Countries like Saudi Ara-
bia, the UAE, and Qatar have dedicated massive investment to
build up domestic technology industry and innovation hubs. As
demand for technology rises—including sensitive tech subject to
U.S. export restrictions—the United States and China will be in
competition for market access and network effects across the re-
gion.
Digital Silk Road
The Middle East is integral to China’s Digital Silk Road (DSR),
a BRI initiative that seeks to entrench Chinese technology com-
panies in foreign markets and digital infrastructure.269 The no-
tion was first presented as the “information silk road” in a 2015
white paper outlining an expanded vision of BRI that would seek
to construct cross-border fiberoptic cables and telecommunication
networks, intercontinental underwater cables, and satellite infor-
mation channels.270 The DSR has since evolved to cover 5G cel-
lular infrastructure, cloud computing and data centers, smart city
technology, and e-commerce and digital payment services.271 Con-
sistent with its approach to BRI, China broadly defines DSR by
design in order to lump a range of overseas investment projects
and initiatives under the umbrella of a seemingly coherent devel-
opment strategy. Mohammed Soliman, director of the Middle East
Institute’s Strategic Technologies and Cyber Security Program,
observed, “By utilizing technology statecraft, Beijing aims to es-
tablish China’s geopolitical footprint in the region without resort-
ing to conventional military expansion.” 272 As of late 2023, at
least 17 countries have signed formal MOUs to join the DSR glob-
ally, among them Egypt, Turkey, Saudi Arabia, and the UAE.273
365
Figure 3: China’s Economic and Technology Interests in the Middle East
TURKEY
SYRIA
LEBANON
IRAQ IRAN
ISRAEL JORDAN
KUWAIT
Palestinian
Territories
BAHRAIN
EGYPT
QATAR
SAUDI ARABIA
UNITED ARAB
EMIRATES
OMAN
BELT & ROAD INITIATIVE
DIGITAL SILK ROAD
ARMISTICE LINES YEMEN
PORT INVESTMENT
LEBANON
SYRIA
OIL OR GAS INVESTMENT
5G CONSTRUCTION CONTRACTS
CHINESE SMART CITY SURVEILLANCE ISRAEL

TECHNOLOGY IN USE
RMB SWAP LINES JORDAN

Palestinian
Territories
EGYPT
Sources: Various.274
Note: Smart City surveillance technology encompasses a variety of surveillance technologies
(such as CCTV cameras, recording and video management systems, and facial recognition) that
make data from a city’s core management systems available to government entities. For more see
Katherine Atha et al., “China’s Smart City Development,” SOS International LLC (prepared for
the U.S.-China Economic and Security Review Commission), January 2020, 61.
Huawei and Others Deeply Embed in Technology Infrastructure

Chinese telecommunications companies Huawei and ZTE have
moved aggressively to expand their presence in the Middle East and
developing countries more broadly since coming under scrutiny from
the United States and its allies and partners over data security
concerns.275 As of early 2023, Huawei had contracts with 11 Middle
Eastern countries to build out 5G infrastructure, including Egypt,
Turkey, Iran, Lebanon, Jordan, and all six GCC countries.276 Devel-
366
oping countries seeking to modernize their telecommunications net-

works have been attracted to the low-cost products offered by Huawei
and ZTE that still perform relatively well compared to equipment
from non-Chinese competitors.277 Huawei has been deeply involved
in Egypt for decades, establishing its North African headquarters
in Cairo in 1999.278 In 2018, Huawei and state-controlled Telecom
Egypt signed a $200 million financing agreement backed by the
Bank of China and China Export & Credit Insurance Corporation
(Sinosure) to fund the establishment of a national 4G network.279
And despite previous false starts, in 2024 Telecom Egypt secured
the exclusive license from the government worth $150 million to
provide 5G services enabled by Huawei technologies.280 Huawei has
signed similar agreements to collaborate on 5G buildout with Zain
in Saudi Arabia, Etisalat in the UAE, Turk Telekom in Turkey, and
VIVA in Kuwait.281
Beyond cellular networks, Chinese firms have been involved in
the construction of another critical piece of the IT infrastructure
in the region: data centers. The Gulf still lags behind the United
States, Europe, and Asia in terms of total data centers and data
center capacity. Saudi Arabia currently has 60 data centers oper-
ating with 123 megawatts (MW) of capacity, while the UAE has
52 centers operating with 235 MW as of the end of 2023.282 For
comparison, as of 2022 Germany has 1,060 MW of data center
capacity, China has 4,818 MW, and the United States has 17,000
MW.283 However, both Saudi Arabia and the UAE are moving
to rapidly expand capacity. In late 2021, Saudi Arabia’s Minis-
try of Communications and Information Technology set a goal of
reaching 1,300 MW of data center capacity by 2030, and in the
UAE another 343 MW of capacity is currently planned or under
construction.284 Chinese companies Huawei, Lenovo, and Inspur
have served as IT infrastructure providers for equipment used
in data centers, and cloud service providers Alibaba and Tencent
have staked out operation of data facilities in both countries.285
(For a discussion of total compute, including cloud services, as a
key facet of U.S.-China technology competition in AI, see Chapter
3, “U.S.-China Competition in Emerging Technologies.”)
Emerging Technology
The expanding collaborative regional innovation landscape
around emerging technologies like AI, advanced computing, and
biotechnology has increased the potential for transfer of cut-
ting-edge, dual-use technology. Wealthy Gulf states in particular
view increased technological linkages with China as an opportu-
nity to accelerate digital initiatives posited in economic diversi-
fication plans like Saudi Arabia’s Vision 2030.286 Gulf sovereign
wealth funds have been major investors in tech startups around
the world for over a decade, yet now they have set goals to de-
velop domestic technology industries modeled on Silicon Valley
as part of their national diversification strategies.287 China may
be able to use its role as a partner in building these burgeoning
ecosystems to both expand its influence in the region and evade
export controls imposed by the United States and other Western
countries to obtain sensitive dual-use technology.
367
Artificial Intelligence Opens New Front of Tech Competition

Technology partnerships between Chinese companies of concern
and AI startups in the Middle East present a new vector of vulner-
ability of sensitive technology and data transfer.* The wealthy Arab
Gulf countries have made clear their ambition to become AI lead-
ers, allocating massive investment into planned construction of AI
infrastructure and regional innovation hubs. The consultancy PwC
estimates the economic contribution of AI will be 13.6 percent of
gross domestic product (GDP) in the UAE and 12.4 percent in Saudi
Arabia by 2030, behind only China and the United States.288 Of the
96 strategic goals included in Saudi Arabia’s Vision 2030, some 70
percent involve using data and AI.289 The UAE stood up an Artifi-
cial Intelligence and Advanced Technology Council in January 2024
to guide AI policy, and the following month the country’s largest
listed firm, International Holding Co., appointed an AI chatbot to
an observer post on its board.290 The sheer amount of resources—
both capital and energy—required to build data processing capacity
that enables cutting-edge applications of AI are only accessible to a
handful of actors worldwide, yet they are two resources abundant in
Saudi Arabia, the UAE, and Qatar.
Gulf Sovereign Wealth Funds Make Big Bets on AI
A frenzy of deal-making has commenced between Gulf funds and
AI companies in China and elsewhere since the launch of ChatGPT-3
in November 2022. Saudi Arabia’s Public Investment Fund (PIF) was
the most active investor among the world’s sovereign wealth funds in
2023, investing $31.6 billion across 49 separate deals, an increase of 33
percent from 2022.291 As of March 2024, the PIF had $925 billion in as-
sets under management, up from $480 billion in 2022 and putting it on
track to meet its ambitious target of $2 trillion by 2030.292 Investing in
emerging technology has been a central pillar of the PIF’s strategy to
grow its portfolio and advance priorities outlined by Vision 2030.293 In
2017, the PIF was the top investor in the SoftBank Vision Fund—the
world’s largest technology venture capital fund—providing $45 billion
of the initial $100 billion in capital alongside other investors such as
Japan’s SoftBank, the Emeriti sovereign wealth fund Mubadala, Apple,
Foxconn, and Qualcomm.294 The Vision Fund has recently announced
it is pivoting toward strategic investment in AI and semiconductors,
with SoftBank executives pronouncing their size will enable them to
create an ecosystem of AI startups that can pool resources and rapidly
scale to outcompete other investors.295 Notable investment deals relat-
ing to China include:
• Prosperity7 Ventures investment in Zhipu AI: In May 2024 the
Financial Times reported that the technology venture capital
division of Saudi Aramco called Prosperity7 had invested in
Chinese generative AI startup Zhipu AI.296 Though details of
the deal were not made public by either party, Prosperity7 was
reportedly a minority investor in a $400 million funding round
that valued Zhipu at roughly $3 billion.297 This is the first in-
stance of a foreign investor backing a Chinese generative AI
* For more on China’s ambitions in AI and the U.S.-China competition in the space, see Chapter
3, “U.S.-China Competition in Emerging Technologies.”
368
company endeavoring to rival industry leaders like OpenAI.298

According to Gregory Allen, the director of the Center for Stra-
tegic and International Studies Wadhwani Center for AI and
Advanced Technologies, the deal also raises questions on wheth-
er Zhipu will be able to access advanced compute powered by
leading-edge semiconductors through operations in Saudi Ara-
bia.299 Founded in 2019, Zhipu AI is one of the more notable
startups in generative AI and first to secure Chinese govern-
ment approval for roll-out of its products, with backing from
Alibaba Group and Tencent.300
• Alat partnerships in AI and semiconductor industry: Alat is a
$100 billion investment firm launched by the PIF in February
2024 with the stated mission of developing Saudi Arabia’s pro-
duction and manufacturing of advanced technology industries,
including AI and semiconductors.301 Since then it has announced
a number of deals with Chinese companies, including a $2 bil-
lion partnership with Lenovo to set up a regional headquarters
and a new manufacturing base and a $200 million joint venture
with surveillance company Dahua to develop its first overseas
manufacturing operations.302 In recognition of the increasing-
ly precarious position his firm occupies amid the intensifying
U.S.-China technology competition, Alat CEO Amit Midha made
clear that partnering with U.S. firms was a top priority, stating
that the fund would be willing to unwind its Chinese invest-
ments if asked by U.S. officials.303
U.S. Expands Technology Transfer Restrictions to Region
Increased concern surrounding Chinese end users’ ability to by-
pass U.S. export controls through third countries has led to an ex-
pansion of the list of restricted markets for leading-edge products. In
October 2023, the Commerce Department expanded semiconductor
export controls to require licenses for sale of cutting-edge NVIDIA
and AMD chips to certain Middle Eastern countries, including the
UAE and Saudi Arabia, consistent with prior rules to prevent Chi-
nese military end use.304 In July 2023, the Financial Times reported
the Committee on Foreign Investment in the United States (CFIUS)
was investigating a planned $3 billion investment by the Abu Dhabi
sovereign wealth fund Mubadala to buy a majority stake in New
York-based Fortress Investment Group over concerns of technology
transfer due to close ties between the emirate and China.305
Group 42 Exemplifies Challenges and Possible Approach

to Technological Disentanglement
One of the leading AI companies in the Middle East moved to
sever ties with Chinese firms in favor of expanded access to U.S.
technology following pressure from both the Administration and
Congress. Founded in 2018, Group 42 (G42) serves as a central
conduit through which the UAE is implementing a broad set of
technology initiatives, with a portfolio that spans AI, cloud com-
puting, genomics, and self-driving vehicles.306 The company is
backed by the sovereign wealth fund Mubadala Investment Co.
369
Group 42 Exemplifies Challenges and Possible Approach

to Technological Disentanglement—Continued
and chaired by Sheikh Tahnoon bin Zayed, national security ad-
visor and brother to Abu Dhabi’s crown prince.
In November 2023, the New York Times first reported on con-
cerns raised by U.S. intelligence officials over G42’s extensive ties
with Chinese companies, including underlying hardware provided
by Huawei, cooperation with BGI on genetic sequencing, and a
$100 million stake in ByteDance carried out by its $10 billion
private equity investment arm 42XFund.307 High-level officials
in the Administration reportedly told their Emirati counterparts
that when it came to cutting-edge emerging technologies, the UAE
needed to choose between partnership with the United States or
China.308 In January 2024, the House Select Committee on the
CCP called for the Commerce Department to make a determi-
nation on whether G42 and its subsidiaries should be added to
the Entity List due to potential transfer of dual-use technology
to Chinese military end users.309 Prior to the Select Committee’s
letter, G42’s CEO said in an interview that his company cannot
work with both sides, and in February it had sold holdings in
Chinese companies and broken ties with hardware suppliers, in-
cluding Huawei.310
Microsoft and G42 announced a $1.5 billion “strategic invest-
ment” agreement in April 16, 2024, following “close consultation”
with both the U.S. and Emirati governments.311 The deal afforded
access to Microsoft cloud services for AI applications, a seat for
Microsoft Vice Chair and President Brad Smith on the board of
G42, and commitments by both parties to adhere to shared stan-
dards on AI development and technology sharing in the develop-
ing world.312 Mr. Soliman said in testimony before the Commis-
sion that the agreement could serve as a model for engagement
with the technology goals and companies of Middle East countries
while establishing guardrails for U.S. technology and intellectual
property in the region.313 The UAE’s ambassador to the Unit-
ed States said after the deal that the two country’s governments
were aligned in their vision for AI and would be “partners at
the leading edge of advanced computing technologies.” 314 White
House technology advisor Tarun Chhabra described the deal as
generally positive, saying the United States has an interest in
moving countries in the Middle East away from close ties with
companies like Huawei.315
Smart Cities and Surveillance Technology

The expertise of Chinese companies in deploying low-cost surveil-
lance technologies at scale has presented an enticing value propo-
sition for authoritarian regimes seeking innovative ways to tighten
state control. The collective term “smart cities” commonly refers to
the application of digital technologies in an urban setting to collect
and analyze data in order to optimize municipal management and
services.316 While smart city technology can greatly improve effi-
ciency and accelerate development in emerging market economies, it
370
also raises concerns over privacy and the export globally of China’s
repressive mass surveillance model used in Xinjiang Province and
elsewhere throughout the country.317
Digital transformation of society has become a central pillar of the
national diversification strategies of wealthy Gulf nations like Saudi
Arabia, the UAE, and Qatar, who partner with a variety of foreign
technology firms and providers of smart city technology.318 Accord-
ing to the 2023 Smart City Index, a ranking of 141 cities along a
variety of infrastructure and technology metrics, Abu Dhabi placed
13th in the world, Dubai 17th, and Riyadh 30th.319 Projects under
development like Saudi Arabia’s planned futuristic city NEOM on
the Red Sea intend to expand the integration of data to ease friction
in daily life of residents, with city planners stating that the city will
make use of 90 percent of collectible data, in comparison to current
smart cities that typically utilize around 1 percent.320 Huawei has
signed contracts to provide cloud services for NEOM, as has Chinese
AI company SenseTime.321 In early 2024, Saudi fund Alat (a subsid-
iary of the PIF) announced a $200 million partnership with Dahua
Technology, a leading Chinese surveillance equipment maker that
was added to the Commerce Department’s Entity List in 2022 for
its role in surveillance of Uyghurs.322 Elsewhere in the region, Chi-
nese technology is being embedded in Egypt’s New Administrative
Capital, a planned city for 6.5 million residents under construction
with sizable contribution from China State Construction Engineer-
ing Corporation (CSCEC).323 Furthermore, in both Qatar and the
UAE, Huawei is involved in new smart city development projects.324
China’s Military and Security Presence in the
Middle East
China has slowly been expanding its security footprint in the Mid-
dle East. It has built a military outpost in the region, is carrying out
counterpiracy activities, participating in peacekeeping operations,
and conducting military exercises and port calls with regional part-
ners. Some analysts argue that China may view dual-use ports as a
potential way to expand its security options in the region, as well.
Although its military presence in the region remains limited and it
has shown little interest in playing a larger role in regional secu-
rity, these activities allow Beijing to bolster the PLA’s operational
experience and its reputation as a security partner. Lastly, China is
targeting customers in the Middle East arms market, particularly
through the sale of drones, to establish itself as an alternative op-
tion to the United States and Russia.
PLA Activities in the Middle East Boost Operational
Experience
China’s military footprint in the Middle East is relatively small at
present, especially compared to the United States’ presence, but it
enables China to gain operational experience and could lay the foun-
dation for a larger military presence in the region in the future.325
In recent years, one of China’s top military objectives in the region
has been protecting its investments.326 Toward this end, China has
deployed PLA assets to participate in UN peacekeeping efforts, and
it has potentially begun scoping locations for formal military bases
371
and commercial ports where the PLA Navy can dock its ships.327
The PLA’s efforts to operate more frequently in the Middle East
could enhance China’s efforts to project power and compete with
the U.S. military on a global scale.328 At this point in time, though,
Chinese military operations in the region are marginal compared to
those of the United States.
China Could Expand Basing Footprint in the Future
Though there are currently no official Chinese military bases in
the Middle East, a logistics facility in Djibouti already serves as a
PLA military outpost, supporting regional military operations and
representing a potential model for expanding its security footprint
in the future.329 While the Djibouti installation is China’s only of-
ficial military outpost, Beijing could establish similar facilities in
the future.* 330 A 2022 report on China’s global basing ambitions
by RAND Corporation researchers Cristina L. Garafola, Stephen
Watts, and Kristin J. Leuschner analyzed the desirability and fea-
sibility of potential PLA basing and access locations, assessing that
countries including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia,
and the UAE were likely highly desirable locations for PLA bas-
ing and access points, although the feasibility of these varied.331
The U.S. Department of Defense’s 2023 report on Military and Se-
curity Developments Involving the PRC notes that China “probably
also has considered other countries as locations for PLA military
logistics facilities,” including the UAE.332 Additionally, according to
a 2020 study written for the Commission by the open source in-
telligence company Jane’s, two of the 18 sites that could serve as
potential overseas PLA bases are located in the Middle East (both
in Oman).333
Some analysts have argued that whether or not it adds actual
bases, China may be able to rely on access to critical infrastruc-
ture in the Middle East as a way of expanding its power projection
capabilities in the region.334 Grant Rumley, the Meisel-Goldberg-
er fellow at the Washington Institute for Near East Policy, argues
that China will likely continue to augment its security presence
in the Middle East through “a combination of modest military
deployments and investments in critical infrastructure.” 335 Chi-
na’s 2016 National Defense Transportation Law gives the PLA
legal authority to commandeer civilian facilities, such as ports,
in times of crisis.336 As noted by Conor Kennedy, an assistant
professor at the China Maritime Studies Institute, the 2016 law
requires Chinese transportation enterprises overseas to provide
logistical support for PLA forces operating overseas.337 PLA ex-
perts have discussed the importance of “strategic strongpoints,”
a term that “generally refers to potential dual-use overseas fa-
cilities, including foreign commercial ports over which the PRC
* China primarily uses its Djibouti base to conduct antipiracy and freedom of navigation activi-
ties that are aimed at securing trade corridors in the region. The PLA Navy has utilized Djibouti
as a logistics hub for its anti-piracy missions in the Gulf of Aden since 2008, and evacuated Chi-
nese and foreign civilians there in 2015 during a surge of violence in Yemen, after which China
and Djibouti reached an agreement to build a permanent base in January 2016. Mordechai Chazi-
za, “China’s Military Base in Djibouti,” Begin-Sadat Center for Strategic Studies, August 2018;
China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Hong Lei’s Regular Press
Conference on January 21, 2016, January 21, 2016. Sam Lagrone, “U.S. AFRICOM Commander
Confirms Chinese Logistics Base in Djibouti,” U.S. Naval Institute, November 25, 2015.
372
expects to exert some degree of control” and that are primarily

useful for peacetime operations, “enabling PLA Navy port calls,
joint exercises, and antipiracy operations in distant theaters.” 338
A host country’s willingness to support the PLA’s operations
is more important than Chinese law, however, as longstanding
U.S. experience demonstrates significant constraints imposed
by host countries, particularly during times of increased global
tensions.339 In the Middle East, Chinese firms have port operat-
ing agreements with Egypt, Israel, Iraq, Kuwait, Saudi Arabia,
Turkey, and the UAE.* 340 (See “Port and Special Economic Zone
Investments” above for a more detailed discussion of certain Chi-
nese port-related investments in the region.)
Beijing Leverages Counterpiracy Task Force to Gain
Experience Operating Overseas
While China has used antipiracy operations in the Middle East
to protect its trade and gain operational experience, these oper-
ations do not seem connected to aforementioned regional efforts
dealing with Houthi rebels. In December 2008, China responded
to the rise in piracy in the Red Sea and Gulf of Aden, primarily
from Somalia, by dispatching a Naval Escort Task Force (NETF),
or counterpiracy task force, to the Gulf of Aden.341 The NETF has
mostly sustained the same configuration of vessels: two surface
combatants and a refueling ship, although the task force has oc-
casionally augmented its presence with other capabilities such
as the Song-class diesel-electric submarine.342 Since 2008, China
has maintained its counterpiracy missions, gaining operational
experience and escorting a number of commercial ships through
the Red Sea.343 Chinese state media claims that since 2008, the
PLA Navy has escorted more than 7,000 commercial ships.344 Ac-
cording to an August 2024 report by independent analyst Dennis
J. Blasko, since December 2008, the PLA Navy has deployed 46
counterpiracy escort task forces to the Gulf of Aden on a UN-au-
thorized mission.345 Mr. Blasko asserts that until recently, the
PLA Navy had normally dispatched three task forces per year at
roughly four-month intervals, but the 45th and 46th task forces
departed from China on five-month intervals, potentially indi-
cating a shift in deployment patterns.346 Mr. Blasko states that
the more onerous requirements for its surface fleet in operations
around Taiwan and the South China Sea may be forcing the PLA
Navy to draw forces away from the Gulf of Aden mission, while it
also may be possible that the PLA Navy is trying to keep its ships
clear of waters threatened by Houthi terrorists.347
* According to Isaac B. Kardon, a senior fellow for China studies at the Carnegie Endowment
for International Peace, Chinese firms partially owned or operated 20 ports in the Middle East
and North Africa region as of February 2020. These ports may allow the PLA Navy to perform
valuable military functions for logistics, intelligence, and communications without the estab-
lishment of formal PLA facilities and permissions. Isaac B. Kardon, written testimony for the
U.S.-China Economic and Security Review Commission, Hearing on China’s Military Power Pro-
jection and U.S. National Interests, February 20, 2020, 2, 13.
373
Figure 4: China’s Diplomatic and Military Activity in the Middle East
TURKEY
SYRIA
LEBANON
ISRAEL* IRAQ IRAN

JORDAN
Palestinian KUWAIT
Territories
EGYPT BAHRAIN
QATAR UNITED ARAB

EMIRATES
SAUDI ARABIA
COMPREHENSIVE STRATEGIC OMAN

PARTNERSHIP
STRATEGIC PARTNERSHIP+
FRIENDLY COOPERATIVE
PARTNERSHIP
YEMEN
INNOVATIVE COMPREHENSIVE
PARTNERSHIP
ARMISTICE LINES LEBANON
BILATERAL MILITARY EXERCISES SYRIA
WITH CHINA SINCE 2013
MULTILATERAL MILITARY EXERCISES
WITH CHINA SINCE 2013
ISRAEL*
PORT CALLS WITH CHINA SINCE 2013
CHINESE DRONE SALES TO THE JORDAN

MIDDLE EAST SINCE 2013
Palestinian
+CHINA ALSO MAINTAINS A STRATEGIC PARTNERSHIP Territories
WITH THE PALESTINIAN AUTHORITY EGYPT
Source: Various.348
Despite the NETF’s longstanding presence, the PLA Navy has ig-
nored distress calls from commercial vessels under attack in the
Red Sea in contravention of customary and international maritime
law, content to free-ride on U.S.-led international counterpiracy op-
erations.349 For instance, in November 2023, a Liberian-flagged ves-
sel targeted by Iran-aligned Houthi rebels with missiles put out an
SOS call in the Gulf of Aden, but the three PLA Navy vessels in
the area did not respond.350 Despite being heavily reliant on access
to and safe transit of the Red Sea for trade with Middle Eastern
partners, Chinese leaders continue to avoid any outright critique
of the Houthis.351 At a January 2023 press conference in Cairo, for
example, Minister Wang simply called for an end to the attacks on
374
civilian ships and for the resumption of smooth trade flows, without
mentioning the terrorist group.352 Instead, China continues to bene-
fit from the activities of the U.S.-led task force Operation Prosperity
Guardian * to safeguard shipping lanes against attacks by Houthi
rebels.† 353
Chinese Maritime Shipping Free-Rides on

U.S.-Provided Security
The spillover from the conflict in Gaza has highlighted the
limits of China’s willingness to play an active security role in
the region.354 As noted above, although China has participat-
ed in counterpiracy patrols in the Gulf of Aden since 2008, it
has avoided participating in efforts to protect Red Sea shipping
lanes as the threat of Houthi attacks forces ships to reroute.355
The fallout has been particularly harmful to Egypt, where Chi-
na has billions of dollars’ worth of loans and investments.356
While Minister Wang called for the end to the “harassment of
civilian ships in the Red Sea” in January, he also said strikes on
Yemen were unauthorized by the UN and that the crisis was a
“spillover of the conflict in Gaza.” 357 U.S. officials have pressed
China to influence Iran into discouraging Houthi attacks, with
China reportedly doing so in January 2024 following meetings
between U.S. Secretary of State Antony Blinken, U.S. National
Security Advisor Jake Sullivan, and head of the CCP’s Interna-
tional Department Liu Jianchao.358 China reportedly discussed
the matter with Iran at meetings in Beijing and Tehran in
January 2024.359 Still, China’s lack of material support for the
U.S. effort to keep shipping lanes safe for all commercial tran-
sits may stem from the fact that in March 2024 China and
Russia reportedly made a deal with the Houthis to refrain from
attacking their ships.‡ 360 Chinese ships had reportedly been
signaling their identity to avoid attack in previous months, al-
though one was struck in what was likely a mistake.361 Chi-
na has maintained a stance of neutrality between the Yemeni
government and its Saudi Arabian supporters, and the Houthis
and their Iranian backers.362
* China is balancing its need to protect Chinese commercial vessels with its response to the Is-
rael-Palestine conflict. As a result, China has not joined the U.S.-led Operation Prosperity Guard-
ian coalition to help protect commercial traffic in the Red Sea. The coalition includes Bahrain,
Britain, Canada, France, Italy, the Netherlands, Norway, Seychelles, and Spain. Zhao Ziwen and
Jevans Nyabiage, “Why Hasn’t China Joined US-Led Naval Force against Houthi Rebel Attacks
in Red Sea?” South China Morning Post, December 27, 2023; Phelim Kine, “Beijing Shrugs at U.S.
Call for Help Protecting Red Sea Shipping,” Politico, December 21, 2023.
† Chinese state media has attempted to undermine the credibility of the task force and question
its motives. For instance, Xinhua, a state-run media outlet, claimed in a December 2023 article
that “many allies are unwilling to publicly announce their joining, or even to get involved at all.”
The same article asserted that the task force is an attempt by the United States “to get its allies
to share the escort costs, or even drag its allies into the conflict.” Xinhua, “Awkward! United
States Organizes ‘Red Sea Escort,’ Few Respond” (尬! 美国搞 “红海护航”应者寥寥), December 30,
2023. Translation.
‡ Mr. Rumley stated in his testimony before the Commission that Chinese commercial ships
have been relatively safe, with only one Houthi attack taking place in March 2024. Mr. Rumley
said that aside from this attack, “Chinese commercial vessels have not been purposely targeted
by the Houthis since November 2023.” Grant Rumley, written testimony before U.S.-China Eco-
nomic and Security Review Commission, Hearing on China and the Middle East, April 19, 2024,
11–12; Heather Mongilio, “Chinese Tanker Hit with Houthi Missile in the Red Sea,” USNI News,
March 24, 2024.
375
Beijing Seeks to Use Peacekeeping Operations to Bolster Its

Image as a Contributor to Regional Security
China participates in various UN peacekeeping operations that
are intended to bolster its image and provide PLA personnel with
overseas military experience.363 China has participated in UN
peacekeeping operations for more than three decades, primarily de-
ploying peacekeepers to African countries where China has signif-
icant investments.* 364 In the Middle East, China maintains more
than 400 peacekeepers, almost all of whom are in south Lebanon
supporting the UN Interim Force in Lebanon (UNIFIL).† 365 Chinese
peacekeepers in Lebanon conduct trainings and exercises with UNI-
FIL, which may give them insight into the training practices of mil-
itaries from other countries and help them hone skills that could be
used in operations elsewhere.366 For instance, in February 2023, a
deputy captain within China’s peacekeeping team told Chinese state
media that their recent UNIFIL exercise had focused on defending
their base camp, rescue operations, psychological counseling, and
the resettlement of people.367 According to China’s Ministry of For-
eign Affairs, Chinese peacekeepers in Lebanon also provide medical
assistance to the locals, helping to boost China’s image in the coun-
try and among other UN member states.368 As of late June 2024,
China also has five military observers in Israel who have joined the
UN Truce Supervision Organization (UNTSO).369 The UNTSO was
established in 1948 during the Arab-Israeli War as the UN’s first-ev-
er peacekeeping operation and helps maintain a ceasefire and su-
pervise the application of the armistice agreements.‡ 370
Joint Exercises and Port Calls Help Build Operational
Experience and Military Image
In recent years, China has conducted joint military exercises with
and made port calls to several Middle Eastern countries, including
both U.S. partners and adversarial states like Iran, in order to gain
operational experience and build the PLA’s image. At the first Chi-
na-Arab States Summit in Riyadh in December 2022, General Secre-
tary Xi delivered a speech to the 21 members of the Arab League in
which he proposed “eight major initiatives on China-Arab practical
cooperation,” including an “initiative on security and stability.” § 371
* China had a large peacekeeping presence in the Democratic Republic of the Congo, where it
has carried out mining operations, as well as South Sudan, where a Chinese oil company was
part of a consortium that extracted South Sudan’s oil. China has also placed peacekeeping forces
in Mali and Liberia to protect critical infrastructure projects and Chinese-funded enterprises,
respectively. U.S.-China Economic and Security Review Commission, 2020 Annual Report to Con-
gress, December 2020, 174–175.
† UNIFIL was created by the UN Security Council in March 1978 to confirm Israeli withdrawal
from Lebanon and to assist the Lebanese government in restoring its effective authority in the
area. In 2006, China sent its first peacekeeping contingent to UNIFIL. Comparatively, Indonesia
has 1,232 peacekeepers and India has 894. The United States does not currently have any peace-
keepers in Lebanon. United Nations Peacekeeping, “Troop and Police Contributions,” March 31,
2024; China Military Online, “First Batch of 22nd Chinese Peacekeeping Force to Lebanon Sets
Off,” December 8, 2023; United Nations, “UNIFIL, Lebanon.”
‡ The United States currently has two peacekeepers at UNTSO, while Finland and Switzerland
have the most, at 14 and 13 peacekeepers, respectively. United Nations Peacekeeping, “Troop and
Police Contributions,” September 18, 2024.
§ Chinese state media said the initiative will focus on strengthening strategic dialogues be-
tween the defense departments and military forces of China and the partner countries; con-
ducting exchanges between military units and academies; deepening cooperation on maritime
security, international peacekeeping and “professional techniques”; and expanding joint exercises
and training. As part of this initiative, China will train 1,500 personnel from partner countries
in fields such as smart policing and cyber security law enforcement, implement the China-League
376
During the inaugural summit, all sides agreed to further cooperation

between their militaries, including in joint exercises.372 According
to Mr. Rumley, some of China’s exercises and port calls appear to be
more symbolic than practical, while others are more sophisticated
and have led to reciprocal exercises in China.373 Mr. Rumley asserts
that China’s exercises with Middle East partners are “designed to
showcase the capabilities of the Chinese military, build up PLA ex-
perience, and improve China’s image as a security partner.” 374
In recent years, China conducted several military exercises with
Arab countries that seek in part to improve China’s operational ex-
perience and military image:
• UAE: In August 2023, China and the UAE held their first joint
exercise, Falcon Shield 2023, in Xinjiang.375 Associate professor
at the Near East South Asia Center for Security Studies David
Des Roches describes the joint exercise as an “unfortunate de-
velopment” and suggests that the UAE is trying to demonstrate
to the United States that it has alternative options for securi-
ty partners.376 The most recent iteration of the training exer-
cise took place in July 2024, again in Xinjiang.377 During both
exercises, the UAE deployed its Dassault Mirage 2000-9DAD/
EAD fighters, an aircraft also operated by Taiwan’s air force,
potentially giving the PLA Air Force an opportunity to gather
information on its capabilities.378
• Saudi Arabia: China has also conducted joint naval exercises with
Saudi Arabia, referred to as the Blue Sword exercises.379 The first
edition of the Blue Sword exercises was held in 2019 near Saudi
Arabia’s Jeddah port, and the second edition was held in 2023 in
Zhanjiang, China, at a naval brigade camp.380 Following the most
recent event, Chinese media suggested these exercises were now
“routine” and offered both countries an opportunity to learn from
each other’s strengths, highlighting that China’s military training
system is different from Saudi Arabia’s Western-style training doc-
trine.381 The exercises focus on counterpiracy operations, including
basic training, professional training, and exercises involving simu-
lated rescue operations.* 382
• Iran: China has also participated in military exercises with Iran.
Most recently, in March 2024, China conducted naval drills with
Iran and Russia in the Gulf of Oman.383 These exercises began
in 2018 and are in their sixth iteration, but the 2024 iteration
was the first time other countries, including Oman, Pakistan,
India, and others, have been allowed to observe.384 Mr. Rumley
notes that China’s exercise with Iran and Russia is one example
of Beijing focusing on a more symbolic rather than practical op-
eration.385 During the exercise, the three militaries conducted a
hostage rescue drill and tactical maneuvering drills.386
of Arab States Cooperation Initiative on Data Security, establish a network information exchange
mechanism, and strengthen exchanges and dialogues in data governance and cyber security. Xin-
hua, “Xi Proposes Eight Major Initiatives on China-Arab Practical Cooperation,” China Daily,
December 10, 2022.
* Basic training and professional training involve things like underwater searches, rappelling
from helicopters, and practice shooting various weapons. Seong Hyeon Choi, “Chinese and Saudi
Navies Launch Joint Counterterrorism Exercise against Backdrop of Israel-Hamas War,” South
China Morning Post, October 10, 2023.
377
China’s Growing Role in the Middle Eastern Arms Market

Although it is a relatively small supplier of arms to the Middle
East relative to the United States,* China has sought to create
deeper inroads into Middle Eastern countries through the transfer
of arms and dual-use technologies in order to establish itself as an
alternative security partner in the region.387 China has attempt-
ed to compete in this market due to its relatively low-cost options,
affordable services, and a lack of geopolitical conditions placed on
sales, among other factors.388 In particular, China has stood out as
an exporter of military drones to countries such as Saudi Arabia
and the UAE.389
China Targets Middle East as Market for Arms Sales
China’s sale of arms and dual-use technologies in the Middle East
simultaneously serves its own commercial interests and strengthens
its position as an alternative regional security partner at the Unit-
ed States’ expense. In the last decade, China has begun to refocus
arms exports to the Middle East.† 390 Notably, China’s 2016 Arab
Policy Paper called for increased cooperation between China’s mil-
itary and Arab countries and to “deepen cooperation on weapons,
equipment and various specialized technologies, and carry out joint
military exercises.” 391 General Michael Kurilla, the commander of
U.S. Central Command, told the Senate Armed Services Committee
in March 2023 that China’s arms sales to the Middle East had in-
creased by 80 percent over the previous ten years.392 Still, China’s
arms sales to the region—and globally—remain low relative to the
United States and other arms exporters.‡ 393
China markets aircraft as well as air and missile defense, an-
ti-tank, and anti-drone systems in the region. For example, in Febru-
ary 2024, 36 Chinese companies, including China North Industries
Corporation and China National Aero-Technology Import and Ex-
port Corporation, attended the World Defense Show in Saudi Arabia
to market their services.394 Chinese companies displayed fighter jet
models, long-range air and missile defense systems, and anti-tank
systems, among other equipment.395 The PLA Air Force also demon-
strated J-10 fighter jets—the first time China has displayed them
at an international expo.396 No new deals were publicly announced
in 2024 for Chinese fighter jet purchases, but in 2023 the UAE gov-
ernment signed a deal to purchase 12 Chinese L-15A advanced jet
trainers.397 In 2022, China delivered the Silent Hunter air defense
system to Saudi Arabia.398 This is an anti-drone weapons system
intended to protect Saudi Arabia against loitering munitions and
* According to data from the Stockholm International Peace Research Institute, the United
States constituted the largest share of arms export to the Middle East between 2019 and 2023,
accounting for 38 percent of total exports. Pieter D. Wezeman et al., “Trends in International
Arms Transfers, 2023,” Stockholm International Peace Research Institute, March 2024, 3.
† China’s arms exports to the region have varied over time; in 1986, it sent almost 95 percent
of its arms exports to Middle East countries, but this percentage dropped significantly throughout
the 1990s and early 2000s as China reoriented its arms sales to Asian customers. Maria Mary Pa-
pageorgiou, “China’s Growing Presence in the Middle East’s Arms Race and Security Dynamics,”
Springer Nature Switzerland, 2023, 263–265; China Power Project, “How Dominant Is China in
the Global Arms Trade?” Center for Strategic and International Studies, May 27, 2021.
‡ Between 2019 and 2023, three of the top ten arms importers were in the Middle East: Saudi
Arabia, Qatar, and Egypt. The United States remains the top supplier of arms to the region,
followed by France, Italy, and Germany. Pieter D. Wezeman, et al., “Trends in International Arms
Transfers, 2023,” Stockholm International Peace Research Institute, March 2024, 11.
378
Iran-backed Houthi drones.399 In 2017, the UAE purchased Blue

Arrow 7 anti-tank missiles from China to arm its Wing Loong-2
drone fleet.400 China delivered these purchases to the UAE in 2020,
and the Stockholm International Peace Research Institute estimates
there were around 500 missiles in the delivery.401
China Has Emerged as the Main Supplier of Military-Grade Drones
in the Middle East
China has positioned itself as the primary supplier of drones to
the region, including to longstanding U.S. security partners Saudi
Arabia and the UAE.402 Maria Papageorgiou, a lecturer at the Uni-
versity of Exeter, testified before the Commission that between 2016
and 2020, China’s arms sales to Saudi Arabia increased by 386 per-
cent and to the UAE by 169 percent.403 During this period, the main
types of weapons purchased from China were drones, specifically the
Wing Loong-1 and the Wing Loong-2 (see Table 3 below).404 Sau-
di Arabia is also expected to receive the Wing Loong-10, a high-al-
titude drone capable of carrying several munitions, sometime in
2024.405 In April 2024, Iraq received a delivery of Caihong-5 (CH-5)
unmanned aerial vehicles (UAVs).406 According to news reports, the
Iraqi Army Aviation Command had expressed interest in acquiring
CH-5 drones since April 2023.407 China’s CH-5 drones can carry
heavier payloads and have a longer range and endurance life than
their predecessors (CH-4s).408 These features could allow for more
effective strike missions or intelligence gathering.409
Table 3: Chinese Military-Grade UAVs Sold to Middle Eastern Countries

(2010–2023)
Year Number
Country UAV Design Manufacturer Ordered Ordered
Iraq CH-4 CASC 2014 20*
Saudi Arabia CH-4 CASC 2014* 20*
Jordan CH-4 CASC 2015* 6*
Egypt ASN-209 CATIC 2010* 18
UAE CR-500 NORINCO 2019* 10*
UAE Wing Loong-1 CADI/AVIC 2011* 25*
Saudi Arabia Wing Loong-1 CADI/AVIC 2014* 15*
Egypt Wing Loong-1 CADI/AVIC 2016* 10*

Egypt Wing Loong-1 CADI/AVIC 2018 32*
Saudi Arabia Wing Loong-2 CADI/AVIC 2017 50*
UAE Wing Loong-2 CADI/AVIC 2017 15*
Saudi Arabia CH-4 CASC 2017 5*
Iraq CH-5 CASC 2023* Unclear
Note: Values with an asterisk are estimates.

Source: Various.410
379
Chinese military drones are more accessible to foreign militaries,

as they are priced at roughly half the cost or less of their U.S. coun-
terparts.411 Dr. Papageorgiou suggests that the Gulf states in par-
ticular are attracted to Chinese armed drones because of their lower
cost.412 Although Chinese drones are typically of a lesser quality, the
lower price point allows countries in the region to purchase them
in larger quantities—an advantage in conflict zones where they can
be quickly shot down.413 Additionally, Mr. Rumley explains that re-
gional actors are incentivized to buy Chinese armed drones because
it will give them access to Chinese drone technology.414 According
to the U.S. Department of Defense, China entices countries in the
Middle East to buy its weapons systems, especially drones, by offer-
ing flexible payment options, gifts, and donations to the purchasing
country.415
The Middle East continues to be a volatile region where factional
and sectarian conflict can quickly spill over and threaten the secu-
rity and commercial interests of the United States and its allies and
partners. While China does not yet appear intent on replacing the
United States as the dominant outside power in the region, it acts
opportunistically to undermine U.S. influence. China’s approach to
the region is mixed, seeking to strike a balance between undertak-
ing efforts that may undermine the influence of the United States
while maintaining a threshold of stability necessary to ensure un-
abated commercial activity. China may also believe that it benefits if
continued regional turmoil deflects some U.S. energy and attention
away from its own immediate periphery. However, China’s substan-
tial economic and commercial interests in the region, and its reli-
ance on key trade routes that pass through it, leave it exposed to
potential disruption if a significant conflict among regional powers
were to break out.
Diplomatically, the Middle East presents an opportunity for China
to promote its vision of global leadership. First, China is developing
deeper relations with both U.S. partners and rivals in the region.
Second, Beijing uses its three initiatives, the Global Security Initia-
tive, Global Development Initiative, and Global Civilization Initia-
tive, to engage Arab states and to present an alternative vision that
appeals to the region’s autocratic governments. Lastly, China uses
multilateral forums, such as the China-Arab States Cooperation Fo-
rum, to spread narratives and gain support for issues such as its
human rights abuses in Xinjiang or bolster its territorial claims in
the South China Sea or Taiwan.
Iran is also a crucial element of China’s efforts to undermine the
United States and the rules-based international order it leads. Chi-
na and Iran harbor a shared sense of grievance toward the U.S.-
led world order. By sustaining Iran—and, indirectly, its proxy forces
throughout the region—Beijing complicates the security landscape
for the United States and supports an effective counterweight to
rising regional powers on the Arabian Peninsula. Chinese purchas-
es of sanctioned Iranian crude oil have increased dramatically in
recent years, to the point where China now purchases nearly 90
percent of Iranian oil and in doing so has established a network of
380
logistical and financial institutions to bypass U.S. and international

sanctions regimes against Iran.416 This evolving and increasingly
sophisticated sanctions circumvention scheme is eroding the eco-
nomic leverage the United States and the international community
can bring to bear not only to contain Iran but also to use against
other adversarial states like Russia and North Korea, who together
with China are forming what researchers at the Atlantic Council
have dubbed the “axis of evasion.” 417 However, China’s partnership
with Iran has limits, as China acts exploitatively to purchase Irani-
an oil that cannot easily be sold to other buyers due to sanctions at
below-market prices, all while signaling Beijing’s unwillingness to
enmesh too deeply for fear of souring relations with Saudi Arabia,
the UAE, and other important actors.418
Another area of increasing concern for the United States pertains
to China’s ability to acquire cutting-edge U.S. technology subject to
export controls given the presence of Chinese technology companies
in the region’s digital infrastructure, particularly in the Arab Gulf.
Huawei, ZTE, and other companies on the Commerce Department’s
Entity List have been instrumental in the buildout of telecommu-
nications and cloud infrastructure across the region. With the rapid
advent of generative AI and the ambition of Saudi Arabia, the UAE,
and other wealthy Gulf states to become AI leaders, there is acceler-
ating demand for dual-use hardware and software supplied by lead-
ing tech companies. In October 2023, the Commerce Department
expanded semiconductor export controls to require licenses for sale
of cutting-edge chips to certain Middle Eastern countries, including
the UAE and Saudi Arabia, consistent with prior rules to prevent
Chinese military end use.419 Microsoft and the UAE’s leading AI
firm Group 42 reached a landmark agreement in April 2024 that
followed the latter’s commitment to untangle ties with Chinese tech
companies, including Huawei. This case is informative regarding
how best to incentivize key partners with whom the United States
maintains close security relationships to effectively constrict poten-
tial conduits of technology transfer to China.
Lastly, though China maintains a modest maritime security pres-
ence in the Middle East operating out of its base in Djibouti, it has
yet to forward-deploy the forces necessary to conduct military oper-
ations that could rival the U.S. security architecture in the region. It
appears for now that Beijing is content to free-ride off the security
that U.S. counterpiracy operations, counterterrorism operations, and
broader security partnerships provide in the region. China may also
be considering options for new bases in the region; for example, the
U.S. Department of Defense asserted in 2023 that China has proba-
bly considered the UAE for a PLA logistics facility.420 This and sim-
ilar port construction projects undertaken by Chinese companies in
areas of strategic importance should be closely monitored, as should
arms sales and increasing military ties between the PLA and coun-
tries in the region.
381
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382
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383
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C. Murphy, written testimony before the U.S.-China Economic and Security Review
Commission, Hearing on China and the Middle East, April 19, 2024, 2; Wang Yu, “The
Israeli-Palestinian Conflict: Causes, Impacts and Solutions” (巴以冲突：根源、影响与
出路), International Cooperation Center, February 23, 2024. Translation; Liu Chang,
“Ten Years Later, We Look Back at the Arab Spring” (十年后, 再看 “阿拉伯之春”) Chi-
na Institute of International Studies, April 9, 2021. Translation; Guangming Daily,
“The Decade after the Arab Spring” (“阿拉伯之春” 后的十年寒冬), December 18, 2020.
Translation; Li Ruohan and Zhang Cheng, “Terrorist Threats and Security Responses
under the Perspective of the ‘Belt and Road Initiative’ ” (“一带一路” 倡议视野下的恐怖
主义威胁与安全应对), Journal of the Ocean University of China (2019). Translation;
Mao Jikang, “The Evolution of the Geopolitical Structure in the Middle East and
Its Impact on China’s Energy Security” (中东地缘政治格局演变及对我国能源安全影响),
Peace and Development 4 (2019): 118. Translation; Yu Qian, “Analysis of Political
Risks in Countries or Regions along the ‘Belt and Road’ ” (“一带一路” 沿线国家或地区
政治风险分), Shanghai Brilliance Credit Rating and Investors Service Co. Ltd., May
22, 2018, 8–9. Translation; China Youth Daily, “The Fifth Anniversary of the Arab
Spring: The Chaos in the Middle East and the Pain of the World” (“阿拉伯之春” 五周
年记:中东大乱世界之痛), January 14, 2016. Translation.
31. Cheng Shuaipeng, “International Observation: U.S. Middle East Policy Exac-
erbates Regional Crisis by Pouring Fuel on Fire” (国际观察｜边浇油边灭火美中东
政策加剧地区危局), Xinhua, February 4, 2024. Translation; China Daily, “Gaza Spill-
over-Sparks Risk Igniting Wider War,” January 15, 2024; Global Times, “UNSC Has
Not Authorized Force against Yemen; China Urges All Parties Concerned to Abide
by International Law: China’s UN Envoy,” January 13, 2024; Yang Ran, “US Actions
Blamed for Red Sea Crisis,” China Daily, December 26, 2023; China’s Ministry of
Foreign Affairs, Qin Gang: The United States Should Draw Lessons from Its Failure
in Afghanistan, April 13, 2023.
33. Dawn C. Murphy, “The Deep Foundations of China’s Mediator Role in the Mid-
dle East,” Australian Institute of International Affairs, April 14, 2023.
35. Michal Shmulovich, “China Unveils Peace Plan Based on 1967 Lines,” Times
of Israel, May 7, 2013; China’s Ministry of Foreign Affairs, Foreign Ministry Spokes-
person Hua Chunying’s Regular Press Conference on May 6, 2013, May 7, 2013; Cary
Huang, “Xi Proposes Four-Point Plan to Resolve Palestinian Issue,” South China
Morning Post, May 6, 2013.
36. China’s Consulate-General in Toronto, Chinese President Makes Four-Point Pro-
posal for Settlement of Palestinian Question, May 6, 2013.
37. Karl Vick, “China Can Posture, but It Can’t Bring Peace to the Middle East,”
Time, May 7, 2013.
38. Charlotte Gao, “China Vows to Play an Active Role in Settling the Palestine-Is-
rael Issue,” Diplomat, December 28, 2017; China’s Ministry of Foreign Affairs, Wang
Yi Meets with Representatives of Palestine and Israel for Palestinian-Israeli Peace
Symposium, December 22, 2017; Associated Press and Times of Israel, “China Pushes
Four-Point Israeli-Palestinian Peace Plan,” August 1, 2017.
39. Galia Levi, “China and the Middle East: The Israeli-Palestinian Conflict on the
Agenda,” Institute for National Strategic Studies, August 18, 2021; Helena Legarda,
“China Wades into the Israel-Palestine Conflict Once More,” Mercator Institute for
China Studies, May 28, 2021; Xinhua, “China Puts Forward Four-Point Proposal Re-
garding Palestine-Israel Conflict,” May 17, 2021.
40. China’s Ministry of Foreign Affairs, Qin Gang Has a Phone Call with Israeli
Minister of Foreign Affairs Eli Cohen, April 17, 2023; China’s Ministry of Foreign
Affairs, Qin Gang Has a Phone Call with Palestinian Minister of Foreign Affairs and
Expatriates Riyadh al-Maliki, April 17, 2023; Peter Baker, “Chinese-Brokered Deal
Upends Mideast Diplomacy and Challenges U.S.,” New York Times, March 11, 2023.
41. Joe Cash, “Xi: China Willing to Help Foster Palestinian Peacemaking with Isra-
el,” Reuters, June 14, 2023; Associated Press, “China Inks ‘Strategic Partnership’ with
Palestinian Authority as It Expands Middle East Presence,” June 14, 2023.
42. Associated Press, “Netanyahu Says China Has Invited Him for a State Visit,”
June 27, 2023; Times of Israel, “ ‘Strategic Mistake’: Netanyahu Panned for Planning
China Visit as Signal to Biden,” June 27, 2023.
384
43. Amanda Chen, “Israeli Media Reaction to China’s Stance on the Israel-Hamas
War,” China-Global South Project, November 13, 2023; Lazar Berman, “Netanyahu
Confirms to US Lawmakers that He is Heading to China,” Times of Israel, June 27,
2023; Associated Press, “Netanyahu Says China Has Invited Him for a State Visit,”
June 27, 2023; Shalom Yerushalmi, “Netanyahu Set to Visit China Next Month, in
Trip Seen Likely to Annoy Biden,” Times of Israel, June 26, 2023; Xinhua, “Chinese,
Palestinian Presidents Hold Talks,” National Committee of the Chinese People’s Po-
litical Consultative Conference, June 15, 2023; Associated Press, “China Inks ‘Stra-
tegic Partnership’ with Palestinian Authority as It Expands Middle East Presence,”
June 14, 2023.
44. Derek Grossman, “China Is Burning All Its Bridges with Israel,” RAND Cor-
poration, May 15, 2024; Christina Lu, “How China Is Leveraging the Israel-Hamas
War,” Foreign Policy, January 31, 2024; Simone Lipkind, “Fickle Friends: Sino-Israeli
Ties Buckle Amid War with Hamas,” Council on Foreign Relations, January 25, 2024;
Mark Leonard, “China’s Game in Gaza: How Beijing Is Exploiting Israel’s War to Win
Over the Global South,” Foreign Affairs, January 8, 2024.
45. Derek Grossman, “China Is Burning All Its Bridges with Israel,” RAND Cor-
poration, May 15, 2024; Christina Lu, “How China Is Leveraging the Israel-Hamas
War,” Foreign Policy, January 31, 2024; Simone Lipkind, “Fickle Friends: Sino-Israeli
Ties Buckle Amid War with Hamas,” Council on Foreign Relations, January 25, 2024;
Mark Leonard, “China’s Game in Gaza: How Beijing Is Exploiting Israel’s War to Win
Over the Global South,” Foreign Affairs, January 8, 2024; Kawashima Shin, “How
China Defines the ‘Global South,’ ” Diplomat, January 11, 2024.
47. China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson’s Remarks
on the Escalation of Tensions between Palestine and Israel, October 8, 2023; Evelyn
Cheng, “China Responds to Israel-Hamas Conflict with a Call to ‘End the Hostilities,’
CNBC, October 8, 2023.
Regular Press Conference on October 9, 2023, October 9, 2023; Andrew Zhang, “During
Rare China Trip, Schumer Criticizes Country’s Initial Reaction to Hamas Attack on
Israel,” Politico, October 9, 2023; Ken Mortisugu, “US Senate Majority Leader Schum-
er Meets Xi and Welcomes Stronger Chinese Statement on Hamas Attack,” Associat-
ed Press, October 9, 2023.
Regular Press Conference on October 9, 2023, October 9, 2023; Andrew Zhang, “During
Rare China Trip, Schumer Criticizes Country’s Initial Reaction to Hamas Attack on
Israel,” Politico, October 9, 2023; Ken Mortisugu, “US Senate Majority Leader Schum-
er Meets Xi and Welcomes Stronger Chinese Statement on Hamas Attack,” Associat-
ed Press, October 9, 2023.
50. Josephine Ma, “Gaza Crisis: China ‘Always’ behind Arab, Islamic World on Le-
gitimate Aims, Foreign Minister Wang Yi to Malaysia’s Kadir,” South China Morning
Post, October 21, 2023; China’s Ministry of Foreign Affairs, Wang Yi Has a Phone Call
with Foreign Minister of Iran Hossein Amir-Abdollahian, October 15, 2023.
51. Grant Rumley and Rebecca Redlich, “Tracking Chinese Statements on the
Hamas-Israel Conflict,” Washington Institute for Near East Policy, May 10, 2024;
AFP, “China: Israel’s Actions in Gaza Have Gone ‘Beyond the Scope of Self-Defense,’ ”
Times of Israel, October 15, 2023.
52. China’s Ministry of Foreign Affairs, Wang Yi Has a Phone Call with Israeli
Foreign Minister Eli Cohen, October 24, 2024; China’s Ministry of Foreign Affairs,
Wang Yi Has a Phone Call with Palestinian Foreign Minister Riyad Al-Maliki, Octo-
ber 24, 2023.
53. Dang Yuan, “Decoding China: Beijing, BRICS Seek Middle East Influence,”
Deutsche Welle, November 24, 2023; China’s Embassy in the United States of Ameri-
ca, “Xi Jinping Attends the Extraordinary Joint Meeting of BRICS Leaders and Lead-
ers of Invited BRICS Members on the Situation in the Middle East with Particular
Reference to Gaza,” November 22, 2023.
54. Zhao Ziwen, “ ‘Disgrace for Civilisation’: China Repeats Call for Gaza Ceasefire,
Peace Talks on Middle East and Ukraine,” South China Morning Post, March 7, 2024.
55. Dawn C. Murphy, written testimony before the U.S.-China Economic and Secu-
56. Adam Rasgon and Vivian Wang, “China Will Host Senior Officials of Hamas
and Fatah, Longtime Adversaries,” New York Times, July 15, 2024; Yun Sun, “With
Second Meeting in June, China Finds Opportunity in Hamas-Fatah Talks,” Al-Mon-
itor, May 14, 2024.
385
57. China’s Ministry of Foreign Affairs, Ambassador Wang Kejian Mmeets with
Hamas Political Bureau Chairman Haniyeh (外交部大使王克俭会见哈马斯政治局主席
哈尼亚), March 19, 2024. Translation; Simone McCarthy and Wayne Chang, “Chinese
Envoy Meets Hamas Chief Haniyeh After First Visit to Israel Since Gaza War Be-
gan,” CNN, March 19, 2024; Middle East Monitor, “China: We Are Keen on Maintain-
ing Relations with Hamas,” March 18, 2024; Zhao Ziwen, “China Sends First Envoy
to Palestine and Israel in Direct Push for Gaza War Ceasefire,” South China Morning
Post, March 15, 2024.
58. Damien Cave and Adam Rasgon, “Hamas and Fatah Officials, Longtime Rivals,
Met in China,” New York Times, April 30, 2024.
59. China’s Ministry of Foreign Affairs, Special Envoy Zhai Jun of the Chinese
Government on the Middle East Issue Attends Israel’s National Day Concert, June
21, 2024; China’s Ministry of Foreign Affairs, Special Envoy Zhai Jun of the Chinese
Government on the Middle East Issue Meets with Israeli Ambassador to China Irit
Ben-Abba Vitale, April 15, 2024.
60. Xinhua, “Palestinian Factions Sign Beijing Declaration on Ending Division,
Strengthening Palestinian National Unity,” State Council of the People’s Republic of
China, July 24, 2024; Kali Robinson, “Who Governs the Palestinians?” Council on For-
eign Relations, May 28, 2024; Wilson Center, “Doctrine of Hamas,” October 20, 2023.
61. Robert Barron, Andrew Scobell, and Adam Gallagher, “Palestinian Factions
Pledge Unity: Another Diplomatic Win for China?” United States Institute of Peace,
July 25, 2024; Adam Rasgon and Alexandra Stevenson, “Multiple Past Attempts to
Broker Unity Have Failed,” New York Times, July 23, 2024; Adam Rasgon and Vivian
Wang, “China Will Host Senior Officials of Hamas and Fatah, Longtime Adversaries,”
New York Times, July 15, 2024.
62. China Arab State Cooperation Forum, “China and Arab Countries Are Fel-
low Travelers in Implementing the Global Civilization Initiative” (中国和阿拉伯国
家是践行全球文明倡议的同路人), April 1, 2024. Translation; China Arab State Co-
operation Forum, “In 2023, the Concept of Building a Community with a Shared
Future for Mankind Will Take Root in the Middle East” (2023年, 构建人类命运共
同体理念在中东落地生根), January 3, 2024. Translation; Wang Di, “Carry Forward
the Spirit of China-Arab Friendship, Implement the Outcomes of the China-Arab
States Summit, and Make All-Out Efforts to Build a China-Arab Community with
a Shared Future in the New Era,” Chinese People’s Institute of Foreign Affairs;
Saudi Press Agency, “Riyadh Declaration - The First Arab-China Summit,” De-
cember 9, 2022.
64. M. Taylor Fravel, “China’s Global Security Initiative at Two: A Journey, Not a
Destination,” China Leadership Monitor, May 30, 2024, 3; China’s Ministry of Foreign
Affairs, The Global Security Initiative Concept Paper, February 21, 2023.
Destination,” China Leadership Monitor. May 30, 2024.
66. Sheena Chestnut Greitens, “Xi’s Security Obsession: Why China Is Digging In
at Home and Asserting Itself Abroad,” Foreign Affairs, July 28, 2023.
67. China’s Ministry of Foreign Affairs, The Global Security Initiative Concept Pa-
per, February 21, 2023.
Destination,” China Leadership Monitor, May 30, 2024; Jesse Marks, “China’s Stra-
tegic Facilitation in the Persian Gulf Security Crisis,” Stimson Center, May 10, 2024;
China’s Ministry of Foreign Affairs, Wang Yi Attends the Second Middle East Security
Forum, September 21, 2022.
69. China Institute of International Studies, “Wang Yi Attends the Second Middle
East Security Forum,” September 29, 2022.
Destination,” China Leadership Monitor, May 30, 2024.
71. China Institute of International Studies, “Report on the Implementation of the
Global Security Initiative,” July 2024, 11; Xinhua, “China Willing to Be Stabilizing
Force in Dealing with Hotspot Issues: FM,” February 18, 2024; Fan Hongda, “Obser-
vation on China’s Mediation of Saudi-Iranian Relations from the Perspective of the
Global Security Initiative” (全球安全倡议视域下的中国调解沙特伊朗关系观察), North-
west University’s Center for Iranian Studies, August 21, 2023. Translation; China
National Radio, “China Mediates the Restoration of Diplomatic Relations between
Saudi Arabia and Iran, Jin Yinan: Successful Practice of Implementing the Global
Security Initiative” (中国斡旋沙伊复交，金一南：践行全球安全倡议的成功实践), March
21, 2023. Translation; Global Times, “ ‘Showing China’s Image as a Responsible Ma-
jor Country!’ The World ‘Likes’ China’s Mediation on the Resumption of Diplomatic
386
Relations between Saudi Arabia and Iran” (“彰显中国负责任大国形象”! 世界为中国斡旋
沙伊复交“点赞”), March 13, 2023. Translation.
Destination,” China Leadership Monitor, May 30, 2024; Yao Yao, “The Global Devel-
opment Initiative Provides a Blueprint for Responding to World Changes,” Red Flag
Manuscript, February 25, 2022. CSIS Interpret Translation.
73. Manoj Kewalramani, “China as a Rising Norm Entrepreneur: Examining the
GDI, GSI and GCI,” Trends in Southeast Asia 2:2024 (January 2024); Chen Chao and
Wang Yiwei, “Synergies between the Global Development Initiative and the Belt and
Road Initiative” (全球发展倡议与 “一带一路” 协同增效), Beijing Daily, May 27, 2022.
CSIS Interpret Translation.
74. Chen Yunnan, “China’s Global Development Initiative Is Not the BRI Reborn,”
Nikkei Asia, March 8, 2023.
75. Dale Aluf, “China’s Influence in the Middle East and Its Limitations,” Dip-
lomat, February 26, 2024; Yao Yao, “The Global Development Initiative Provides a
Blueprint for Responding to World Changes” (“全球发展倡议”为因应世界变局擘画蓝
图), Red Flag Manuscript, February 25, 2022. CSIS Interpret Translation; China’s
Mission to the UN, Friends of Global Development Initiative Officially Launched at
the UN New York Headquarters, January 20, 2022.
76. Center for International Knowledge on Development, “Progress Report on the
Global Development Initiative 2023,” June 20, 2023, 29; China’s Ministry of Foreign
Affairs, Concept Note on the Global Clean Energy Cooperation Partnership, Septem-
ber 28, 2022.
77. China’s Ministry of Foreign Affairs, Let Us Take Real Action to Build a Chi-
na-Arab Community with a Shared Future, May 30, 2024.
78. Michael Schuman, Jonathan Fulton, and Tuvia Gering, “How Beijing’s Newest
Global Initiatives Seek to Remake the World Order,” Atlantic Council, June 21, 2023;
R. Evan Ellis, “The Trouble with China’s Global Civilization Initiative,” Diplomat,
June 1, 2023; Xinhua, “Full Text of Xi Jinping’s Keynote Address at the CPC in Dia-
logue with World Political Parties High-Level Meeting,” March 16, 2023.
79. R. Evan Ellis, “The Trouble with China’s Global Civilization Initiative,” Diplo-
mat, June 1, 2023; Qin Gang, “Forging Ahead on the New Journey toward a Commu-
nity with a Shared Future for Mankind,” China’s Ministry of Foreign Affairs, March
27, 2023.
80. China’s State Council Information Office, Full Text of Xi Jinping’s Keynote Ad-
dress at the CPC in Dialogue with World Political Parties High-Level Meeting, March
16, 2023.
81. R. Evan Ellis, “The Trouble with China’s Global Civilization Initiative,” Diplo-
mat, June 1, 2023.
82. International Department of the Chinese Communist Party’s Central Commit-
tee, Yinchuan Declaration on the Implementation of the Global Civilization Initiative
at the Fourth China-Arab Political Parties Dialogue, July 14, 2023. Translation.
83. International Department of the Chinese Communist Party’s Central Commit-
tee, Yinchuan Declaration on the Implementation of the Global Civilization Initiative
at the Fourth China-Arab Political Parties Dialogue, July 14, 2023. Translation.
84. Xinhua, “Xi Urges Greater Efforts to Build China-Arab Community with
Shared Future,” May 30, 2024.
85. Peter Irwin, “Islam Dispossessed: China’s Persecution of Uyghur Imams and
Religious Figures,” Uyghur Human Rights Project, May 13, 2021; Nathan Ruser et
al., “Cultural Erasure: Tracing the Destruction of Uyghur and Islamic Spaces in Xin-
jiang,” Australian Strategic Policy Institute, September 24, 2020.
86. Bradley Jardine and Lucille Greer, “Beyond Silence: Collaboration between
Arab States and China in the Transnational Repression of Uyghurs,” Oxus Society
for Central Asian Affairs and Uyghur Human Rights Project, April 22, 2022; Bradley
Jardine, Edward Lemon, and Natalie Hall, “No Space Left to Run: China’s Transna-
tional Repression of Uyghurs,” Oxus Society for Central Asian Affairs and UHRP,
June 24, 2021.
87. Maya Wang, “ ‘Eradicating Ideological Viruses’ China’s Campaign of Repression
against Xinjiang’s Muslims,” Human Rights Watch, September 10, 2018.
88. Jewlan and Jilil Kashgary, “Arab Nations Praise China’s Uyghur Policies: So-
ciety Is ‘Harmonious,’ Religion Free,” Radio Free Asia, June 23, 2023; Muhammad
Zulfikar Rakhmat and M. Habib Pashya, “China Is Courting Middle Eastern Nations
on Xinjiang,” Diplomat, May 5, 2021; Roie Yellinek and Elizabeth Chen, “The “22 vs.
50” Diplomatic Split Between the West and China Over Xinjiang and Human Rights,”
Jamestown Foundation, December 31, 2019; Nick Cumming-Bruce, “China’s Retort
over Its Mass Detentions: Praise from Russia and Saudi Arabia,” New York Times,
July 12, 2019.
387
89. Frederik Kelter, “China Targets Friendly Media, Diplomats to ‘Tell Story of
Xinjiang,’ ” Al-Jazeera, January 2, 2024; Middle East Monitor, “Diplomats from 30
Muslim Countries Visited China’s Xinjiang Region,” August 10, 2022.
90. Bradley Jardine and Lucille Greer, “Beyond Silence: Collaboration between
Arab States and China in the Transnational Repression of Uyghurs,” Oxus Society
for Central Asian Affairs and Uyghur Human Rights Project, April 22, 2022; Bradley
Jardine, Edward Lemon, and Natalie Hall, “No Space Left to Run: China’s Transna-
tional Repression of Uyghurs,” Oxus Society for Central Asian Affairs and Uyghur
Human Rights Project, June 24, 2021.
91. Nilgün Eliküçük Yıldırım, “The Uyghur Issue in Turkey-China Relations,”
Heinrich-Böll-Stiftung, April 5, 2024; Ben Carrdus, “ ‘I Escaped, But Not to Freedom:’
Failure to Protect Uyghur Refugees,” Uyghur Human Rights Project, June 20, 2023;
Mustafa Akyol, “How China Coopted Turkey to Forsake the Uyghurs,” Hudson Insti-
tute, January 26, 2022.
92. Aynur Kerimu, “Türkiye Strengthens Pivot Toward China,” Jamestown Foun-
dation, June 24, 2024.
93. Dawn Murphy, written testimony before the U.S.-China Economic and Security
Review Commission, Hearing on China and the Middle East, April 19, 2024, 1–2.
96. BRICS Policy Center, “The China-Arab States Cooperation Forum (CASCF),”
May 2016.
99. Nick Carraway, “China and 22 Arab Countries Reach Consensus on Gaza
Ceasefire and Further Cooperation,” Diplomat, July 10, 2024; Dawn Murphy, written
testimony before the U.S.-China Economic and Security Review Commission, Hearing
on China and the Middle East, April 19, 2024, 3.
100. Dawn Murphy, written testimony before the U.S.-China Economic and Secu-
Ceasefire and Further Cooperation,” Diplomat, July 10, 2024; Reuters, “Xi says China
Wants to Work with Arab States to Resolve Hot Spot Issues,” May 30, 2024.
Ceasefire and Further Cooperation,” Diplomat, July 10, 2024; Dewey Sim, “Isra-
el-Gaza War: China and Arab States Condemn ‘Continued Aggression’ in Gaza, Urge
Support for Palestinian Statehood,” South China Morning Post, May 31, 2024; Global
Times, “Joint Statement Adopted by China, Arab States Calls for Immediate Cease-
Fire,” May 31, 2024.
105. Jane Perlez, “President Xi Jinping of China Is All Business in Middle East
Visit,” New York Times, January 1, 2016; Stanley Carvalho, “Xi’s Visit to UAE High-
lights China’s Rising Interest in Middle East,” Reuters, July 20, 2018; Aya Batrawy,
“China’s Xi Jinping Visits Saudi Arabia to Assert Power and Rival U.S. Influence,”
NPR, December 8, 2022.
106. Kate Bartlett, “Why Chinese Foreign Minister’s Visit Focuses on North and
West Africa,” Voice of America, January 16, 2024; Jonathan Fulton, “Mr. Wang Gto
the Middle East,” Atlantic Council, April 1, 2021.
107. Jon Alterman, written testimony before U.S.-China Economic and Security
111. Xinhua, “Belt and Road Initiative to Boost Saudi Arabia’s Economic, Social
Development, Says Saudi Minister,” December 12, 2022.
112. Shannon Tiezzi, “China’s Xi Heads to Saudi Arabia to Boost Beijing’s Influ-
ence in the Middle East,” Diplomat, December 7, 2022.
388
113. Kawala Xie and Teddy Ng, “China and Saudi Arabia Pledge to Widen Ties to
‘All Fields’ and Work Together on Iran Nuclear Programme,” South China Morning
Post, December 9, 2022.
114. Vivian Nereim, “China and Saudi Arabia Sign Strategic Partnership as Xi
Visits Kingdom,” New York Times, December 8, 2022.
118. U.S. Department of State, Missile Technology Control Regime (MTCR) Fre-
quently Asked Questions; J. Peter Scoblic, “China Issues Missile Export Pledge; U.S.
Says It Will Waive Sanctions,” Arms Control Association, December 2000.
119. Julia Masterson, “Saudi Arabia Said to Produce Ballistic Missiles,” Arms Con-
trol Association, January/February 2022.
120. Stockholm International Peace Research Institute, “SIPRI Arms Transfers
Database,” March 11, 2024; Mohman Malla, “Is China Abandoning Its Iran-Saudi
Balancing Act?” East Asia Forum, November 25, 2022; Peter Wood and Alex Stone,
“China’s Ballistic Missile Industry,” China Aerospace Studies Institute, 2021, 14;
Bruce Riedel, “Saudi Arabia’s Relations with China: Functional, but Not Strategic,”
Brookings Institution, July 20, 2020.
121. Jared Malsin, Summer Said, and Warren P. Strobel, “Saudis Begin Making
Ballistic Missiles with Chinese Help,” Wall Street Journal, December 23, 2021.
122. Jared Malsin, Summer Said, and Warren P. Strobel, “Saudis Begin Making
Ballistic Missiles with Chinese Help,” Wall Street Journal, December 23, 2021.
125. Zachary Cohen, “CNN Exclusive: US Intel and Satellite Images Show Saudi
Arabia Is Now Building Its Own Ballistic Missiles with Help of China,” CNN, De-
cember 23, 2021.
126. Mohman Malla, “Is China Abandoning Its Iran-Saudi Balancing Act?” East
Asia Forum, November 25, 2022.
127. Tong Fei, “The Belt and Road Initiative and the New Changes in China-UAE
Relations” (“一带一路” 倡议与中国—阿联酋关系的新变化), Middle East Studies 11:1
(2020): 152. Translation.
128. Yuting Wang, “Opportunities and Challenges for the UAE’s Chinese Expa-
triate Community in a New Era,” Gulf Arab States Institute in Washington, May 5,
2022.
(2020): 163–164. Translation.
136. Stella Chen, “Discourse Power,” China Media Project, May 30, 2022; Kenton
Thibaut, Simin Kargar, and Daniel Suárez Pérez, “China’s Discourse Power Opera-
tions in the Global South,” Atlantic Council, April 2022, 17–21; China Media Project,
“Telling China’s Story Well,” April 16, 2021.
137. Sarah Cook, “Beijing’s Global Megaphone,” Freedom House, January 2020.
389
138. Xinhua, “Interview: Arab-Chinese Media Cooperation Essential amid Com-
mon Challenges, Says Egyptian Expert,” December 5, 2023; Sarah Cook, “Beijing’s
Global Megaphone,” Freedom House, January 2020.
139. Merissa Khurma, “China Has a Growing Presence in Arab Hearts and Minds,”
Wilson Center, June 5, 2023; Shaina Oppenheimer, “What Do Chinese Media Outlets
Say about the Middle East? Depends Which Language You’re Reading,” Haaretz, Feb-
ruary 1, 2021.
140. Bertie Lyhne-Gold and David Bandurski, “A Media Labyrinth in the Middle
East,” June 25, 2024.
141. Lama Al-Hamawi, “Arab-Chinese Media Cooperation Forum Launches Joint
Broadcasting Initiative,” Arab News, December 8, 2022.
142. Lama Al-Hamawi, “Arab-Chinese Media Cooperation Forum Launches Joint
Broadcasting Initiative,” Arab News, December 8, 2022.
143. Tang Zhichao, “Middle Eastern Countries Move towards Strategic Autonomy”
(中东国家迈向战略自主), Xinhua, July 26, 2022. Translation.
144. Tang Zhichao, “Strategic Competition between China and the United States
in the Middle East and China’s Response” (中美在中东的战略竞争与中国的应对) Inter-
national Cooperation Center, February 17, 2024. Translation.
145. Gao Wencheng, “Xinhua Commentary: The United States ‘Lost Power’ in the
Middle East Because It Lost the People’s Hearts” (新华时评: 美国中东 “失势” 失在人
心), Xinhua, June 14, 2023. Translation.
Review Commission, Hearing on China and the Middle East, April 19, 2024, 6–7;
United States Institute of Peace, “Iran & China: A Trade Lifeline,” Iran Primer, July
5, 2023.
150. Al-Jazeera, “China Calls for Iran Sanctions to Be Lifted during Raisi’s Vis-
it,” February 16, 2023; Reuters, China Slams U.S. Sanctions on Iran as Cooperation
Agreement Launched,” January 15, 2022; Security Council Report, “UN Documents
for Iran: Security Council Resolutions.”
151. China’s Ministry of Foreign Affairs, Iranian President Pezeshkian Meets with
Wang Yi (伊朗总统佩泽希齐扬会见王毅), September 25, 2024. Translation; China’s
Ministry of Foreign Affairs, Wang Yi Meets with Secretary of Iran’s Supreme Na-
tional Security Council Ahmadiyan (王毅会见伊朗最高国家安全委员会秘书艾哈迈迪安),
July 25, 2023. Translation; Reuters, “China, Iran Call for Iran Sanctions to be Lift-
ed; Xi to Visit,” February 16, 2023; China’s Ministry of Foreign Affairs, Xi Jinping
Holds Talks with Iranian President Raisi (习近平同伊朗总统莱希举行会谈), February
152. Dan Katz, “Despite Sanctions, China Is Still Doing (Some) Business with
Iran,” Atlantic Council, October 1, 2019; Associated Press, “Iran Says China’s State
Oil Company Has Pulled Out of $5 Billion Deal,” October 6, 2019.
153. Li-Chen Sim and Nicole Grajewski, “What Does Russia Get Out of Iran’s
Membership in the Shanghai Cooperation Organization?” Atlantic Council, October
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154. Kevin Lim, “China-Iran Diplomatic Relations in Broader Perspective,” in Chi-
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CHAPTER 6: KEY ECONOMIC STRATEGIES FOR
LEVELING THE U.S.-CHINA PLAYING FIELD
Abstract
Many of China’s economic, technological, and military policies are
at the expense of and contrary to U.S. and allied interests. Today,
China continues to flood global markets with exports in an attempt
to boost its domestic economic growth while simultaneously pursu-
ing the development of emerging technologies to assert its global
geopolitical interests and spur military modernization. In response,
the United States’ economic approach toward China is evolving to
combat China’s state-led, non-market practices. The United States’
toolkit for addressing these challenges includes trade policy tools,
such as tariffs on imports from China, controls on the transfer of
technology, and restrictions on inbound and outbound investment
that might advance China’s development of sensitive technologies.
At the same time, there remains a lack of consensus on the scope
and implementation of these measures. Lacking an overarching set
of objectives and a comprehensive strategy for achieving them, some
policies are implemented at cross-purposes, weakening the United
States’ approach to economic competition with China. Unlike the
National Security Strategy (NSS), the United States does not yet
have a unified strategy organizing its approach to economic security.
The effectiveness of the United States’ economic security strategy
faces further limits at present from a lack of data and analytic ca-
pabilities as well as a lack of adequate alignment of policies with
key allies and partners.
Key Findings
• U.S. trade policy is a key tool for defending against China’s
non-market economic practices, diversifying U.S. supply chains,
and preserving U.S. economic security.
• Efforts to de-risk supply chains are undermined by a lack of a
cohesive trade policy as well as the continued presence of Chi-
nese value-added content in non-Chinese imports.
• As China increasingly asserts itself as a significant military
power, export controls have emerged as a central tool in U.S.
efforts to deny China direct access to critical dual-use goods
and advancements in national security-sensitive technologies.
However, a number of operational challenges diminish their
effectiveness, including lack of coordination among key allies,
compliance challenges, and uneven enforcement.
• While Congress in 2018 strengthened the U.S. inbound invest-
ment screening mechanism, it considered but did not implement
matching rules on outbound investments. In the last few years,
(403)
404
policymakers have actively explored creating an outbound in-

vestment screening mechanism. Such a mechanism would curb
important U.S. economic support to China’s advanced technol-
ogy ambitions, such as the transfer of management expertise,
know-how, and capital that is unaddressed by the United States’
existing toolkit, including a yet-to-be-implemented executive or-
der (EO).
• A lack of adequate detailed data on U.S. trade and investment
flows poses an acute challenge to effective policy scoping and
implementation.
• Economic partners in the G7 and other developed markets
have implemented trade measures to address trade distortions
caused by China’s state-led economy; these measures continue
to evolve. They are also exploring parallel export controls and
outbound investment screening policies to limit the flow of key
technologies. At times, the United States has had difficulty ob-
taining alignment with allies, which can undercut the effective-
ness of U.S. policy and put U.S. companies at a disadvantage.
Recommendations
• Congress consider legislation to eliminate federal tax expendi-
tures for investments in Chinese companies on the Entity List
maintained by the U.S. Department of Commerce, or identified
as a Chinese military company on either the “Non-Specially
Designated National (SDN) Chinese Military-Industrial Com-
plex Companies List” maintained by the U.S. Department of the
Treasury or the “Chinese military companies” list maintained
by the U.S. Department of Defense. Among the tax expenditures
that would be eliminated prospectively are the preferential cap-
ital gains tax rate, the capital loss carry-forward provisions, and
the treatment of carried interest.
• To enhance the effectiveness of export controls, Congress should:
○ Improve the analytic and enforcement capabilities of the U.S.
Department of Commerce’s Bureau of Industry and Security
(BIS) by providing resources necessary to hire more in-house
experts; establish a Secretary’s Fellows Program to more ef-
fectively attract interagency talent; expand partnerships with
the national labs; increase access to data and data analysis
tools, including the acquisition of proprietary datasets and
modern data analytic systems; and hire additional agents and
analysts for the Office of Export Enforcement.
○ Amend the Export Control Reform Act to require that within
30 days of granting a license for export to entities on the
Entity List, including under the Foreign Direct Product Rule,
BIS shall provide all relevant information about the license
approval to the relevant congressional committees, subject to
restrictions on further disclosure under 50 U.S.C. § 4820(h)(2)
(B)(ii).
○ Direct the president to:
405
Designate a senior official to coordinate efforts across the

Administration to prioritize bilateral and multilateral sup-
port for U.S. export control initiatives; and
Establish a Joint Interagency Task Force, reporting to and
overseen by the national security advisor and with its own
budget and staff, to assess ways to achieve the goal of lim-
iting China’s access to and development of advanced tech-
nologies that pose a national security risk to the United
States. The task force should include designees from the
U.S. Departments of Commerce, Defense, State, Treasury,
and Energy; the intelligence community; and other relevant
agencies. It should assess the effectiveness of existing ex-
port controls; provide advice on designing new controls and/
or using other tools to maximize their effect while mini-
mizing their negative impact on U.S. and allied economies;
and recommend new authorities, institutions, or interna-
tional arrangements in light of the long-term importance
of U.S.-China technology competition.
○ Codify the “Securing the Information and Communications
Technology and Services Supply Chain” Executive Order to
ensure that as the authority is used more robustly, challenges
to its status as an executive order will not constrain BIS’s
implementation decisions or delay implementation.
• Congress direct the Administration to create an Outbound In-
vestment Office within the executive branch to oversee invest-
ments into countries of concern, including China. The office
should have a dedicated staff and appropriated resources and
be tasked with:
○ Prohibiting outbound U.S. investment through a sector-based
approach in technologies the United States has identified as
a threat to its national or economic security;
○ Expanding the list of covered sectors with the goal of aligning
outbound investment restrictions with export controls. The of-
fice should identify and refine the list of covered technologies
in coordination with appropriate agencies as new innovations
emerge; and
○ Developing a broader mandatory notification program for sec-
tors where investment is not prohibited to allow policymakers
to accumulate visibility needed to identify potential high-risk
investments and other sectors that pose a threat to U.S. na-
tional or economic security. In addition to direct investments,
the notification regime should capture passive investment
flows to help inform debates around the expansion of prohibi-
tions to cover portfolio investment.
• Congress repeal Permanent Normal Trade Relations (PNTR) for
China. The PNTR status allows China to benefit from the same
trade terms as U.S. allies, despite engaging in practices such as
intellectual property theft and market manipulation. Repealing
PNTR could reintroduce annual reviews of China’s trade prac-
tices, giving the United States more leverage to address unfair
trade behaviors. This move would signal a shift toward a more
406
assertive trade policy aimed at protecting U.S. industries and

workers from economic coercion.
• Congress direct relevant departments and agencies to expand
their data collection and transparency initiatives into the vol-
ume and types of investment flowing into China by taking the
following actions:
○ Amending the International Investment and Trade in Ser-
vices Survey Act to require the Bureau of Economic Analy-
sis within the U.S. Department of Commerce to publish more
detailed sectoral breakdowns of U.S. direct investment in
China on a nationality basis and the U.S. Department of the
Treasury to publish annual sector breakdowns of U.S. portfo-
lio investment in China on a nationality basis. The portfolio
investment sectors should be more specific than those provid-
ed by the Commerce Department for direct investment. Ad-
ditionally, Congress should require the Treasury Department
to publish quarterly updates—without sector breakdowns—of
nationality-based portfolio investment in China.
○ Requiring the U.S. Department of Commerce to produce a
report on the feasibility and methodology for publishing na-
tionality-based results for direct investment, where offshore
tax havens and locales of incorporation would not be said to
receive hundreds of billions of dollars and true destinations
of the capital would be accurately identified.
• Congress direct the Administration to impose sanctions on
Chinese financial institutions that violate sanctions, includ-
ing those that are proven to be working with or supporting
the Russian military industrial base or facilitating purchases
of Iranian oil.
• In light of the periodic and increasingly frequent removal of
some of these materials from Chinese websites, Congress direct
the executive branch to fund the creation and operation of a
regularly updated, permanent data archive, in effect a series
of snapshots of portions of the Chinese internet. In the past
decade, foreign analysts have made use of open source Chi-
nese-language materials to gain insight into various aspects of
current policy as well as internal (but unclassified) discussions
of future military, diplomatic, and economic strategy. Informa-
tion would be stored in the permanent data archive, accessible
to both government and private analysts.
• Congress consider legislation to set priorities and goals for
U.S.-China economic relations. These policy priorities and goals
should include:
○ Updating existing trade and economic tools to ensure their
timely application, utility, and effectiveness in countering
China’s non-market economic policies;
○ Limiting U.S. economic and security dependence on supply
chains in critical and emerging products, technologies, and
services provided by companies controlled, operating in, or
subject to the influence of China;
407
○ Enhancing the accountability of the executive branch to Con-

gress and increasing the transparency of its actions to ensure
coordinated governmental action and respect for Congress’s
constitutional Article I, Section 8 authority;
○ Prioritizing domestic production and employment while also
recognizing the need, as appropriate, to coordinate and align
policies with friends and allies;
○ Acting to address production overcapacity fueled by Chinese
policies and actions; and
○ Advancing the resilience of the U.S. economy and ensuring its
access to key inputs and technologies.
• Congress pass legislation eliminating the ability of entities op-
erating in U.S. Foreign-Trade Zones (FTZs) to qualify for zero
or lower tariffs on products imported from China or Chinese-af-
filiated or -invested entities into the FTZ and then reexported.
• The relevant committees of Congress hold hearings to assess
the desirability and feasibility of creating a trade defense coa-
lition with other like-minded countries to forestall the risk of a
second China shock. Such a grouping would seek to align poli-
cies for responding to the recent acceleration in China’s exports
of subsidized, underpriced materials and manufactured goods.
Introduction
In recent years, U.S. policymakers have begun to rethink many of
the assumptions that undergirded the previous several decades of
trade and economic engagement with China. While China undertook
some measures to reform its economy in ways to promote private
enterprise and foreign investment, such measures invariably proved
secondary to the Chinese Communist Party’s (CCP) core goals of
remaining in power, strengthening its economy and military power
and growing China’s global influence. The CCP never intended to
cede control of China’s economy to market forces.
Early indications suggest that attempts by the United States to
limit China’s access to and development of certain dual-use and
foundational technologies, promote de-risking, and address econom-
ic distortions and unfair trade practices from China have had some
success. But even as a growing array of policy tools are being de-
ployed to evolve U.S. economic, trade, and related national security
policy toward China, the U.S. economy remains deeply intertwined
with China’s. There is a need for a more comprehensive policy re-
alignment—including a review of trade tools, export controls, and
investment restrictions—as well as a significantly greater effort to
align these measures with those of allies and like-minded countries
in order to ensure their efficacy.
This chapter begins with a review of how China continues to pur-
sue its economic interests in ways inconsistent with global norms
of fair trade. The chapter then reviews the United States’ response
to China’s action across three arenas: trade policy, export controls,
and investment screening. The chapter draws on the Commission’s
May 2024 hearing on “Key Economic Strategies for Leveling the
408
U.S.-China Playing Field: Trade, Investment, and Technology,” con-

sultations with experts, and open source research and analysis.
Economic Security as a Whole-of-Government
Approach
Over the past three decades, U.S. economic policy toward China
was substantially developed and implemented in functional silos.
The United States tailored policy approaches based on explicit con-
cerns—such as specific market access challenges, intellectual prop-
erty (IP) theft, or steel and aluminum overcapacity—so as not to de-
rail broader economic cooperation or to slow what was widely hoped
to be a process of liberalization by China.1
Given this, U.S. strategy and implementation of its key econom-
ic tools were also siloed. U.S. officials were aware that China’s
non-market economic practices frequently advantaged Chinese com-
panies at the expense of U.S. firms and workers and resulted in
significant shifts in supply chains. However, optimism that a com-
plex and interdependent global economy would deter conflict and
liberalize China tempered the U.S. response and kept the focus on
more narrow industry-specific issues or better enforcement of exist-
ing trade rules.2 Similarly, despite periodic concerns that technology
transfers might be assisting the People’s Liberation Army’s military
modernization drive, until very recently this was viewed as an issue
for narrow export controls on weapons and dual-use products, not
a reason to broadly challenge China’s innovation ecosystem or limit
flows of U.S. capital and know-how that helped build up China’s
technological capabilities in critical and emerging technologies.3
Many policymakers have come to believe that the size, scale, and
complexity of China’s challenge to U.S. interests requires more in-
tense coordination between economic and national security goals.4
The United States, however, has not reshaped its architecture of
economic tools accordingly despite a consensus that China is now
a whole-of-government problem.5 While the United States has pur-
sued numerous actions to refine and improve the tools it uses to
address the trade, technology, and investment challenges it faces
from China, its actions remain fundamentally siloed.
U.S. export controls on advanced chips illustrate the risks of the
current approach. The U.S. government restricts advanced semicon-
ductor technologies aimed to limit China’s military modernization.
Whatever their impact on China’s ability to achieve progress on
artificial intelligence (AI) and supercomputing, U.S. export controls
have evidently pushed Chinese chip makers to focus additional ef-
forts on legacy chip production.6 However, trailing-edge—or lega-
cy—chips are also critical to U.S. and allied commercial and military
supply chains.7 Chinese dominance of the sector is thus incongruent
with U.S. strategic goals.8 Expanding export controls would likely
be ineffective for this problem. China has secure access to the tech-
nology necessary for legacy production and already accounts for 30
percent of worldwide manufacturing capacity.9 Instead, other tools
will be needed to address the United States’ strategic objectives of
maintaining an edge in the most advanced semiconductors while
avoiding excessive dependence on China for legacy chips.10
409
The United States publishes a comprehensive National Security

Strategy (NSS) that helps provide guiding principles and goals, co-
herence, and coordination across disparate government efforts for
myriad U.S. national security policies.11 The NSS also helps provide
important messaging and coordination with key allies and partners.
The most recent NSS repeatedly mentioned economic issues vis-
à-vis U.S. competition with and the national security threat from
China. These issues span China’s non-market abuses and economic
coercion, China’s partially closed economy and growing technolog-
ical capabilities, and China’s global economic importance and the
benefits it reaps from the open international economic order.12 Yet
even with this recognition of China-related challenges, there is no
comparable strategy on the economic side that defines a clear set
of principles and goals to guide restructuring of the United States’
economic relationship with China, foster coordination across varied
departments and policy tools, and drive development of the tools
that will be needed.
Deploying Tariffs and Other Trade Measures
Emerging Consensus on Trade Policy Objectives toward
China
Key priorities of U.S. trade policy since 1945, according to the Con-
gressional Research Service, have included “(1) fostering economic
growth and securing more open, equitable, and reciprocal market
access for U.S. exports and investment; (2) protecting U.S. producers
from unfair foreign trade practices and rapid surges in fairly traded
imports; and (3) strengthening the rules-based multilateral trading
system to help achieve the above objectives and further U.S. for-
eign policy.” 13 Since 2017, however, the focus of U.S. trade policy has
shifted in significant ways as the United States pivoted to address
what it saw as rising economic challenges and flaws in the previous
policy framework, particularly vis-à-vis China.14 The United States
has increasingly deployed its trade policy instruments to address
three areas in the U.S.-China economic relationship:
• China’s harmful economic practices: Since China joined the
WTO, the United States has largely sought to address the costs
to the U.S. economy from China’s non-market practices through
bilateral engagement and multilateral mechanisms. Beijing’s
harmful policies include unfair subsidies, access to free or sub-
sidized credit, and other non-trade barriers; coercive IP transfer
and theft; and protectionism and market access restrictions.15
Distortions in China’s system have often led to significant over-
capacity, which, when combined with the open international
trading system, has enabled China’s export-led growth model
and injured market-based producers in other countries.16 In
2018, Section 301 tariffs were unilaterally imposed to make
progress on these issues. This marked a shift from a previous
approach based on bilateral and multilateral frameworks.17
• Supply chain resilience: In response to growing geopolitical ten-
sions and, later, shocks related to the COVID-19 pandemic, the
United States has intensified its efforts to address supply chain
risks and reduce reliance on Chinese production. As economist
410
Emily Blanchard observes, governments are no longer just in-

terested in what goods and services enter or are sold within
their borders but also are looking to reshape patterns of produc-
tion occurring outside their borders and even before domestic
firms may be involved, an approach that was not deeply consid-
ered when the WTO framework was established.18
• The intersection of economic and national security: In recent
years, U.S. trade policy has aimed to address the United States’
persistent and massive trade deficit with China, the loss of U.S.
jobs and industry, and potential national security concerns aris-
ing from trade-related harm to domestic industries such as steel
and aluminum.19 Ongoing policy debates center on how to de-
ploy trade measures to ensure the United States does not lose
critical industries to low-cost, state-supported, and non-market-
based competition from China.
Recent U.S. Trade Measures
Since 2017, the United States has promulgated a complex web of
trade measures to mitigate harms from Chinese imports in an at-
tempt to create a more level playing field. Authorities under Section
301 of the Trade Act of 1974 were used to undertake an expansion
in tariffs that was unprecedented in recent history. Alongside these
actions, the United States also turned to Section 201 of the Trade
Act of 1974 and Section 232 of the Trade Expansion Act to protect
domestic industry, including from harmful Chinese economic prac-
tices. At the same time, U.S. industry expanded use of quasi-judicial
trade remedy tools such as antidumping investigations, which were
the source of most pre-2017 additional tariffs on imports from China
following its accession to the WTO.20 By the end of 2020, the United
States’ trade-weighted average tariff on Chinese products (including
antidumping duties) was 26.7 percent, compared to 8.4 percent at
the start of 2018.* 21
Section 201 Action on Washing Machines and Solar Panels
On February 7, 2018, the United States placed duties on imports
of washing machines and solar cells and modules under Section 201
of the Trade Act of 1974, the first imposition of Section 201 tariffs
since 2001.22 According to economic historian Douglas Irwin, Sec-
tion 201 was meant to be “the principal means by which industries
harmed by imports could receive temporary relief from foreign com-
petition.” 23 If the U.S. International Trade Commission (USITC) de-
termines following an investigation that a product’s import volume
is a “substantial cause of serious injury, or the threat thereof, to
the domestic industry,” the U.S. president can then decide to impose
trade restrictions.24 Relief under Section 201 is meant to serve as
a temporary “global” safeguard, meaning import restrictions for a
particular product or industry are applied to imports from all coun-
* The antidumping and countervailing duties (AD/CVD) assessed by the United States tended
to be substantially higher than tariffs under Section 301. The average tariff without accounting
for these trade remedies rose from 3.1 percent in January 2018 to 19.3 percent in December 2020,
reflecting that Section 301 and other trade authorities were the primary drivers of the increase.
Chad P. Bown, “U.S.-China Trade War Tariffs: An Up-to-Date Chart,” Peterson Institute for Inter-
national Economics, April 6, 2023.
411
tries.* 25 Although these safeguard duties enable the United States

to deal with temporary import surges in a way that is compliant
with the WTO’s safeguard provisions, the authority has seen limited
use. This is partially because the standard of “substantial cause” has
proven difficult to establish, while its requirement of “serious injury”
entails a much more onerous burden of proof than the equivalent
standard in antidumping and countervailing duties (AD/CVD) pro-
ceedings.26
After the USITC concluded two investigations on imports of wash-
ing machines and solar products, the U.S. government placed tariffs
of up to 50 percent on residential washers and initial tariffs of 30
percent on certain solar cells and modules.† 27 Though the Section
201 duties on residential washers ended in February 2023,‡ the
measures on solar products were renewed in February 2022 to last
until 2026 (see textbox below).28
Overlapping Trade Measures in the Solar Industry

The numerous trade measures covering solar cells and mod-
ules illustrates the wide-ranging playbook the United States is
employing to counter unfair Chinese trade practices. Christian
Roseland, an analyst at Clean Energy Associates, identifies seven
separate U.S. trade actions (including repeated use of AD/CVD
statutes) covering solar products that remain in effect.29 These
measures include:
• AD/CVD orders: The United States now enforces three sepa-
rate AD/CVD orders related to Chinese solar production, and
an additional investigation was launched in 2024. In 2012,
the U.S. Department of Commerce placed AD/CVD on all so-
lar cells from China.30 In 2015, the Commerce Department
issued a new AD/CVD order covering solar modules assem-
bled in China, regardless of where the solar cells originat-
ed, and it also placed an antidumping order on Taiwan in
response to Chinese companies establishing manufacturing
facilities on the island.31 In 2022, the Commerce Department
found that Chinese companies were routing covered solar
products through Cambodia, Malaysia, Thailand, and Viet-
nam to circumvent the AD/CVD order, although additional
duties on these imports were waived until June 2024.32 Most
recently, in May 2024, the Commerce Department initiated,
at the request of petitioners, a new AD/CVD case aimed at
imports from various Southeast Asian countries that are not
otherwise subject to the circumvention finding.33 The inves-
* As a result, Section 201 duties generally cannot be evaded through transshipment, an illicit
activity that undermines other trade authorities like AD/CVD orders, which target imports on a
country-specific basis. Specific countries are sometimes exempted from Section 201 duties.
† As temporary measures, both tariffs were scheduled to be gradually phased out over a number
of years. In addition, the Administration used tariff-rate quotas, which allow a limited number
of goods to enter at a lower tariff rate. U.S. Trade Representative, Fact Sheet: Section 201 Cases:
Imported Large Residential Washing Machines and Imported Solar Cells and Modules.
‡ In its statutorily required evaluation of the Section 201 washing machine duties, the USITC
assessed that the duties led to a decline in imports of residential washers and an increase in U.S.
industry’s market share and financial performance between 2018 and 2022, with LG Electron-
ics USA, Inc. and Samsung Electronic Home Appliance America, LLC emerging as the primary
beneficiaries. U.S. International Trade Commission, Large Residential Washers: Evaluation of the
Effectiveness of Import Relief, August 2023, 1.
412
Overlapping Trade Measures in the Solar Industry—

Continued
tigation includes alleged instances of transnational subsidies
provided by Chinese policy banks.34 Prior to 2024, the Unit-
ed States did not countervail subsidies provided by a gov-
ernment to firms operating in another country.35 (For more
on the Commerce Department’s changing approach to trans-
national subsidies, see Chapter 4, “Unsafe and Unregulated
Chinese Consumer Goods: Challenges in Enforcing Import
Regulations and Laws.”)
• Safeguard duties: In January 2018, the United States placed
a tariff-rate quota on imports of solar cells and modules from
all countries—though China was among the largest sourc-
es of covered products—for an initial period of four years,
which was extended for another four-year period in 2022.36
Between 2019 and 2024, bifacial (i.e., two-sided) solar cells,
a product predominantly used in large-scale utility projects,
were granted an exclusion from the safeguard action; the U.S.
government terminated the moratorium in May 2024 after
imports of the product continued to surge.* 37
• Section 301: Solar cells and modules were included in the du-
ties imposed after the Section 301 investigation into China’s
technology transfer, IP, and innovation policies. In May 2024,
the U.S. government announced that it would double the tar-
iffs on certain solar products from 25 percent to 50 percent as
part of the Office of the U.S. Trade Representative’s (USTR)
four-year review of the Section 301 action.38
• Uyghur Forced Labor Prevention Act (UFLPA): The UFLPA
creates a rebuttable presumption that goods produced in
Xinjiang are made using forced labor and therefore barred
from importation.39 The United States has used the UFLPA
to seize over a thousand shipments of solar products, pre-
sumably because they use polysilicon originating from the
region.40
In total, imports subject to these trade measures face an effec-
tive tariff between 91 percent and 286 percent.41 Other products,
such as steel, aluminum, and semiconductors, are also subject to
duties under multiple authorities.† 42
* The Trump Administration also attempted to revoke the exclusion at the end of 2020, one year
after introducing it. However, the U.S. Court of International Trade ruled in 2021 that revocation
fell outside of the president’s authority and reinstated the exclusion. President Joe Biden elected
to maintain the exclusion in 2022 when extending the safeguard measures. In 2023, a federal
appeals court overturned the Court of International Trade’s finding, ruling that the president
does have authority to terminate exclusions from the tariff. Jennifer A. Dlouhy, “Biden Seeks to
Bolster Solar Manufacturers with Tax and Trade Moves,” Bloomberg, May 16, 2024.
† These overlapping measures, however, create a complex regulatory environment, and industry
representatives have asserted that uncertainty about future duties undermines efforts to create
resilient supply chains. Clean Energy Associates and American Council on Renewable Energy,
“Potential Impacts of the 2024 Antidumping and Countervailing Duties on the U.S. Solar Indus-
try,” July 9, 2024, 26.
413
Section 232
Another trade policy tool the United States has deployed is Sec-
tion 232 of the 1962 Trade Expansion Act, which authorizes ac-
tions when the quantity or circumstances of specific imports pose
a threat to U.S. national security.* 43 Between 2001 and 2017, no
Section 232 investigations were conducted.† 44 Since 2017, however,
nine new investigations have been initiated into imports of steel,
aluminum, automobiles and automobile parts, and other metals and
components.45 In seven of these cases, the Commerce Department
determined that subject imports posed national security threats, but
because Section 232 remedies are viewed as extraordinary, only two
of these investigations led to tariff actions.46 The steel and alumi-
num Section 232 investigations resulted in import tariffs of 25 per-
cent and 10 percent, respectively.‡ 47
Section 301
To date, Section 301 of the Trade Act of 1974 has been the most
versatile and significant tool for responding to China’s non-market
policies. Section 301 of the Trade Act of 1974 provides the USTR
broad discretion to suspend trade agreement concessions or impose
import restrictions if a U.S. trading partner is found violating com-
mitments or engaging in an act, practice, or policy that is “unreason-
able or discriminatory and burdens or restricts [U.S.] commerce.” 48
Prior to 2017, Section 301 had largely fallen out of use as a trade
remedy tool, with 119 investigations having occurred from 1975 to
2000 and only five between 2000 and 2016.§ 49 The USTR initiat-
ed a broad Section 301 investigation in August 2017 into China’s
technology transfer, IP, and innovation policies. That investigation
ultimately became the basis for the United States to impose signif-
icant tariffs on two-thirds of all imports from China in four waves
of tariff actions between July 2018 and September 2019, impact-
ing $335 billion in trade ¶ with duties ranging between 7.5 percent
* Although a wide variety of actors may trigger the initiation of a Section 232 investigation—in-
cluding any “interested party,” the head of “any department or agency,” and the secretary of com-
merce—investigations have historically been rare. Brock Williams of the Congressional Research
Service notes that prior to the 2017 investigations under the Trump Administration, Section
232 action was last taken in 1986, with a total of just 26 investigations and six actual trade en-
forcement action occurring before 2017. Brock R. Williams, “Trump Administration Tariff Actions:
Frequently Asked Questions,” Congressional Research Service CRS R 45249, May 18, 2021, 5.
† The use of Section 232 gives the Commerce Department and the president broad authority
to examine imports that may threaten national security but otherwise would not be prohibited
under the terms of existing trade agreements or the WTO. The majority of the Section 232 in-
vestigations took place during the height of the Cold War in response to increased threats facing
U.S. national security. Doug Palmer, “The Cold War Origins of Trump’s Favorite Trade Weapon,”
Politico, July 5, 2018.
‡ The tariffs were not just aimed at China; initially they were imposed on most steel and alumi-
num imports into the United States. Various countries, including the EU, Japan, and the United
Kingdom, later negotiated tariff suspensions on set volumes of imports. China along with other
trading partners raised a WTO case against the Section 232 tariffs in 2018. The initial findings
of the panel concurred that the Section 232 tariffs went beyond the scope of allowed national
security measures under the WTO, and the United States has appealed the case, effectively stop-
ping further developments in the decision-making progress. Alan H. Price et al., “United States
Notifies Intent to Appeal WTO Panel Reports on Section 232 Steel and Aluminum Measures,”
Wiley, January 30, 2023; Rachel F. Fefer et al., “Section 232 Investigations: Overview and Issues
for Congress,” Congressional Research Service CRS R 45249, May 18, 2021, 8–11, 41–44.
§ Among the five Section 301 investigations, in 2010 the Obama Administration launched an
investigation into China’s policies affecting green technologies, following industry petition. Office
of the U.S. Trade Representative, United States Launches Section 301 Investigation into China’s
Policies Affecting Trade and Investment in Green Technologies, October 15, 2010.
¶ These figures are relative to 2017 levels, and the targeted products amounted to 66 percent
of all imports from China. The United States announced plans to implement tariffs on another
414
and 25 percent.* 50 Between July 2018 and May 2024, the United
States assessed $215 billion in duties under the Section 301 action,
or roughly $36 billion per year.51 For comparison, U.S. Customs and
Border Protection collected $35 billion in duties across all countries
and trade authorities in fiscal year (FY) 2017.52 According to Ja-
mieson Greer, a partner in the International Trade team at King
& Spalding, these tariffs were a key piece of a new approach and
enforcement posture toward China that aimed to “level the playing
field and potentially create an environment where negotiations for
improved terms of trade were possible.” 53
In May 2024, the United States modified the Section 301 tariffs
to respond to emerging sources of Chinese overcapacity. Following
the completion of a review of the 2018–2019 tariffs, the USTR de-
termined to continue the Section 301 duties already in place while
announcing new tariffs on products that “are targeted by China for
dominance or are sectors where the U.S. has recently made signif-
icant investments.” 54 These tariffs notably included a 100 percent
tariff on made-in-China electric vehicles (EVs), effectively doubling
the cost of importing an EV from China.† 55 The EV duties are
intended to align with ongoing U.S. efforts to boost domestic EV
production and promote EV production jobs in the United States,
which could otherwise be uncompetitive with low-cost vehicles sold
by BYD and other Chinese EV automakers that have benefited from
years of heavy subsidies.56 Additional tariffs were also placed on
imports of Chinese EV batteries, personal protective equipment, cer-
tain critical minerals, semiconductors, and ship-to-shore cranes.57
These actions placed tariffs on an additional $18 billion in imports
from China, though many have extended phase-in periods.58 As a
reflection of Section 301’s newly elevated role in U.S. trade strategy
toward China, the USTR is considering the need for further action
under the statute. In April 2024, the USTR launched a new Section
301 investigation into China’s practices in the shipbuilding, mari-
time, and logistics sectors.‡ 59
The “Phase One” Trade Deal
The Section 301 tariffs became the basis for broad negotiations
with China over a variety of trade issues. In January 2020, these ne-
gotiations culminated in a trade agreement with China, often called
the “Phase One” Economic and Trade Deal, wherein China agreed
to address key U.S. concerns in exchange for a reduction in Section
301 tariffs.§ 60 China agreed to enhance IP protections, terminate
roughly $151 billion in goods in December 2019, but it suspended this action because of ongoing
trade negotiations with Beijing. Chad P. Bown, “The U.S. China Trade War and Phase One Agree-
ment,” Peterson Institute for International Economics, February 2021, 13, 28.
* The list of Section 301 tariffs issued in September 2019 applied an initial duty of 10 percent
to $120 billion in Chinese goods. This tariff was reduced to 7.5 percent as part of the Phase One
trade agreement. Office of the U.S. Trade Representative, United States and China Reach Phase
One Trade Agreement, December 13, 2019.
† U.S. imports of EVs from China totaled $368 million in 2023, equal to 2 percent of the U.S.’s
imports of EVs from all sources. U.S. Census Bureau, USA Trade Online, September 9, 2024.
‡ A recent paper that constructs an economic model of Chinese subsidies found that China’s
shipbuilding industry received $86 billion (renminbi [RMB] 624 billion) in subsidies, and this
policy support caused Chinese shipbuilders to increase their global market share by 40 percent.
Panle Jia Barwick, Myrto Kalouptsidi, and Nahim Zahur, “Industrial Policy Implementation: Em-
pirical Evidence from China’s Shipbuilding Industry,” NBER Working Paper, December 2023, 4.
§ As part of the Phase One agreement, the United States reduced the tariff for products on
“List 4A,” referring to Section 301 actions the USTR took to expand the Section 301 action in
September 2019. The duty rate for this subset of goods was reduced from 15 percent to 7.5 per-
415
policies that force technology transfer from U.S. companies, and

increase purchases of certain U.S. products by specified amounts,
among other commitments.
While the COVID-19 pandemic created global disruptions that re-
sulted in a significant change to economic conditions, China fell far
short of fulfilling its commitment to purchase an additional $200 bil-
lion worth of U.S. products over 2017 levels before the end of 2021.
According to calculations by economist Chad Bown,* China’s pur-
chases of covered products reached only 58 percent of its purchase
commitments by the end of 2021.61 Even aside from the purchasing
commitments, however, the USTR assessed that China has failed to
meet many of its Phase One obligations. Though China’s 2020 im-
plementation of the Foreign Investment Law and 2021 amendments
to the Copyright Law, Patent Law, and Criminal Law partially met
or fulfilled some of the elements of the Phase One deal, many tech-
nology transfer-related policies continue. In its Statutory Four-Year
Review of the Section 301 measures, the USTR stated, “Instead of
pursuing fundamental reform, the Chinese government largely took
superficial measures aimed at addressing negative perceptions of
its technology transfer-related acts, policies, and practices. At the
same time, China has persisted and even become more aggressive,
particularly through cyber intrusions and cybertheft, in its attempts
to acquire and absorb foreign technology.” 62
Effects and Consequences of U.S. Trade Action on China
U.S. trade policy since 2017 has had wide-ranging impacts on the
U.S. economy and promoted specified trade objectives to varying de-
grees. In its statutory review of the China Section 301 tariff action
in 2024, the USTR assesses that the Section 301 tariffs were “ef-
fective in encouraging China to take steps toward eliminating the
investigated technology transfer-related acts, policies, and practices,
and in counteracting such policies. The Section 301 tariffs have also
been effective in reducing the exposure of U.S. persons and compa-
nies to China’s technology transfer-related acts, policies, and prac-
tices.” 63 Following the tariffs, China’s share of total U.S. imports
declined steadily, falling from 20 percent in 2017 to 13.1 percent
in the first eight months of 2024.† 64 Across sectors covered by Sec-
tion 301 tariffs, the USITC estimates that tariffs caused imports to
decline on average by 13 percent between 2018 and 2021.65 Oth-
er economies, including Mexico and Vietnam, are emerging as key
suppliers of intermediate and final goods for the U.S. economy. (For
more on the emerging signs of supply chain diversification from Chi-
na, see Chapter 1, “U.S.-China Economic and Trade Relations (Year
in Review).”)
There are differing assessments on the employment and broader
economic impact of the tariffs. The USTR notes that the U.S. tar-
cent, while other products subject to the China Section 301 action kept a 25 percent duty. Chad
P. Bown, “U.S.-China Trade War Tariffs: An Up-to-Date Chart,” Peterson Institute for International
Economics, April 6, 2024.
* In January 2024, Dr. Bown was sworn-in as the Chief Economist of the U.S. Department of
State.
† Due to a lack of data collected on cross-border e-commerce imports from China that utilize the
de minimis exception, these figures likely underrepresent China’s actual share of the U.S. import
market. For more, see Chapter 4, “Unsafe and Unregulated Chinese Consumer Goods: Challenges
in Enforcing Import Regulations and Laws.”
416
iffs and Chinese counter-tariffs “have had small negative effects on

U.S. aggregate economic welfare, positive impacts on U.S. production
in the 10 sectors most directly affected by the tariffs, and mini-
mal impacts on economy-wide prices and employment.” * 66 Though
the tariffs increased costs for some U.S. businesses and consumers,
when averaged across the entire U.S. economy, the effect was small †
and overwhelmed by inflationary pressures stemming from the
COVID-19 pandemic.67 The USITC estimated that the tariffs were
responsible for a 0.2 percent increase in the price of covered prod-
ucts produced domestically between 2018 and 2021, although prices
increased by as much as 15–25 percent in a select number of sectors,
including textiles, semiconductors, and motor vehicle parts.‡ 68 The
USITC’s modeling also found that the Section 301 tariffs caused
domestic production to expand by between 1.2 and 7.5 percent in
the ten sectors most directly affected by the tariffs.69 As Mr. Greer
highlighted in testimony before the Commission, total U.S. manu-
facturing employment grew by 500,000 workers between 2016 and
2019.70 Though this increase in employment occurred after years of
stagnant manufacturing jobs growth prior to the tariffs, there are
differing assessments on employment effect of the tariffs.71 For in-
stance, in the steel sector, the Economic Policy Institute highlights
how investments announced following the Section 232 steel action
in 2018 directly created 3,200 jobs.72 However, other estimates show
net job losses when accounting for employment in industries down-
stream from the steel sector. Economists Kadee Russ and Lydia Cox
calculate that the March 2018 tariffs on steel and aluminum led
to 75,000 fewer jobs in manufacturing by mid-2019.73 Nonetheless,
the United States added nearly 250,000 manufacturing jobs in 2018
and at the fastest growth rate since the 1980s.74 Various studies
find that the overall impact of the tariffs and China’s retaliatory
measures was mixed and may have had a small negative impact on
overall employment in 2018 and 2019, although total U.S. employ-
ment continued to grow during those years.75 If there was short-
term pain, in Mr. Greer’s assessment, it should be weighed against
the “cost of doing nothing or underestimating the threat posed by
China.” 76
Circumvention of U.S. Tariffs Likely Weakened Their
Effectiveness
The success of U.S trade policies against China was at least par-
tially undermined by Chinese exporting firms using various tac-
tics to circumvent or evade the increased tariffs. These measures
include: (1) transshipment or re-routing of products through third
countries to avoid China-specific duties, (2) fraudulently underval-
* The USTR did not conduct its own economic analysis of the tariffs and instead synthesized
the results from numerous studies in academic literature as well as the findings from the USITC
report on the impact of the Section 301 tariffs on ten sectors. U.S. Trade Representative, Four-
Year Review of Actions Taken in the Section 301 Investigation: China’s Acts, Policies, and Practices
Related to Technology Transfer, Intellectual Property, and Innovation, May 2024, 64.
† Imports from China amounted to 2.6 percent of GDP in 2018. U.S. Census Bureau, Trade
in Goods with China, September 9, 2024; U.S. Department of Commerce, Bureau of Economic
Analysis, Gross Domestic Product.
‡ The import data used in the USITC’s models do not account for shipments valued under
$800 that utilize the de minimis exception. Because low-value goods are more likely to utilize
the de minimis exception, their exclusion from USITC’s model could bias their price coefficients,
particularly in industries like textiles where cross-border e-commerce trade has grown rapidly.
417
uing or mis-invoicing imports to U.S. customs to lower the assessed

duty, and (3) increased use of duty-free entry for small e-commerce
shipments under the de minimis exception. (For more on the in-
creased usage of these channels and the resulting problems for U.S.
customs and regulatory officials, see Chapter 4, “Unsafe and Un-
regulated Chinese Consumer Goods: Challenges in Enforcing Im-
port Regulations and Laws.”) The extent of tariff avoidance through
these tactics is unclear due to limited data and enforcement capac-
ity. However, in its four-year review of the Section 301 tariffs, the
USTR acknowledged the challenge posed by customs duty evasion.77
China also took other actions to mitigate some of the impact of trade
tensions on Chinese firms (see textbox below).
China’s Efforts to Offset the Economic Impact of

Trade Actions
China designed its retaliation against U.S. trade measures to
maximize impact on the United States while minimizing harm to
Chinese exporters. China’s retaliatory tariffs covered roughly 60
percent of U.S. imports relative to 2017 levels, raising the average
tariff on U.S. goods to 21.1 percent.78 A number of studies provide
evidence that China strategically targeted U.S. products in what
it viewed to be politically sensitive areas.* 79 China’s retaliato-
ry action most notably included tariffs on nearly all U.S. agri-
culture products, but China also raised duties on a broad range
of U.S. intermediate inputs used by its manufacturing sector.80
By 2020, Chinese retaliatory tariffs covered roughly 38 percent
of U.S. manufactured goods imports, equivalent to $30 billion in
2017 terms.81 However, China refrained from placing tariffs on
aviation components and semiconductor products and equipment,
suggesting it avoided raising tariffs on key products related to
its own technological development priorities.82 Instead, China ap-
peared to target products that had alternative suppliers to the
United States, ensuring China-based firms could substitute out
U.S. inputs impacted by China’s retaliatory measures.† China
also reduced its most-favored-nation tariff across a range of prod-
ucts from all other countries shortly after the start of the trade
war, further incentivizing China-based firms to shift away from
the United States.83 China’s average tariff on goods from other
countries fell from 8 percent to 6.5 percent since 2018.‡ 84
* There is some evidence that China’s retaliatory tariffs introduced in 2018 were correlated
with Republican candidates losing vote share in the 2018 House elections relative to the results
in 2016. However, the magnitude of this impact varies across different studies based on different
econometric modeling decisions. Emily J. Blanchard, Chad P. Bown, and Davin Chor, “Did Trump’s
Trade War Impact the 2018 Election?” Journal of International Economics 148 (2024): 1–23; Da-
vid Autor et al., “Help for the Heartland? The Employment and Electoral Effects of the Trump
Tariffs in the United States,” NBER Working Papers, January 2024.
† Economists Davin Chor and Bingjing Li find that China’s imports of intermediate goods
picked up from the rest of the world in the first few months after China imposed retaliatory mea-
sures on the United States, suggesting that other economies filled in for tariffed U.S. products.
Davin Chor and Bingjing Li, “Illuminating the Effects of the U.S.-China Tariff War on China’s
Economy,” Journal of International Economics 150 (July 2024): Appendix 16.
‡ China’s most-favored nation cuts substantially overlapped with the list of U.S. products sub-
ject to Chinese retaliatory tariffs, suggesting these reductions aimed to further incentivize Chi-
nese firms to switch away from U.S. suppliers. Between January 2018 and June 2019, China
reduced the most-favored nation tariff for 4,646 product lines, nearly three-quarters of which
were covered by China’s retaliatory duties on the United States. Chad P. Bown, Euijin Jung, and
418
China’s Efforts to Offset the Economic Impact of

Trade Actions—Continued
China implemented other measures to lessen the impact of the
trade tensions on China’s economy. China’s government absorbed
some of the cost of the U.S. tariffs by reducing taxes on domestic
export manufacturers. China decreased the gross value-added tax
(VAT) rate from 17 percent in 2018 to 13 percent by the end of
2020 while also increasing the VAT rebate on exports over the
same time period.85 The share of Chinese exports that faced an
effective VAT rate of zero increased from 5 percent in 2017 to
about 50 percent by the end of 2020.86 China also made it eas-
ier for firms to access its processing trade regime, under which
manufacturers approved by Chinese authorities can import in-
puts duty free, provided they are used to produce exports.87 After
2018, the share of U.S. imports that entered China as processing
trade rose sharply, suggesting that firms made greater use of the
customs arrangement to negate the impact of tariffs; notably, the
processing trade share of imports from other countries remained
largely unchanged.88 Nevertheless, the sum of China’s responses
led to a diversion of imports away from the United States—by
2023, the United States was the source for just 6.5 percent of
China’s total imports, down from 7.3 percent before 2018.89
The existing U.S. tariff architecture is not well-suited to deter the

import of products made in other countries using Chinese compo-
nents, creating an opportunity for Chinese exporters to continue
accessing the U.S. market by moving final assembly outside of Chi-
na. The Section 301 tariffs on China are designed to duty imports
directly from China-based producers. However, under the methodol-
ogy typically used to determine duty rates, the tariffs generally do
not apply to exporters based outside of China that utilize Chinese
components, provided that the inputs are modified in such a way to
meet the customs standard for the applicable rule of origin (often
requiring a “substantial transformation”).90 This creates a situation
where the United States may continue to import Chinese value-add-
ed content embedded via third-country supply chain linkages. A
number of recent studies note that trade data suggest producers in
third countries, such as Vietnam, relied at least in part on Chinese
inputs to ramp up their exports to the United States since 2018.91
Chinese EV makers are reportedly seeking to set up production in
Mexico, which could enable them to use Mexico-based operations
as a backdoor to import low-cost vehicles into the U.S. market and
avoid the 100 percent duties on Chinese EVs under Section 301.92
By statute, Section 301 duties apply only to the trading partner in
question and do not cover products produced in third countries.*
Eva (Yiwen) Zhang, “Trump Has Gotten China to Lower Its Tariffs. Just Toward Everyone Else,”
Peterson Institute for International Economics, June 12, 2019.
* Other U.S. trade authorities enforced against China account for this dynamic. Section 201
duties are assessed on imports regardless of country of origin, while the Section 232 steel and
aluminum duties were assessed on other countries that processed unrefined products made in
China for the U.S. market. In the AD/CVD context, the U.S. Commerce Department can also
conduct scope and circumvention inquiries to determine and implement remedies if producers in
third countries rely on products subject to an AD/CVD order.
419
Though Mr. Greer acknowledges that even incremental movements

of supply chains represent an improvement over the status quo, he
notes that third-country workarounds can be addressed by “extend-
ing the effect of the measures to imports from Chinese headquar-
tered companies or adjusting the rules of origin for goods subject to
the Section 301 tariffs.” 93 Tools to accomplish this include utilizing
rules of origin requirements in U.S. free trade agreements with oth-
er trading partners.
Challenges in Aligning Tariff Measures with Strategic
Objectives
The findings of the China Section 301 investigation into China’s
technology transfer practices have been used to justify tariffs on a
range of products that extend well beyond the original scope of the
investigation, leading some to assess that the trade measures lack
strategic clarity. Mr. Greer testified before the Commission that the
China Section 301 tariffs were designed to target products relat-
ed to the Made in China 2025 strategy, a national industry policy
strategy released in 2015 to promote ten high-tech industries.94 An
analysis by Mary Lovely and Yang Liang at the Peterson Institute
of International Economics compared the products included in the
initial Section 301 tariff action—which was implemented on July 6,
2018, and covered $34 billion in Chinese imports—to a list of sectors
identified by the Commerce Department as patent-intensive.95 They
found that 80 percent of the products in the initial tariff action fell
within these industries, consistent with the technologies the USTR
identified as subject to extensive Chinese technology transfer prac-
tices in its Section 301 investigation.96 However, subsequent tariff
waves were scoped much more broadly. According to Dr. Lovely, these
Section 301 actions placed greater focus on less knowledge-intensive
and more labor-intensive sectors.97 Because of the expansive scope
of the measures, she assessed in testimony before the Commission
that “U.S. trade policy objectives have not been clearly linked to the
trade policy instruments we currently deploy.” 98 Some argue that
such a broad approach is necessary to respond to the pervasiveness
of China’s non-market practices, while others advocate for focusing
U.S. trade restrictions on a set of products with national security
implications and removing barriers to trade with China in less stra-
tegically important areas.99 Following the USTR’s 2024 Section 301
review, the U.S. government maintained and selectively reviewed
the existing broad-ranging tariff measures, and it also selectively
expanded the tariff measures to industries where surging Chinese
manufacturing capacity posed a clear threat to ongoing efforts to
bolster U.S. domestic production.100
The China Section 301 tariffs impacted foreign firms in China and
raised production costs for U.S.-based firms with Chinese supply
chains, reflecting the challenge of targeting tariffs solely at Chinese
producers that benefit from state support. In their review of the
Section 301 tariff list, Dr. Lovely and Dr. Liang found that products
targeted for tariffs were primarily sourced from foreign affiliates
operating in China, with the exception of tariffs on China’s chemical
sector (see textbox on “Chinese Supply Chains Are Reducing Depen-
dence on Foreign-Invested Enterprises (FIEs)”).101 In the aggregate,
420
total U.S. trade with China only amounted to 3.2 percent of U.S.
gross domestic product (GDP) in 2018, meaning most U.S. economic
activity had limited reliance on China.* 102 The Section 301 tariffs
did increase production costs for U.S. firms using China as an ex-
port production platform or using intermediate inputs from China.
Costs for U.S.-based producers that relied on supply chains linked to
China also rose. By 2020, 93 percent of Chinese intermediate goods
imports were subject to higher duties, compared to 69 percent of
consumer goods and 47 percent of capital equipment.103 One study
found that for U.S. exporting firms with supply chain links to China,
the tariffs on imported inputs effectively acted as a 2 percent tariff
on their exports.† 104 The USTR engaged in an exclusion review pro-
cess to mitigate these effects. In addition, an increased number of
U.S.-based exporters applied to operate within a U.S. foreign trade
zone (FTZ), which provides lower tariffs for imported inputs incorpo-
rated into exported products. The share of U.S. merchandise imports
from China entering under special duty provisions for warehousing
or an FTZ increased from 11 percent in 2017 to 17 percent in 2023,
with a total of $75 billion in inputs entering these zones.‡ 105
Chinese Supply Chains Are Reducing Dependence on

Foreign-Invested Enterprises (FIEs)
Foreign (non-Chinese) firms in China have historically been an
important source of China’s exports. Recently, however, domestic
Chinese firms have overtaken them as China’s leading exporters.
In 2014, foreign-invested enterprises (FIEs)—which include sub-
sidiaries of multinational enterprises, Sino-foreign joint ventures,
and Hong Kong and Macau-funded enterprises—accounted for 46
percent of China’s total exports.106 In 2014, 60 percent of China’s
U.S.-bound exports originated from FIEs, reflecting the higher re-
liance on China as a hub for offshore production within U.S. sup-
ply chains.107 Though more recent data on China’s exports to the
United States by FIEs are unavailable,§ FIEs’ share of China’s
* Though China is the largest supplier of imported inputs for manufacturing, most of the goods
used in U.S. manufacturing are sourced domestically. One study estimates that the average U.S.
manufacturing sector sources 88 percent of manufactured inputs by value added from within
the United States. Richard Baldwin, Rebecca Freeman, and Angelos Theodorakopoulos, “Hidden
Exposure: Measuring U.S. Supply Chain Reliance,” Brookings, September 27, 2023, 16.
† In some cases, U.S. manufacturers face a tariff inversion, where tariffs on inputs used in man-
ufacturing exceed the value of the finished good, disadvantaging domestic production compared to
imports. For example, the CEO of the U.S.-based television producer Element asserts that it faces
an inverted tariff due to U.S. duties on LCD panels from China, and it is challenged to compete
on price with televisions assembled in Mexico or other countries and imported into the United
States. David Baer, written testimony for U.S. Senate Finance Committee, Hearing on U.S.-China
Relations: Improving U.S. Competitiveness Through Trade, April 22, 2021, 10.
‡ In contrast, the share of U.S. imports from all other countries that entered a warehouse or
FTZ fell from 10 percent in 2017 to 7 percent in 2023. U.S. Census Bureau, USA Trade Online,
September 9, 2024.
§ China only publishes data on total exports by FIEs and does not release data that show ex-
ports by destination. The 2014 estimate on exports by FIEs to the United States was calculated
using microdata from China’s customs agency. Commission staff were unable to locate updated
calculations based on these data. U.S. trade data on imports from related parties, where the
importer has some form of a corporate relationship with the China-based exporter, suggest the
role of FIEs in China’s U.S.-bound exports followed the trend in its overall exports, though the
related party data only captures a portion of all FIE transactions given its focus on U.S.-based
multinational enterprises and exporters and importers frequently leaving this data field empty
on customs forms. U.S. imports from related parties in China fell from 29 percent in 2014 to 20
percent in 2023. U.S. Census Bureau, Imports and Exports by Related Parties, July 3, 2024; Mary
Lovely and Yang Liang, “Trump Tariffs Primarily Hit Multinational Supply Chains, Harm U.S.
Technology Competitiveness,” Peterson Institute for International Economics, May 2018, 2.
421
Chinese Supply Chains Are Reducing Dependence on

Foreign-Invested Enterprises (FIEs)—Continued
total exports have fallen over the past decade. Between 2014 and
2023, FIEs’ share of China’s overall exports fell from 46 percent
to 28 percent.108 This decline was likely even sharper within ad-
vanced technology products; FIEs’ share of exports of “high-tech
new products”—a category defined by China’s National Bureau
of Statistics—dropped from 84 percent in 2011 to 59 percent in
2020.* 109 Though foreign multinationals and global supply chains
continue to play a significant role in China’s exporting sector,
particularly for advanced technology products, domestic Chinese
firms are driving a growing share of China’s export activity.
Export Controls
China asserts itself as a significant military power, and export
controls have emerged as the United States’ policy tool of choice for
denying China access to critical dual-use technologies and hindering
China’s capacity to develop such technologies on its own. Adding
to the complexity of crafting export control policy toward China is
the country’s military-civil fusion policy, which blurs the distinction
between Chinese commercial enterprise and China’s military. With
mounting concerns over China’s military modernization, growing ag-
gressiveness in the South China Sea, and posture toward Taiwan,
the question of how to restrict sensitive technologies that could give
China a military edge has taken on added urgency in recent years.†
China has capitalized on years of broad and mostly unfettered
access to U.S. and allied foundational technologies by making sig-
nificant leaps in its domestic capabilities. As U.S. policymakers have
shifted their assessment of the threat from China and recognized
the growing importance of certain types of technologies like ad-
vanced semiconductors, export controls have taken on new signifi-
cance for their potential ability to help the United States maintain
its technological and military edge. The evolution in export control
policies faces added challenges of carefully identifying controlled
technologies, a fast-moving technological landscape, and fragmented
supply chains. New export controls must contend with questions on
scope, enforcement, and structure to optimize their effect.
At the same time, in the Export Control Reform Act, Congress re-
quired export controls to be evaluated on an ongoing basis to ensure
they do not inadvertently harm U.S. technological leadership, which
“requires that United States persons are competitive in global mar-
kets.” 110 Congress has further stated as export control policy that
“[e]xport controls applied unilaterally to items widely available from
foreign sources generally are less effective in preventing end-users
* Chinese statistics distinguish the high-tech exports from firms invested by Hong Kong, Ma-
cau, and Taiwan entities from those of all other foreign-invested firms. The latter groups’ share
of China’s high-tech exports fell from 70.5 percent in 2011 to 25 percent in 2020. Scott Kennedy,
“The Private Sector Drives Growth in China’s High-Tech Exports,” Center for Strategic and In-
ternational Studies, April 28, 2022.
† This discussion omits the essential issue of export controls for human rights reasons, as in the
case of foreign governments using technology to surveil activity, restrict movement, and otherwise
control or limit the rights of their citizens.
422
from acquiring those items. Application of unilateral export controls

should be limited for purposes of protecting specific United States
national security and foreign policy interests.” 111 To underscore the
importance of this statement of policy, Congress requires the secre-
tary of commerce to report annually on the impact of export controls
on U.S. scientific and technological leadership.112
Changing Design of Export Controls
The United States’ approach to export controls has evolved as the
country’s traditional commitments to the principles of open trade
have collided with the realities of adversarial nations seeking to
use U.S. technology to further their military aims. The Export Con-
trol Reform Act (ECRA) of 2018, motivated by increasing concerns
regarding the dual-use technology trade between the United States
and China, forms the foundation of the current U.S. export control
regime toward China.113 ECRA gives expansive authority to the
president to control the export, reexport, and transfer of items by
U.S. or foreign nationals and corporations. It also provides “U.S. per-
sons” authority to limit the ability of U.S. individuals and companies
to provide support for certain foreign military-focused activities.114
Unlike prior export control statutes, ECRA explicitly regards eco-
nomic security as a component of national security and has no ex-
piration date.* 115
U.S. Export Control Infrastructure

The Export Administration Regulations (EAR) implement
U.S. export control policy for goods and destinations, the license
applications process used by exporters, and the Commerce
Control List.† 116 Much of the EAR’s infrastructure predates
ECRA, though ECRA expanded and implemented notable re-
forms within the EAR.‡ 117 ECRA created the statutory author-
ity for the Entity List, a list of foreign persons and end uses
that are determined to be a threat to U.S. national security.
Exports to persons on the Entity List broadly require licensing
for all items subject to the EAR. Most persons on the list face
a presumption of denial for licenses.118 In recent years, the
Entity List has been increasingly used to target key Chinese
firms with direct ties to the People’s Liberation Army, such as
semiconductor manufacturer SMIC.§ 119
* The act also mandates a review of export license requirements. The review strengthens the
licensing process for countries subject to a comprehensive U.S. arms embargo, like China, and
mandates as part of the licensing process an assessment of the impact of granting a license on
the U.S. defense industrial base.
† The Commerce Control List is a list of dual-use technologies subject to controls under the
EAR. The Bureau of Industry and Security (BIS) within the Department of Commerce adminis-
ters the EAR. Paul K. Kerr and Christopher A. Casey, “The U.S. Export Control System and the
Export Control Reform Act of 2018,” Congressional Research Service CRS R 46814, June 7, 2021.
‡ Separate regulations control nuclear materials and technology and defense articles and ser-
vices. U.S. law has expanded to prohibit arms sales to China since 1989. The United States also
maintains a policy of denial for exports of satellite and space equipment to China. Karen M. Sut-
ter and Christopher A. Casey, “U.S. Export Controls and China,” Congressional Research Service
CRS IF 11627, March 24, 2022.
§ While the Entity List is the primary list containing parties of concern, BIS also maintains
a Denied Persons List, which contains entities that are fully denied export privileges, and an
Unverified List, which contains entities that cannot receive license exceptions and require addi-
tional scrutiny. U.S. Department of Commerce Bureau of Industry and Security, Denied Persons
List, 2024; U.S. Department of Commerce Bureau of Industry and Security, Unverified List, 2024.
423
U.S. Export Control Infrastructure—Continued

The EAR also regulates the transfer of controlled technologies
to a foreign person within the United States, often called “deemed
exports,” by requiring a license. Such licenses are typically used
by universities, advanced technology research and development
institutions, biochemical firms, and the medical and advanced
computing sectors, which often rely on highly trained foreign
persons to support their research and development (R&D) activi-
ties.120 Some concerns have been raised that China is seeking to
take advantage of the United States’ open research environments
to circumvent export controls, heightening the importance of the
deemed export rules.121
A powerful but—until recently—rarely used tool is the Foreign
Direct Product Rule (FDPR), which regulates the reexport and
transfer of any foreign-made items if their production directly in-
volves certain technology, software, or equipment that originates
from the United States, even if the item was produced outside
of the United States by a foreign entity.122 The Commerce De-
partment has recently utilized the FDPR in conjunction with the
Entity List to limit the ability of targeted entities to sidestep
U.S. controls by sourcing restricted products from companies out-
side the United States. For example, the department used the
rule against China in 2020 to help improve and expand the ef-
fectiveness of controls targeting Huawei.* Specifically, Commerce
used the FDPR to expand controls that restricted direct exports
of U.S. semiconductors by also controlling exports to Huawei of
products made with U.S. technology (even products made whol-
ly outside the United States by foreign firms) that support the
manufacture of semiconductors.123 (For more on Huawei, see “Ef-
fects of Export Controls” later in this chapter.) In mid-2024, the
Department of Commerce announced an expansion of the FDPR
rules, albeit with exclusions for key semiconductor manufactur-
ing equipment-producing countries like Japan, the Netherlands,
and South Korea, by (1) prohibiting exports to more Chinese end
users and (2) lowering the percentage of U.S. content required to
trigger the rule.† 124
ECRA tasked the Administration with creating an interagen-
cy process to define and place controls on emerging and foun-
dational technologies.‡ However, the Commission’s 2023 Annual
* Before the FDPR was updated, Huawei was able to maintain access to the supply of advanced
foreign chips because it could still purchase chips produced by non-U.S. firms made using U.S.
technology (e.g., semiconductor manufacturing equipment). Given the widespread prevalence of
U.S. technology at some level in most steps of the semiconductor design and manufacturing pro-
cess, the expanded FDPR rule significantly expanded the practical scope of the controls. Gregory
C. Allen, “In Chip Race, China Gives Huawei the Steering Wheel: Huawei’s New Smartphone and
the Future of Semiconductor Export Controls,” Center for Strategic and International Studies,
October 6, 2023.
† In September 2024, the U.S. Department of Commerce expanded export controls on semicon-
ductors, quantum computing items, and other technologies. U.S. Department of Commerce Bureau
of Industry and Security, “Commerce Control List Additions and Revisions; Implementation of
Controls on Advanced Technologies Consistent with Controls Implemented by International Part-
ners,” Federal Register 89:72926 (September 6, 2024).
‡ This is generally understood to cover the White House’s Critical and Emerging Technologies
List: advanced computing, advanced engineering materials, advanced gas turbine engine tech-
nologies, advanced manufacturing, advanced and networked sensing and signature management,
advanced nuclear energy technologies, AI, autonomous systems and robotics, biotechnologies,
424
U.S. Export Control Infrastructure—Continued

Report identified that “despite increasing the number of specif-
ically named Chinese entities barred from receiving technology,
the Department of Commerce’s Bureau of Industry and Security
(BIS) has made limited progress in expanding the scope of tech-
nologies controlled. In 2018, ECRA tasked the agency with iden-
tifying ‘emerging and foundational’ technologies and imposing
controls where necessary, but BIS has not identified any founda-
tional technologies.” 125 In a May 2022 statement, BIS announced
it would no longer attempt to distinguish between emerging and
foundational technologies.126 Instead, BIS would refer to such
technologies as Section 1758 technologies since there were defi-
nitional challenges to distinguishing between the two and there
were few practical implications of the distinction, noting that “the
categorization of the technologies has sometimes delayed the im-
position of controls.” 127 In his written testimony to the Commis-
sion, partner at the law firm Akin and a former Assistant Secre-
tary of Commerce for Export Administration in BIS Kevin Wolf
stated that “BIS has published the first unilateral controls on
[emerging and foundational technologies] with its October 2022
[semiconductor-related] rule described above, which clearly meets
the spirit and purpose of Section 1758, although not the letter of
the section.” 128
Controls on advanced semiconductors reflect a realization that

because certain technologies are so foundational to advanced mili-
tary capabilities, they need to be controlled more broadly than pre-
viously envisioned for dual-use technologies. In testimony before
the Commission, nonresident fellow at the Carnegie Endowment
for International Peace Peter Harrell commended the October 2022
semiconductor controls. He argued that they leveraged chokepoints
effectively, delineated clear objectives, and were devised to reduce
diversions and workarounds, reflecting lessons learned from previ-
ous controls targeting specific Chinese firms.129 BIS export controls
on semiconductors expanded in 2022 from an approach that covered
a small number of companies in China to broader country-based
controls on both semiconductors and semiconductor manufacturing
equipment. BIS expanded semiconductor controls again in October
2023 to cover additional types of semiconductors and semiconductor
manufacturing equipment. Mr. Harrell sees the flexibility and iter-
ative approach shown by BIS as strengths that allow the United
States to “address gaps and workarounds as they are identified” and
“reduce the odds of unintended consequences.” 130 A similar iterative
process could be used to expand controls as future emerging tech-
nologies take on stronger national security implications, including
quantum information science, AI (to the extent not covered by ex-
isting controls on advanced semiconductors needed for AI systems),
communication and networking technologies, directed energy, financial technologies, human-ma-
chine interfaces, hypersonics, networked sensors and sensing, quantum information technologies,
renewable energy generation and storage, semiconductors and microelectronics, and space tech-
nologies and systems. John P. Barker et al., “White House Releases Updated Critical and Emerg-
ing Technologies List,” Arnold & Porter, February 28, 2024.
425
robotics, and biotechnology. (For more on U.S.-China technology com-

petition in these sectors, see Chapter 3, “U.S.-China Competition in
Emerging Technologies.”)
While recent attention has focused on advanced technology prod-
ucts, particularly the most advanced semiconductors and semicon-
ductor manufacturing equipment, some experts have recommended
that the United States review more traditional dual-use technolo-
gies to identify whether other sensitive chokepoints exist that could
hinder China’s ability to develop or advance its own dual-use in-
dustries—for example, civilian aerospace. China’s leadership has
repeatedly expressed anxiety about its reliance on certain high-end
electronic components and specialized steel alloys that are manufac-
tured by a small number of U.S. or allied companies; these inputs
currently have no viable high-end Chinese competitors and will like-
ly take years or more to duplicate.131
Plurilateral vs. Unilateral Export Controls
Due to the interconnected nature of the global trade ecosystem
and the lack of tangible methods to track or control the final des-
tinations of physical goods, the effectiveness and sustainability of
export controls relies on the cooperation of allies and partners. The
United States has traditionally preferred to take a multilateral ap-
proach to export controls for three reasons.132 First, this approach
ensures maximum effectiveness of controls since the controls block
trade from a broader range of potential sources of the technology for
the targeted country or entity.133 Second, a multilateral approach
improves enforcement; absent geolocation solutions that could re-
motely shut off technology if it travels outside of a proscribed area,
preventing reexport of restricted goods relies on allied cooperation,
tracking, and enforcement systems.134 Third, broad adherence to a
uniform set of controls ensures that firms in other countries do not
merely “backfill” U.S. exports, which would both limit the effective-
ness of the controls and potentially harm U.S. interests by redirect-
ing revenue needed to sustain R&D away from U.S. firms to their
international competitors.135 In the long run, unilateral controls can
create a structural regulatory and economic incentive for U.S. com-
panies and their foreign competitors to develop technologies outside
the United States with non-U.S. technology and content. This would
undercut the U.S. export control goal of maintaining the country’s
technological leadership.
Experience, however, indicates that U.S. leadership on export con-
trols via unilateral implementation can convince allied countries to
follow. Allied countries contend with their own domestic interests
that are concerned about losing access to profitable markets. When
the United States implements export controls ahead of allied coun-
tries, this can help allied governments overcome domestic political
constraints.136 Plurilateral controls also face constraints based on
the varying legal powers of foreign governments and the resources
available to devote to enforcement and ongoing international coop-
eration.137
The October 2022 controls on advanced semiconductor and semi-
conductor manufacturing equipment exports to China provide an
example.138 While U.S. companies design some of the most sophis-
426
ticated semiconductors and are among the leaders in semiconduc-

tor manufacturing equipment, companies in Europe and East Asia
also play critical roles in the production of the chips themselves and
certain high-end chip-making equipment.139 Initially, the October
2022 rules were imposed unilaterally by the United States, though
they did expand restrictions and licensing requirements on some
foreign-produced items.140 Aware of the need to multilateralize the
rules for effectiveness, the United States designed the rules in con-
sultation with key allies and worked to bring them along. Japan
and the Netherlands, home to a number of companies key to ad-
vanced semiconductor production, have since imposed similar con-
trols based on the U.S. rollout.141 By moving first, the United States
was able to quickly target China’s ability to purchase key semicon-
ductor manufacturing equipment supplied by the United States,
which could have enabled more advanced domestic semiconductor
manufacturing capability.142 With the United States having demon-
strated commitment to sacrificing some short-term economic gain
for longer-term security, the Netherlands and Japan also agreed to
limit their own exports of advanced equipment to China and to ab-
stain from developing products that would have otherwise filled the
gap left by U.S. firms.143 In April 2024, Japan expanded its export
controls to include additional types of semiconductor manufacturing
equipment, following the United States’ lead in its October 2023
expansion of its semiconductor controls.144
Still, most other countries have not imposed export controls to the
same extent as the United States. Many countries currently lack a
legal regime that allows them to target controls to specific entities of
concern versus broader country-targeted controls, which have been
the traditional approach of multilateral regimes. Other countries
have also been hesitant to adopt analogues to the “U.S. persons”
controls, which limit the ability of U.S. individuals and companies
to support Chinese semiconductor development and ongoing servic-
ing of certain equipment. While Japan’s enhanced export controls
on semiconductor equipment apply to all exports, not just China’s,
and Japan does implement catch-all end user restrictions related to
the exports of certain technologies, it does not prohibit non-resident
Japanese persons from servicing existing semiconductor machinery.
The United States has pressed both Japan and the Netherlands
to implement restrictions on ongoing maintenance and servicing
of chip-making equipment already in China, without which their
ongoing ability to produce cutting-edge chips would deteriorate.145
This concern is significant given the capabilities and large amount
of semiconductor manufacturing equipment China procured both be-
fore the controls were announced and between the announcement
and when it went into effect.146
Traditional multilateral frameworks for export controls, set up
to control conventional and nuclear weapons, have not adapted
well to modern challenges of dual-use technologies and changes in
geopolitical realities.* The four existing multilateral export con-
trol regimes are informal arrangements whereby member coun-
tries can coordinate policies and exchange information and best
* See Appendix I, “Current Multilateral Export Control Regimes” for a list of the current export
control regimes.
427
practices for various types of weapons-related products and tech-

nologies.147 Each regime is consensus-based and does not have
legally binding rules. Some regimes have only limited self-report-
ing on adherence. Additionally, a drawback of consensus-based
regimes is that a single state can veto important decisions like
admitting new members or updating the control lists. Since 2021,
Russia has effectively neutralized new decisions under the Was-
senaar Arrangement, which serves to control dual-use items in
addition to conventional arms.148
Bilateral and mini-lateral coordination could provide one solution,
particularly for technologies with only a few commercial producers.
Negotiations and controls could move faster, be nimbler, and poten-
tially involve higher levels of coordination by having fewer coun-
tries involved.149 As the United States has conferred with nations
in smaller settings, a new consensus has emerged on the need to
control items such as semiconductors. The informal cooperation be-
tween the United States, Japan, and the Netherlands with respect
to semiconductor and semiconductor manufacturing equipment
controls provides an example of the benefits of and possibilities for
mini-lateral approaches. In a statement after a trilateral meeting
with representatives from Japan and South Korea, the Department
of Commerce affirmed the national security significance of semicon-
ductors and referenced the role of the trilateral U.S.-Japan-Repub-
lic of Korea Disruptive Technology Protection Network, launched
in April 2024, in combating illicit technology transfer.150 Another
example is the Trilateral Security Partnership between the United
States, the United Kingdom, and Australia (AUKUS). In June 2023,
the United States announced formal collaboration with its AUKUS
partners—the UK and Australia—on export control enforcement,
which would involve knowledge sharing and other cooperation.151
This effort has helped spur AUKUS countries to align their relevant
lists of controlled equipment and technology and permit exceptions
where needed to ensure that trade in these goods between the three
countries faces fewer restrictions.152 Even with a small number of
countries, challenges can emerge when export control policy is not
aligned or allied governments lack the legal authority to impose the
types of controls used by the United States. Progress in AUKUS
has reportedly been slowed by the gap between the United States’
controls and those of the UK and Australia.153
Export Control Outcomes at the U.S.-EU Trade and

Technology Council
The U.S.-EU Trade and Technology Council (TTC) has helped
advance transatlantic communication on export controls in some
aspects, such as evasion and diversion efforts in exports to Rus-
sia and Iran, but significant challenges remain in coordinating
controls on sensitive technology flows to China. In June 2021,
the United States and the EU established the TTC in an effort
to deepen ties and coordination on approaches to trade, technolo-
gy, and security.154 The TTC hosts ten working groups, including
groups on export control cooperation and investment screening
428
Export Control Outcomes at the U.S.-EU Trade and

Technology Council—Continued
cooperation.* Although China is not explicitly mentioned in the
TTC’s outlined mission, addressing China’s increasing influence
is a point of focus for the TTC. Toward that end, the TTC has
produced tangible policy developments, including plans to oper-
ationalize a joint early warning mechanism for disruptions in
semiconductor supply chains and the development of a joint AI
Roadmap.155 The United States and EU have also set up a plat-
form to share information, including about export control licens-
es.156
In addition to EU-level efforts on a broad set of issues, indi-
vidual European countries have also partnered with the Unit-
ed States to confront China’s growing challenge. For example,
in March 2023, the Netherlands joined the United States in re-
stricting exports of semiconductor manufacturing technology to
China.157
However, despite a broad commitment to “promote convergent
control approaches on sensitive dual-use technologies,” the TTC
has not resulted in concrete goals or timelines for fundamentally
reforming the multilateral export control system or creating a
unified approach to export controls on China. In fact, it remains
unclear if the TTC can be leveraged in this way.158 Particularly,
there is no EU level uniform export control policy, and EU mem-
ber states retain autonomy over matters of national security and
investment.159
Bringing Allies and Partners on Board

As Mr. Wolf testified, broad plurilateral controls will only be
agreed to if allies believe the controls are in their national securi-
ty interests, which requires outreach and engagement on the part
of the United States. In testimony before the Commission in May
2024, regional experts on industry and trade policies argued that
many allies and partners in the Asia Pacific, Latin America and the
Caribbean, and Europe still do not understand or agree with the na-
tional security justification for U.S. controls.160 To the extent allies
believe export controls are about giving the United States an eco-
nomic advantage rather than addressing national security concerns,
they are less likely to implement parallel domestic export controls.
In written testimony for the Commission, Mr. Wolf articulated his
view that “if ever the justification for a new control is solely to help
U.S. industry succeed economically, it will always eventually result
in precisely the opposite outcome because no ally is going to agree
to a plurilateral control just to help U.S. industry.” 161 Furthermore,
based on dialogues with foreign governments, think tanks, indus-
try, and media, Mr. Wolf believes many countries outside the United
* Working groups include: tech standards, climate and green tech, secure supply chains, infor-
mation and communications technology and services (ICTS) security and competitiveness, data
governance and tech platform regulation, misuse of technology threatening security and human
rights, export controls, investment screening, promoting small and medium-sized enterprises ac-
cess to and use of digital technologies, and global trade challenges. Office of the U.S. Trade Rep-
resentative, U.S.-E.U. Trade and Technology Council (TTC).
429
States take the view that only items with a “direct and immediately
identifiable relationship to the development, production, or use of a
weapon” should be subject to export controls.162
Outreach to help countries better understand burgeoning national
security threats has proven effective. The United States used exten-
sive outreach efforts to expose the security threat of Chinese compo-
nents in global telecommunications networks. Former U.S. Undersec-
retary of State for Economic Growth, Energy, and the Environment
Keith Krach led a team working with allied countries’ governments
and telecom corporations to reduce the presence of equipment man-
ufactured by Chinese firm Huawei in telecom infrastructure.163 In
addition to helping other nations understand the national security
justifications for new controls on Huawei equipment, U.S. efforts at
coordination with allies and like-minded countries also helped over-
come fears of Chinese retaliation; by being a part of a wider group,
each country had a buffer against Chinese pressure.164
Effects of Export Controls
U.S. and allied export controls have slowed China’s technologi-
cal advancement and made it more difficult for Russia to procure
components for weapons systems. Maintaining and improving the
effectiveness of export controls has required cooperation with allies,
continuous adjustments and additions to the export control regime,
and coordination with other economic tools like sanctions. However,
experts continue to raise concerns over how long these initial suc-
cesses will last as China focuses its efforts on becoming a self-suffi-
cient manufacturer of legacy and high-end chips.
Enforcement in the United States and other countries has encoun-
tered a number of difficulties. Chinese firms stockpiled equipment
from key Dutch and Japanese firms in the period between when
export controls were announced and when they went into effect.165
Even after the effective date of the controls, China continues to be a
major buyer of lower-end semiconductor manufacturing equipment
not subject to current controls. ASML’s equipment sales to China
surged in 2024.166 Industry experts have claimed that South Ko-
rean * and Japanese † firms also continue to sell machines, compo-
nents, spare parts, and materials to Chinese firms that U.S. firms
would not be able to sell due to U.S. restrictions.167 Chinese firms
have also demonstrated the ability to use new or renamed shell
companies to avoid enforcement.168
China has intensified efforts to design out foreign components in
its chip-making processes. To build out domestic supply chains, the
Chinese government provides financial support to subsidize Chinese
chip companies using domestic technology and materials as much as
possible in their production processes.169 Huawei itself plays a key
role in nurturing China’s semiconductor ecosystem.170 Since being
* South Korea is one of China’s largest trading partners for memory chips, silicon wafers, and
chip-making materials and parts. In September 2024, South Korea’s Trade Minister indicated
they would seek additional incentives from the United States in exchange for further tightening
advanced semiconductor export controls. Sam Kim, “Embracing China Chip Curbs,” Bloomberg,
September 2, 2024; MacKenzie Hawkins and Sam Kim, “US Asks South Korea to Toughen Export
Curbs on China Chips,” Bloomberg, April 3, 2024.
† China comprises a large and growing share of revenue for major Japanese semiconductor
manufacturing equipment companies. Anniek Bao, “Japanese Chip Equipment Firms Count on
China Sales Amid U.S. Moves to Block High-End Exports to Beijing,” CNN, September 6, 2024.
430
added to the Entity List and targeted with the FDPR, Huawei has
doubled down on developing access to domestic alternatives for ad-
vanced chips. Huawei has benefitted from direct subsidies and pref-
erential contracts with the Chinese government.171 These subsidies,
along with Huawei’s still flourishing telecommunications business,
gave it the financial resources to weather the initial drop in reve-
nue from lost smartphone sales and continue investing in R&D.172
In 2022, Huawei filed patents for proprietary ultraviolet technology,
indicating that it was trying to reduce reliance on imported ASML
equipment.173 At the same time, China has focused on increasing
production capacity for legacy chips, which provide much of the com-
puting power needed to modernize China’s military and are critical
for a wide range of supply chains.174
Examination of Chinese domestic chip manufacturers and smart-
phone makers indicates that China’s efforts to reduce its reliance
on imported semiconductors and chip manufacturing equipment
have been slowed by export controls. Although Huawei’s smartphone
business showed signs of recovery four years after the Department
of Commerce tightened export controls, it is clear that China’s
technology still lags behind the leading global chip producers.175
In 2023, Huawei released a new smartphone powered by high-end
Chinese-made chips,* but these chips trailed the world’s most ad-
vanced chips in size, energy efficiency, and cost.176 Huawei’s smart-
phones demonstrated increased self-sufficiency in the percentage of
Chinese components in new models released in 2024, but the pace
of advancement in semiconductor technology appeared to slow.177
Huawei reportedly will soon release a new AI chip to replace U.S.
chips blocked from export to China by export controls.178 Equipment
stockpiles helped but likely did not solve constraints in fabrication
capacity, and China remains dependent on foreign lithography
equipment.179
Coordination between the United States and Europe has played a
key role in the effectiveness of export controls on Russia.180 Export
controls and sanctions have been used in concert to increase their
effectiveness in safeguarding national security, particularly when
export controls alone are not enough to deter aggressive action by
an adversary. In late 2021 and early 2022, the G7 sought to use the
threat of sanctions and export controls to deter Russia from attack-
ing Ukraine.181 While this effort was ultimately unsuccessful, the
imposition of export controls after Putin’s invasion of Ukraine, cou-
pled with sanctions that limited the country’s access to financial re-
sources, have degraded Russia’s military industrial base by forcing
it to pivot away from Western technology.182 After the G7 imposed
export controls on Russia, Russia shifted to China and other coun-
tries, such as Turkey and Iran, to procure replacement goods.183
However, Chinese firms are playing a role in helping Russia evade
export controls and procure controlled inputs for weapons systems
used against Ukraine. A battlefield report on export controls found
that of 2,800 different non-Russian components that experts recov-
ered from Russian weapons in Ukraine, almost all of the compo-
* The chips were manufactured by China’s leading semiconductor equipment manufacturer,
Semiconductor Manufacturing International Corporation (SMIC). Gregory C. Allen, “In Chip
Race, China Gives Huawei the Steering Wheel: Huawei’s New Smartphone and the Future of
Semiconductor Export Controls,” Center for Strategic and International Studies, October 6, 2023.
431
nents—95 percent—originated from Western firms.184 To address

the flow of dual-use goods from these countries to Russia, in De-
cember 2023 the Administration issued an EO authorizing sanc-
tions against third country banks that facilitate the sale of dual-use
goods to Russia.185 At the same time, continued transshipment from
China and Hong Kong in particular has eroded these export con-
trols and allowed controlled materials to end up on the battlefield.
(For more on China’s support for Russia’s war effort, see Chapter
2, “U.S.-China Security and Foreign Affairs (Year in Review).” For
more on Hong Kong’s role in export control evasion, see Chapter 10,
“Hong Kong.”) Russia has also been attempting to grow its domestic
production capacity for military and dual-use goods, often with Chi-
nese technical support.186
Investment Screening
Like trade, investment flows between the United States and Chi-
na have become inextricably linked with national security concerns.
Cross-border investment can be broken into two categories: direct
investment and portfolio investment. Portfolio investment covers
transactions involving equity or debt securities of an enterprise but
typically does not translate into direct management oversight or in-
put into the business beyond shareholder voting rights. In contrast,
direct investment typically involves transactions that provide own-
ership of 10 percent or more, establishing a lasting interest in and
a significant degree of influence over an enterprise.
Chinese investment into the United States has the potential to
be a conduit for technology transfer and can provide China with
leverage over key sectors of the U.S. economy.187 Yet from the other
direction, U.S. investment into China can provide needed funding
and transfer intangible benefits—such as managerial expertise and
broader awareness and sophistication about technology markets and
business models—to advanced technology companies, which in turn
have the potential to enhance Chinese military capabilities.188 To
ensure that cross-border investments do not imperil national secu-
rity, the United States has expanded its inbound investment screen-
ing regime to further scrutinize Chinese direct investment into the
United States. It is now also pursuing the creation of an outbound
investment screening regime that may look at both direct and port-
folio investment.
Inbound Investment Screening
Chinese inbound direct investment in the United States has de-
clined substantially since 2017.* U.S. Bureau of Economic Analysis
(BEA) data show that new Chinese foreign direct investment (FDI)
peaked in 2016 at $27.4 billion before plummeting 97.7 percent to
$621 million in 2023.† 189 As of 2023, Chinese entities held $62.4
* Unless otherwise noted, assume any data on investment stock or flows involving China in-
clude investment originating from or directed to Hong Kong and Macau.
† This trend matches alternative data sources such as those compiled by Rhodium Group, an
independent research provider, though they capture a higher overall value for investment and
find that annual investment has dropped from $46 billion in 2016 to less than $5 billion in 2022.
The discrepancy in values between the BEA and Rhodium Group data is partially the result of of-
ficial data being distorted by companies’ usage of holding companies, offshore vehicles, and other
complex ownership structures to take advantage of favorable tax policies. Complicated deal struc-
tures with “indirect” holdings also make it difficult for statistical agencies to correctly separate
432
billion of FDI stock in the United States.190 Policy changes in both

the United States and China contributed to the fall. Starting in
2016 and continuing through 2017, China directed its domestic in-
vestors to reduce certain foreign holdings and tightened the coun-
try’s capital controls.191 In 2018, the United States passed the For-
eign Investment Risk Review Modernization Act (FIRRMA), which
expanded the jurisdiction of the Committee on Foreign Investment
in the United States (CFIUS) to block sensitive investments, most
notably from China.192
CFIUS is an interagency committee chaired by the U.S. secretary
of the treasury that reviews certain FDI transactions in the U.S.
economy to ensure they do not impair U.S. national security.* FIR-
RMA strengthened and modernized CFIUS’s capacity to take a more
assertive role in scrutinizing U.S. inbound investment by broaden-
ing the scope of transactions CFIUS can or must review, shifting
the filing requirement from voluntary to mandatory in certain more
sensitive transactions, expanding the range of national security is-
sues to be considered, and providing more staff and funding to the
organization.193 While the new scrutiny enabled by FIRRMA likely
contributed to a drop in Chinese direct investment into the United
States, it has not changed the United States’ role as the largest
global recipient of FDI.194 From 2013 to 2017, prior to FIRRMA’s
passage, the United States accounted for 17.4 percent of global FDI
inflows.195 From 2018 to 2023, the United States’ share rose to 19.1
percent of global inflows.196
FIRRMA helped trigger a global expansion of inbound investment
review regimes, restricting Chinese access to key technologies across
a range of different economies. The act directed the U.S. Department
of the Treasury to “facilitate the harmonization of action” on inbound
investments by conferring favored status within CFIUS on countries
with their own reliable screening mechanisms.197 In part because
of this, at least 37 countries now have regulatory frameworks for
screening investments on national security grounds, including most
EU members, the UK, and Japan.198
Outbound Investment Screening
While negotiating FIRRMA, policymakers debated the merits of
restricting or screening U.S. outbound investments to China.199 Pro-
ponents hoped to address many of the same concerns that drive
existing restrictions, such as export controls—namely to prevent
U.S. resources from helping an adversary country advance tech-
nologically. Critics feared new restrictions would undermine the
United States’ position as the preeminent global capital market.200
Ultimately, a proposed outbound investment program was excluded
from FIRRMA.201 Since FIRRMA’s enactment, policymakers have
FDI from portfolio investment stakes in the surveys they use to collect their data. Alternative
data providers like Rhodium Group attempt to rectify this by taking a transactional approach
that tracks and captures individual transactions. Thilo Hanemann, Armand Meyer, and Danielle
Goh, “Vanishing Act: The Shrinking Footprint of Chinese Companies in the US,” Rhodium Group,
September 7, 2023; Thilo Hanemann et al., “Two-Way Street: 2021 Update US-China Investment
Trends,” US-China Investment Project, May 2021, 36.
* CFIUS jurisdiction includes mergers, acquisitions, and takeovers that could result in foreign
control of a U.S. business; certain non-controlling investments in businesses involved in critical
technologies, critical infrastructure, or sensitive personal data (so-called “TID U.S. businesses”);
and certain real estate transactions. U.S. Department of the Treasury, CFIUS Frequently Asked
Questions.
433
returned to outbound investment issues, in part in response to con-

tinued concerns over U.S. investment into China.202
The Scale of U.S. Outbound Investments into China
Inadequate official U.S. government data collection and publica-
tion obscures the scale and sectoral allocation of U.S. investments
into China. Publicly accessible official U.S. government data do not
show U.S. investor positions based on the ultimate destination of
their direct and portfolio investments; instead, they permit the re-
porting of trillions of dollars of investment in the Cayman Islands
or other Caribbean islands. The data that is accessible is categorized
too broadly to discern the technologies or industries that U.S. in-
vestment benefits. Private data providers can address some of these
issues, but drawbacks in their collection methods mean they still
present an imperfect picture at best. Nevertheless, both official and
private data sources suggest that while total U.S. outbound invest-
ment flows to China have substantially declined in recent years, di-
rect investment in particular has become increasingly concentrated
in innovative sectors with implications for U.S. national security.203
Official U.S. Data on U.S. Outbound Investments into China
At the end of 2023, U.S. official data showed the total U.S. di-
rect investment stock in mainland China to be $126.9 billion.204
Including Hong Kong and Macau, U.S. direct investment rises to
$218.5 billion, or 3.3 percent of total U.S. direct investment stock.205
As of 2022, the most recent year with complete data, accumulated
U.S. portfolio investment stock in mainland China was a much more
sizable $712 billion.206 Including Hong Kong and Macau, U.S. port-
folio investment stock rises to $910 billion ($860 billion in equity
investments and $50 billion in bonds), or 8.5 percent of U.S. foreign
investment stock.207
In recent years, the growth of U.S. direct investment into China
has steadily declined. From 2008 until 2018, U.S. FDI into China in-
creased by an average of $10.4 billion a year. From 2019 to 2023, the
growth rate nearly halved, falling to $5.6 billion a year.208 Since the
end of 2020, the value of U.S portfolio stock has been falling, though
a significant portion of that likely resulted from a reduction in Chi-
nese company valuations rather than a reduction in volume.* 209 In
2022, the value of U.S. portfolio investment stock fell by $258.7 bil-
lion compared with 2021.210
Limitations of Official U.S. Data Sources on Outbound Investment
A key challenge that has plagued discussions around a U.S. out-
bound investment mechanism—and the broader U.S.-China finan-
cial relationship—has been a lack of reliable, official data released
by the U.S. government. The Bureau of Economic Analysis (BEA)
under the Commerce Department and the Treasury Department are
the primary government bodies responsible for collecting and pub-
* From December 31, 2021, to December 30, 2022, the CSI 300, the benchmark of main-
land-traded stocks, fell 21.6 percent, almost identical to the 22.1 percent decline in the value
of U.S. portfolio investments in China. Shanghai Stock Exchange, “CSI 300 [2021–2023],” via
Haver Analytics; Carol C. Bertaut, Beau Bressler, and Stephanie Curcuru, “Globalization and
the Geography of Capital Flows,” Board of Governors of the Federal Reserve System FEDS Notes,
December 15, 2023.
434
lishing data on outbound financial flows.211 However, restrictions

around the collection and public reporting of U.S. outbound invest-
ment statistics likely obscure the ultimate scale of these flows and
prevent a detailed assessment of U.S. direct and portfolio invest-
ment in China.212
Table 1: Official Annual Data Collection on U.S. Outbound Investment
Data Type Collecting Agency Limitations

Direct The Department of Commerce Data reflect the place of in-
Investment Bureau of Economic Analysis corporation of the immediate
(BEA) investment counterpart, which
may not be the ultimate desti-
nation of the investment.*
Data are published with sector
categorizations that are too
broad to discern the specific
industries U.S. investment is
supporting.
Portfolio The Department of Treasury Data reflect the place of in-
Investment corporation of the immediate
investment counterpart, which
may not be the ultimate desti-
nation of the investment.
Data are published without any
sector categorizations.
Source: Various.213
U.S. direct investment statistics reflect the place of incorporation

of the immediate investment counterpart, which is not necessarily
the country that domiciles the ultimate beneficial owner (UBO).† 214
As a result, the $700 billion in reported direct investment stock in
offshore tax havens such as Caribbean island non-banking holding
companies and financial firms, for example, likely masks consider-
able additional investment flowing into China.215 Legal restrictions
within the International Investment and Trade in Services Survey
Act—which governs how the BEA is able to collect outbound direct
investment data—protect the confidentiality of the data that is re-
leased.216
These privacy restrictions mean the sectoral breakdowns of U.S.
official data are also too broad to discern investment shifts into sec-
tors most relevant for national security. It is impossible to figure
* Every five years, through the Benchmark Survey of U.S. Direct Investment Abroad, the BEA
collects data on the universe of foreign affiliates of U.S. entities, including detailed balance sheet
and ownership information. By combining the data collected in the Benchmark Survey with data
from the BEA’s Quarterly Survey of U.S. Direct Investment Abroad, BEA researchers have pro-
posed a methodology to reallocate the U.S. direct investment abroad position to the countries and
industries where it is ultimately invested. This reallocation suggests substantial U.S. outbound
investment flows to the Cayman Islands and other tax havens are eventually routed to China. For
example, using data from the 2019 Benchmark Survey, researchers found that in 2019 the U.S. di-
rect investment position in mainland China could be valued at $240 billion, or $140 billion dollars
more than what was estimated for that year in official BEA statistics. However, the reallocation
methods provide an imperfect and incomplete picture. Additional data would be needed to regu-
larly publish direct investment statistics that attribute investment to the ultimate host economy.
Kirsten Brew et al., “Experimental Ultimate Host Economy Statistics for U.S. Direct Investment
Abroad,” U.S. Department of Commerce Bureau of Economic Analysis, October 2023, 7–8, 24.
† Ultimate beneficial ownership (UBO) refers to the person or entity that ultimately owns or
controls a company.
435
out how much U.S. direct investment is flowing into China across
areas such as AI, quantum computing, and semiconductors, given
that the most detailed U.S. data end at “manufacturing of electrical
equipment, appliances, and components,” “information,” and “profes-
sional, scientific, and technical services.” 217 The BEA argues this
is to prevent its data from being used to discern information about
individual transactions, though analysts have challenged this as be-
ing overly cautious.218
Data on U.S. portfolio investment in China suffer from issues sim-
ilar to those of direct investment. The Treasury Department’s Trea-
sury International Capital (TIC) system does not provide the UBO
of outbound portfolio investment transactions.219 However, other
parts of the Federal Government such as the Federal Reserve are
able to reconstruct portfolio investment beneficial ownership data-
sets, though with a severe time lag.220 Neither the TIC nor any
other parts of the Federal Government publish outbound portfolio
investment data organized by investment sector.221
Alternative Estimates of U.S. Direct Investment into China
Private sector data sources, such as Pitchbook and fDi Markets,
can be an imperfect solution to the inadequacies of official direct
investment statistics. However, unlike official sources such as the
BEA, which impose mandatory reporting requirements, private
data collection firms must rely on methods that are inherently in-
complete.* Still, Pitchbook, a private data provider, can provide in-
sight into non-greenfield (mergers and acquisitions, private equity,
and venture investment) U.S. investment, which captures the lion’s
share of U.S. direct investment to China.† According to calculations
using Pitchbook data by Sarah Baurle Danzman, associate professor
at Indiana University Bloomington, new U.S. investment flows in
companies headquartered in mainland China, Hong Kong, or Macau
peaked in 2018 at just under $190 billion—a figure considerably
higher than official statistics.222 Investment volumes have declined
every year since 2021. In 2023, U.S. non-greenfield investment flow
to China was 30 percent of its 2021 value, or slightly below $40
billion.223
While the absence of detailed, official U.S. data means it is im-
possible to get a complete picture of U.S. direct investment into
China, alternative data providers suggest U.S. investors continue to
make meaningful contributions to technology sectors at the heart
of U.S.-China strategic competition. The United States remains the
primary global investor in these sectors and the deals U.S. firms
make can generate national security concerns if U.S. investors pro-
vide capital and expertise that help China advance its capabilities
in sensitive technologies.224
* Pitchbook, for example, relies on systematic web crawling and is therefore unable to capture
investments that have not been reported in regulatory filings, news articles, or press releases.
Michael R. Ryan, “Pitchbook Database,” Texas Tech University Innovation Hub at Research Park.
† Calculations by Sarah Bauerle Danzman suggest the overwhelming majority of U.S. direct in-
vestment flows to China fall under these categories. Dr. Danzman finds U.S. investment through
mergers and acquisitions, private equity, and venture capital was about three times as large as
global greenfield foreign direct investment to China in 2022, with VC investment making up the
largest portion. Sarah Bauerle Danzman, statement for the record for U.S.-China Economic and
Security Review Commission, Hearing on Key Economic Strategies for Leveling the U.S.-China
Playing Field: Trade, Investment, and Technology, May 23, 2024, 2.
436
U.S. non-greenfield investment in strategic sectors such as semi-

conductors, quantum computing, and AI is a fraction of U.S. total
investment to China and is almost exclusively undertaken by ven-
ture capital (VC) firms.* 225 U.S. investment flows in semiconduc-
tors, quantum computing, and AI peaked in 2020 at nearly $17
billion before plummeting to around $2 billion in 2023, though as
discussed below they grew in 2024.226 Among those sectors, U.S.
investment is heavily concentrated in the semiconductor industry,
which accounted for over 90 percent of total U.S. investment in Chi-
na’s semiconductors, quantum computing, and AI sectors in 2020.227
U.S. investors have also been historically very involved with the
Chinese AI industry. An analysis by the Center for Security and
Emerging Technology (CSET) found that from 2015 to 2021, U.S. in-
vestors accounted for 37 percent of the $110 billion in global funding
raised by Chinese AI firms.† 228
The United States is the most important foreign source of in-
vestment to semiconductors, quantum computing, and AI in Chi-
na.229 U.S. investors consistently contribute more than double
the capital to these sectors compared with all non-U.S. investors
combined. Despite increased government interest in an outbound
investment regime, U.S. investors remain keenly interested in
supporting and investing in China’s semiconductors, quantum
computing, and AI sectors.230 In the first half of 2024, U.S. direct
investment in those sectors had already surpassed the total value
of 2023.231
Private sector data sources do not provide estimates of the total
allocation of U.S. portfolio investments in China by sector.232
Impact of Restricting U.S. Direct and Portfolio Investment
Restricting U.S. direct or portfolio investment would have differ-
ent impacts on China’s innovation ecosystem. Halting the flow of
direct investment to specific sectors within the Chinese economy
would diminish certain companies’ access to funding and the intan-
gible benefits often associated with venture capital firms and ear-
ly-stage investors.233
Direct investment often involves a long-term relationship that
gives control over or a significant degree of influence on the man-
agement of an enterprise. Historically, China has enforced strin-
gent restrictions on direct investment flows into the country and
has forced U.S. and other foreign businesses to acquiesce to joint
ventures with Chinese firms and sign over their IP and technology
to access the Chinese market.234 Because of the strategic nature of
the investment, in addition to providing capital or technology, U.S.
investors often also provide intangible benefits to recipient compa-
nies, including an enhanced global reputation, managerial expertise,
talent networks, a deep understanding of technology, and U.S. mar-
ket access.235
* In calculating investment size, Dr. Danzman specifically defines these sectors to include semi-
conductors, edge computing semiconductors, generative AI, post-quantum cryptography, quantum
computing, quantum sensing, and swarm AI.
† CSET researchers used Crunchbase as their data source instead of Pitchbook, which is the
source of the other non-greenfield investment statistics referenced earlier. Without an official
source, and because private sector sources have to rely on inherently incomplete collection meth-
ods such as web scraping, there may be some minor divergences in the data provided by both
sources.
437
Intangible benefits can be especially meaningful for companies

in the startup or early growth phase. When working with founders
who are often young and inexperienced, intangible benefits such as
how to manage complex supply chains, maintain a skilled workforce,
and develop commercial strategies can be critical in determining the
success or failure of young technology companies.236
The scale of U.S. passive investments into China has also gener-
ated national security concerns. The relative ease at which transac-
tions can happen mean the value of U.S. portfolio investment stock
in China was far larger than the value of U.S. direct investment
stock.* 237 Such massive differences in magnitude can help offset the
lack of intangible benefits offered.238 Abundant U.S. equity invest-
ments in Chinese markets can help Chinese companies by reducing
their costs of capital, allowing them to acquire other businesses with
company stock, and attracting and compensating top talent with
company stock and stock options.239
As of 2022, U.S. portfolio holdings of equity made up 5.3 percent
of China’s domestic market capitalization.† United States firms are
likely the largest foreign holder of Chinese equities.‡ 240 Therefore,
while nothing blocks other foreign capital from backfilling any lost
U.S. equity investments, the relative scarcity of global capital, com-
bined with the weak performance of Chinese equity markets in re-
cent years, may mean there are insufficient alternative sources to
fully make up for U.S. portfolio investments. The United States is
by far the largest global investor, making up 25.5 percent of total
foreign portfolio investments as of December 2023.241 Including the
United States’ G7 allies, which are also considering an outbound
investment screening mechanism, this share jumps to 72.2 percent
of global foreign equity investments (as of December 2023, the G7
makes up 48 percent of foreign holdings in the Chinese equity mar-
ket and 59.3 percent of the Hong Kong equity market).§ 242 This sig-
* In 2022, the official value of U.S. portfolio investment stock was 435 percent of direct invest-
ment ($910 billion in portfolio investment stock and $209 billion in direct investment stock).
However, limitations in official data collection of U.S. direct investment likely mean the true
percentage could be different. Carol C. Bertaut, Beau Bressler, and Stephanie Curcuru, “Global-
ization and the Geography of Capital Flows,” Board of Governors of the Federal Reserve System
FEDS Notes, December 15, 2023; U.S. Department of Commerce, “Direct Investment by Country
and Industry, 2022— U.S. Direct Investment Position Abroad on a Historical-Cost Basis, By Coun-
try and Industry [2022],” July 20, 2023.
† This calculation was done by dividing the Federal Reserve’s estimate for U.S. holdings of Chi-
nese and Hong Kong securities by their respective stock market capitalization (China at $11.47
trillion and Hong Kong at $4.57 trillion). World Bank Group, “Market Capitalization of Listed
Domestic Companies (Current US$) - China, Hong Kong SAR, China”; Carol C. Bertaut, Beau
Bressler, and Stephanie Curcuru, “Globalization and the Geography of Capital Flows,” Board of
Governors of the Federal Reserve System FEDS Notes, December 15, 2023.
‡ Based on the Coordinated Portfolio Investment Survey (CPIS), a voluntary data collection ex-
ercise conducted under the auspices of the International Monetary Fund (IMF), the United States
is the largest foreign holder of Chinese and Hong Kong equities with nearly double the assets
of the next-largest foreign holder, Singapore. Importantly, however, the CPIS dataset is reliant
on national sources to build these data. As a result, the IMF reports 2022 U.S. equity holdings
in China and Hong Kong as $367 billion, which is derived from Treasury Department data on
residency. This is far lower than the Fed’s nationality-adjusted value of $860 billion. While this
adjustment could mean U.S. investors are by far the largest and most important foreign investor
in Chinese equities, contributing four times as much capital as Singapore, the prevalence of tax
havens and the imprecision of investment data likely indicate that other countries’ total assets
are underreported as well. International Monetary Fund, “Coordinated Portfolio Investment Sur-
vey–Derived Portfolio Investment Liabilities (All Economies) by Economy of Nonresident Holder:
Total Portfolio Investment (Derived from Creditor Data),” June 2023.
§ Note that CPIS includes mainland China as a foreign investor of the Hong Kong equity mar-
ket and Hong Kong as a foreign investor of the mainland China equity market. The calculations
exclude China and Hong Kong, respectively, as a foreign investor.
438
nificant share of assets means that if the G7 eventually implements

outbound investment restrictions on portfolio investment across all
its member economies, it could significantly impact Chinese public
companies’ access to capital and reduce their ability to compensate
talent or conduct mergers and acquisitions.243
Ongoing Efforts to Regulate Outbound Investment Screening
Ongoing U.S. investment into China raises concerns that remain
unaddressed by existing U.S. authorities. CFIUS screens many types
of investments into the United States for national security risks, but
not outbound flows. Export controls can mitigate the risk from the
transfer of sensitive U.S. technologies and prohibit such transfers
as part of an investment or via R&D collaboration, but they do not
cover other risks that arise from capital investments, particularly
VC/FDI. Policymakers have been engaged in an active debate about
whether to create an outbound investment screening mechanism,
how broad to scope it both in terms of the sectors and the types of
investment to be covered, and otherwise how best to structure such
a system to achieve the desired policy goals but not interfere with
status of the United States as the premier global financial center. In
August 2023, the White House issued an EO directing the Treasury
Department to create an outbound investment review regime, and
debates in Congress continue.*

Economic statecraft has become the United States’ tool of first
resort in addressing the threats China poses to key U.S. interests.
Policymakers in Washington have turned to trade measures, export
controls and sanctions, and foreign investment reviews to address
longstanding concerns about Chinese non-market practices, forced
technology transfer, civil-military fusion, Chinese technological and
military modernization, and the specter of military confrontation.
Some of these tools have not been used at scale in a generation. As a
result, the use of each needs to be reviewed regularly to ensure each
is addressing the unique challenges posed by the Chinese economy
and its system at large.
How the United States coordinates and communicates its trade
policy will play a central role in effectively wielding trade instru-
ments to promote resilient and fair economic relations with China.
Since 2017, the United States has more aggressively utilized a broad-
er range of trade authorities. However, these tariffs and other trade
tools—as blunt yet powerful instruments—have led to wide-ranging
effects on the U.S. economy, promoting trade and supply chain objec-
tives in some areas while imposing costs in others. The effectiveness
of these trade policies can be enhanced through better calibration
of the policy mix. China’s surging manufacturing capacity and ex-
ports in 2024 and its efforts to develop national champions in key
technology areas further underlie the need for a dynamic and stra-
tegic approach to counter China’s unfair trade practices. Above all,
a comprehensive and coherent trade policy must start by addressing
* For additional background on the EO, refer to Appendix II, “Executive Order on an Outbound
Investment Security Program.”
439
unresolved questions about U.S. goals and articulating a vision of

the desired future U.S.-China economic relationship.
The United States has led a number of key allies to introduce ex-
port controls on strategic technologies, most notably semiconductors
and semiconductor manufacturing equipment. Through an iterative
and collaborative process, the United States has demonstrated both
the national security necessity for export controls and that export
controls can effectively slow the technological advancement of ad-
versarial nations. The United States should continue to anticipate
rapid development in these areas, requiring constant recalibration
and coordination with allies and partners on what constitutes a cut-
ting-edge technology. Simultaneously, the United States should not
lose sight of legacy chips. Chinese dominance of legacy chip produc-
tion could create new risks for U.S. commercial supply chains and
military procurement. (For more on U.S.-China technology competi-
tion, see Chapter 3, “U.S.-China Competition in Emerging Technol-
ogies.”)
Debate continues around the desirability of an outbound invest-
ment mechanism and how it should be designed and implemented.
Broad bipartisan consensus calls for a new tool to stem the flow of
capital and nontangible know-how from the United States’ preemi-
nent firms into advanced Chinese technology companies. The August
2023 outbound investment EO is a starting point. However, a dura-
ble mechanism will likely need to be founded in legislation. A num-
ber of debates around its scope also remain, including the types of
investments that should be prohibited. A further challenge in shap-
ing the mechanism is the lack of data around U.S. investments into
China. The pervasive use of offshore tax havens and an inability to
access granular, sectoral data mean policymakers are flying blind
when determining the scale and scope of investment prohibitions.
However, the size and salience of China mean that no single U.S.
economic statecraft tool will be a panacea for the challenges its
economy poses. Trade measures, export controls and sanctions, and
investment restrictions will need to work in tandem to achieve the
United States’ most ambitious and important goals. This means that
the policy work cannot end when each tool is adopted and stream-
lined to address the issues in its specific domain. U.S officials must
continuously dismantle bureaucratic siloes and compel implement-
ing agencies to work toward a unified strategy.
440
Appendix I: Current Multilateral Export

Control Regimes
Missile
Nuclear Technology
Suppliers Australia Control Wassenaar
Regime: Group Group Regime Arrangement
Founded in: 1974 1985 1987 1996
Covered Nuclear and Equipment, Unmanned Convention-
Technologies: nuclear-relat- materials, aerial vehi- al arms and
ed materials, technology, cles capable dual-use items
software, and and software of delivering and technol-
technology that could weapons of ogies
contribute mass destruc-
to chemical tion
and biologi-
cal weapons
activities
Argentina × × × ×
Australia × × × ×
Austria × × × ×
Belarus ×
Belgium × × × ×
Brazil × ×
Bulgaria × × × ×
Canada × × × ×
China ×
Croatia × × ×
Cyprus × ×
Czech Republic × × × ×
Denmark × × × ×
Estonia × × ×
European ×
Union
Finland × × × ×
France × × × ×
Germany × × × ×
Greece × × × ×
Hungary × × × ×
Iceland × × ×
India × × ×
441
Missile
Nuclear Technology
Founded in: 1974 1985 1987 1996
to chemical tion
and biologi-
cal weapons
activities
Ireland × × × ×
Italy × × × ×
Japan × × × ×
Kazakhstan ×
Latvia × × ×
Lithuania × × ×
Luxembourg × × × ×
Malta × × ×
Mexico × × ×
Netherlands × × × ×
New Zealand × × × ×
Norway × × × ×
Poland × × × ×
Portugal × × × ×
Republic of × × × ×
Korea
Romania × × ×
Russia × × ×
Serbia ×
Slovakia × × ×
Slovenia × × ×
South Africa × × ×
Spain × × × ×
Sweden × × × ×
Switzerland × × × ×
442
Missile
Nuclear Technology
Founded in: 1974 1985 1987 1996
to chemical tion
and biologi-
cal weapons
activities
Turkey × × × ×
Ukraine × × × ×
United × × × ×
Kingdom
United States × × × ×
Source: Various.244
443
Appendix II: Executive Order on an Outbound

Investment Security Program
On August 9, 2023, in response to worsening relations and the con-
tinued flow of U.S. investment into key Chinese technology sectors, the
White House issued an EO, “Addressing United States Investments
in Certain National Security Technologies and Products in Countries
of Concern,” establishing an outbound investment regime.245 The EO
takes a sectoral approach focusing on U.S. investments in China across
a narrow set of technologies related to semiconductors and microelec-
tronics, quantum information technologies, and AI systems.246 The EO
is rooted in the authority granted to the president by the International
Emergency Economic Powers Act (IEEPA).* 247
Shortly after the EO was released, the Treasury Department is-
sued an Advance Notice of Proposed Rulemaking (ANPRM) that
outlined the proposed outbound investment regime and sought pub-
lic comments.248 In July 2024, the ANPRM was followed up with
a Notice of Proposed Rulemaking (NPRM), which detailed the Ad-
ministration’s current thinking on how to design and implement an
outbound investment mechanism.† 249
The program aims to limit investment by U.S. persons ‡ in Chi-
nese entities that are involved in—or in certain circumstances may
become involved in—the development or production of covered tech-
nologies.§ It would do this by proposing two categories of concern
for outbound direct investments: notifiable transactions that could
contribute to a national security threat and prohibited transactions
* IEEPA grants the president sweeping authority to “nullify, void, prevent, or prohibit” trans-
actions, 50 U.S.C. § 1702(a)(1)(B), in response to “any unusual and extraordinary threat . . . to the
national security, foreign policy, or economy of the United States,” 50 U.S.C. § 1701(a).
† While the ANPRM and the NPRM are very similar they do have a few important differences.
The definition of AI was harmonized to align with other EOs such as EO 14110. The NPRM
elaborates on and refines some ambiguities around the knowledge standard (which describes the
knowledge a U.S. person must have about certain facts and circumstances related to a transaction
to trigger obligations under the proposed rule); clarifies applicability in very specific transactions
types; provides a new exception for transactions involving persons of third countries that have
similar measures aimed at outbound investments; and clarifies the scope of limited partner in-
vestments that would be covered by the proposed rule and those that would be excepted. U.S.
Department of the Treasury, Office of Investment Security, FACT SHEET: Treasury Department
Issues Notice of Proposed Rulemaking on Implementation of Outbound Investment Executive Or-
der (E.O. 14105), June 21, 2024.
‡ The EO and NPRM impose compliance obligations on “U.S. persons,” defined as a U.S. citizen
or lawful permanent resident, as well as any entity organized under the United States or any
jurisdiction within the United States, including those entities’ foreign subsidiaries. Notably, the
non-U.S. entity also falls under the jurisdiction of the mechanism if it has a majority owner,
general partner, or investment adviser to a pooled investment fund that falls under the defini-
tion of a U.S. person. Similar to economic sanctions, the rules would also prohibit a U.S. person
from making or substantially participating in transactions on behalf of a non-U.S. person that
would be prohibited if undertaken by a U.S. person. U.S. Department of the Treasury, “Provi-
sions Pertaining to U.S. Investments in Certain National Security Technologies and Products in
Countries of Concern,” Federal Register 89:129 (July 5, 2024); Antonia I. Tzinova et al., “Treasury
Department Issues Long-Awaited Proposed Rule on Outbound Investment Screening,” Holland
& Knight, June 26, 2024; U.S. Department of the Treasury, “Provisions Pertaining to U.S. Invest-
ments in Certain National Security Technologies and Products in Countries of Concern,” Federal
Register 89:129 (July 5, 2024).
§ The NPRM defines this as “covered transactions,” which happen when a “U.S. person” trans-
acts with a “covered foreign person.” A “covered foreign person” is defined as a “person of a
country of concern” that engages in activity related to the technologies specified as notifiable or
prohibited in the proposed regulations. “Person of a country of concern” covers any entity head-
quartered in, with a principal place of business in, or organized in the People’s Republic of China,
Hong Kong, and Macau (China); an individual who is a citizen or permanent resident of China;
or an entity that is directly or indirectly majority-owned by a Chinese person. U.S. Department
of the Treasury, “Provisions Pertaining to U.S. Investments in Certain National Security Technol-
ogies and Products in Countries of Concern,” Federal Register 89:129 (July 5, 2024).
444
that “pose a particularly acute national security threat” because of

their potential to significantly advance the “military, intelligence,
surveillance, or cyber-enabled capabilities” of countries of con-
cern.250 However, any notifiable transaction would be automatically
prohibited if the Chinese entity party to the transaction is listed on
any one of several U.S. government lists primarily used for export
controls and sanctions, including the Entity List and the Specially
Designated Nationals (SDN) list.251
Unlike CFIUS, the outbound investment program would not op-
erate through a case-by-case review or preapproval requirement.
Violations would be retroactively enforced though civil and crimi-
nal penalties.252 While the Administration’s approach to prohibited
transactions is consistent with its “small yard, high fence” strategy,
the regime’s notification requirements are far broader and are in-
tended to fill in critical gaps regarding the United States’ under-
standing of the nature and scale of domestic investments in Chinese
high-tech sectors. (For more, see “Limitations of Official U.S. Data
Sources on Outbound Investment” in this chapter.) 253
Table 2: NPRM Proposed Approach to Notifiable and
Prohibited Transactions
Technology Notifiable Transaction Prohibited Transaction

Semiconductors The design, fabrication, and Developing or producing advanced
and packaging of any integrated integrated circuit design and
microelectronics circuit that is not covered by equipment software; developing or
the definition of prohibited producing specific front-end semi-
transactions. conductor fabrication, advanced
packaging, or extreme ultraviolet
lithography equipment; designing,
fabricating, or packaging integrat-
ed circuits that meet or exceed
advanced technical thresholds;
developing, installing, selling, or
producing any supercomputer.
AI systems Designed to be used by AI systems designed to be exclu-
government intelligence or sively used for military, govern-
military; cybersecurity appli- ment intelligence, or mass sur-
cations, digital forensics tools, veillance; frontier AI models; AI
penetration testing tools, or systems trained using a certain
the control of robotics systems; quantity of computing power; and
trained using a quantity of AI systems trained with biological
computing power greater than sequence data.
an amount yet to be deter-
mined; specialized AI models
trained on high-quality data.
Quantum None Developing a quantum computer
information or producing any of its criti-
technologies cal components; developing or
producing any quantum sensing
platform designed for government,
intelligence, or mass surveillance
purposes; developing or producing
certain quantum networks or
quantum communication systems.
Source: U.S. Department of the Treasury, “Provisions Pertaining to U.S. Investments in Certain
National Security Technologies and Products in Countries of Concern,” Federal Register 89:129
(July 5, 2024).
445
The Administration’s program specifically covers active invest-

ments, sometimes called “smart money,” including the acquisition of
equity interests (mergers and acquisitions, private equity, and VC),
contingent equity interests, greenfield investments, joint ventures,
and equity-convertible debt financing.254 It notably carves out pas-
sive investments such as publicly traded securities; securities issued
by an investment company, like an index fund, mutual fund, or ex-
change traded fund; and pooled investment funds.* 255
* Treasury is still finalizing its approach to investments in pooled funds and has proposed two
approaches. The first exempts them so long as the U.S. investor’s rights are consistent with a
passive investment and their capital is not more than 50 percent of the total assets under man-
agement. The second caps their investment at $1 million. Janet K. Kim, Sylwia A. Lis, and Rob
O’Brien, “US Treasury Department Issues Proposed Rules Restricting US Outbound Investment
in Advanced Technologies Involving China,” Baker McKenzie, June 25, 2024.
446
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CHAPTER 7: CHINA’S NEW MEASURES FOR
CONTROL, MOBILIZATION, AND RESILIENCE
Abstract
After a long period of “peace and development” during which
Chinese Communist Party (CCP) leaders felt the international
environment was conducive to China’s economic development,
growing power, and international influence, the views of Chi-
na’s leadership have changed. General Secretary of the CCP Xi
Jinping now believes China has entered a period of increased
challenges both domestically and internationally and has taken
a number of steps to better prepare the Party and country for
this period of threat and uncertainty. On the political front, Chi-
nese leaders have broadened conceptions of national security to
enhance the Party-state’s power, build out the national security
state, and expand tools of societal control at the grassroots lev-
el. On the military front, China’s armed forces have improved
their mechanisms for mobilizing available manpower, leveraging
resources in the civilian economy, and priming the Chinese public
to contribute to national defense. On the economic front, China
has implemented measures to strengthen food security, energy
security, and trade and financial security.
China’s numerous and varied actions are driven by multiple goals,
including the desire to suppress domestic challenges, prepare for a
more volatile and less open international economic environment, and
position itself effectively for long-term strategic competition with
the United States. At the same time, many of these actions serve
to increase China’s capacity for rapid military mobilization and re-
silience in the case of hostilities. Recent changes have made China
significantly more prepared for war compared to five years ago while
potentially obscuring the signals that would normally precede an
imminent or near-term mobilization. These changes have already
altered the strategic and operational environment in China’s favor.
Chinese officials likely believe they have moderated the economic
costs the United States and its allies could impose on them through
sanctions, blockades, and trade restrictions in the event there is an
outbreak of hostilities, potentially reducing the deterrent effect of
non-military policy options and external constraints.
Key Findings
• China’s leaders believe they have entered a new historical
phase characterized by greater internal and external threats.
This heightened threat perception has fueled numerous poli-
cy efforts to better prepare the Party, China’s society, and the
military for what the Party believes will be a more hostile and
uncertain period.
(458)
459
• China’s leaders have intensified their rhetoric about risk over

the last few years, increasingly invoking a concept called “ex-
treme scenario thinking” that suggests Chinese policymakers
are increasingly thinking through the potential ramifications of
a wide range of scenarios, including the repercussions of ac-
tions they might initiate on the international stage. At the same
time, CCP rhetoric toward Taiwan and the United States has
not escalated to the degree that preceded China’s conflicts in
past decades or to what some experts expect to see if China
were imminently preparing for war.
• China is continuing longstanding efforts to address concerns
over food insecurity. China is largely self-sufficient in four of
five key staples, though it is becoming increasingly dependent
on corn and wheat imports. China relies on imports for the fifth
(soybeans) and is overall a significant net food importer. China
is believed to have the world’s largest stockpiles of its key sta-
ples and has taken measures to diversify its soybean supplies
away from the United States and reduce overall soybean con-
sumption.
• China is taking measures to enhance its energy security and
to ensure it can address its oil energy needs for long periods of
time without imports. China is largely self-sufficient in coal, its
primary energy source for power generation, and it has devel-
oped a coal surge capacity to deal with temporary disruptions.
Perhaps because natural gas is not a major part of China’s en-
ergy mix, China seems less concerned about its significant reli-
ance on imports and only has a short-term stockpile of natural
gas. China is heavily dependent on oil imports for transporta-
tion and appears to be building very large stockpiles—with es-
timates of one to two years’ supply.
• China is taking measures to enhance its financial security, chal-
lenge global dollar dominance, and protect itself from U.S. fi-
nancial sanctions by creating alternatives to dollar-based trade
and the U.S.-controlled financial payments system. These efforts
have accelerated since the imposition of sanctions in the wake
of Russia’s war of aggression against Ukraine. While the ren-
minbi (RMB) is not on pace to supplant the U.S. dollar as a me-
dium of global exchange, China is developing these tools with
the intention to insulate itself from many types of U.S. financial
sanctions.
• Party leaders have developed an exceedingly broad concep-
tion of national security and expanded their tools for domes-
tic control. These include an increasingly robust internal se-
curity apparatus, the revival of some Maoist-era methods of
mass mobilization, and efforts to leverage the public for sur-
veillance and control, including by outsourcing public secu-
rity tasks to government-sanctioned “vigilante groups.” This
heightened focus on security has been formalized through
an expansion of relevant legal infrastructure, with new laws
defining national security as touching upon virtually every
aspect of society.
460
• There is currently no evidence that China is preparing for an

imminent war, but the various reforms China has made to its
defense mobilization system over time undeniably make it more
confident and prepared for hostilities than it was five years ago.
Many of these measures reduce the time needed for China to
mobilize and transition from peacetime or gray zone activities
to active hostilities and could be read as efforts to prepare the
operational environment for a conflict over Taiwan. Given the
decreasing amount of open source data available about China,
the United States and international observers will have less
visibility of warnings and indicators that may presage Chinese
military action, a shorter timeline to react once indicators are
discovered, and fewer non-military tools to respond.
Recommendations
• Congress direct the Office of the Director of National Intelli-
gence, within 180 days, to conduct a classified assessment, and
brief its findings to Congress, of the intelligence community’s
(IC) ability to accurately monitor strategic, nonmilitary indica-
tors that would signal that China is preparing for imminent
conflict and the extent to which China’s increasing lack of trans-
parency affects the IC’s ability to monitor this information. The
assessment should include, but not be limited to, the following:
○ The IC’s ability to monitor:
China’s energy storage locations and stockpiling rates, par-
ticularly for crude oil, coal, and natural gas;
Production shifts from civilian to military industries;
China’s national defense mobilization system; and
China’s strategic reserves and their compositions and lo-
cations;
○ The IC’s ability to coordinate with non-Title 10 and -Title 50
federal agencies that have technical expertise in agriculture
and trade to monitor China’s food and energy stockpiling and
any derived indicators that may signal a potential prepara-
tion for conflict;
○ Whether the IC’s current geospatial intelligence posture is
adequate to compensate for the loss of open source informa-
tion from China; and
○ The desirability and feasibility of establishing an Energy
Strategic Warning system involving coordination between rel-
evant entities including the National Geospatial-Intelligence
Agency and the U.S. Departments of Energy, Commerce, State,
and the Treasury.
Introduction
In 2022, protestors in China chanted “Xi Jinping, step down!” and
“Communist Party, step down!” as the most significant public expres-
sions of discontent in decades spread from Shanghai to cities across
461
China.1 Though quickly repressed, such daring chants and protests

suggest that the CCP, despite its relentless efforts, has not been able
to entirely suppress dissent toward the Party-state. Likewise, China
has exhausted the patience of major economies and trading partners
who are no longer willing to endure its economic predation or ignore
its aggression and security threats. Thus, China faces a new era of
risks that the Party’s own policies have brought about.
This chapter examines some of China’s key responses to its per-
ceptions of intensifying domestic and international risks. It will
first investigate China’s efforts to improve economic resilience in
its food, energy, and financial infrastructure. It will then examine
recent changes in Chinese leaders’ assessment of their environment
and survey the Party-state’s efforts to enhance political control over
China’s institutions and society. Finally, it will assess recent efforts
to improve the capacity of China’s armed forces and society to rap-
idly mobilize for a conflict, before considering implications for the
United States. This chapter is based on the Commission’s June 2024
hearing on “China’s Stockpiling and Mobilization Measures for Com-
petition and Conflict,” consultations with experts, and open source
research and analysis.
Chinese Leaders Worry about Interlocked Internal
and External Risks
In the past several years, China’s leadership has assessed that
they have entered a period of greater security challenges and in-
ternal and external risks. General Secretary Xi’s speech and accom-
panying report to the 20th Party Congress in October 2022 struck
a darker tone than the previous one in 2017, emphasizing rising
threats and calling on the nation to “be ready to withstand high
winds, choppy waters, and even dangerous storms.” 2 Customary lan-
guage about China’s “period of strategic opportunity” and “peace and
development” as “the theme of the times” was dropped from the po-
litical report, which instead stated that strategic opportunities were
now concurrent with risks and challenges.* 3 In a speech to the Cen-
tral National Security Commission in May 2023, Xi continued this
intensified rhetoric, describing the national security environment as
“complex and severe.” 4
The language in senior leadership’s speeches has also become
increasingly confrontational. In a speech to representatives from
the commercial sector during the annual “two sessions” in March
2023, Xi plainly stated that “Western countries—led by the United
States—have implemented all-round containment, encirclement and
suppression against us, bringing unprecedentedly severe challenges
to our country’s development.” † 5 Xi has also increasingly exhorted
* The concept of the period of strategic opportunity was introduced by Jiang Zemin at the 16th Par-
ty Congress in 2002, characterizing the first two decades of the 21st century as presenting a peaceful
external environment and stable domestic situation that would allow China to concentrate on eco-
nomic growth and development, building on Deng Xiaoping’s statement that “peace and development
are the theme of the times.” Center for Strategic Translation, “Peace and Development are the Theme
of the Times;” Center for Strategic Translation, “Period of Strategic Opportunity.”
† The speech was given to delegates of the Chinese People’s Political Consultative Conference
(CPPCC), an advisory body, from the All-China Federation of Industry and Commerce and the
China National Democratic Construction Association, during the March 2023 “two sessions,” an-
nual plenary sessions of the National People’s Congress and of the Chinese People’s Political
Consultative Conference; Xi also gave two speeches to the NPC and one to representatives of
the PLA and People’s Armed Police. Xinhua, “Full Text of Xi Jinping’s Speech at First Session of
462
Party officials and the public to endure hardship and “dare to strug-
gle.” 6 Xi uses the Maoist phrase far more frequently than his pre-
decessors, often when exhorting Party members to endure adversity
and strive to achieve Party goals; it was inserted additional times
into the Party Charter after the 20th Party Congress.7
Finally, China’s leaders have begun to insist that Party cadres
must be prepared for “extreme” and “worst-case” scenarios. Xi first
mentioned “extreme scenario thinking” alongside “worst-case sce-
nario thinking” at the May 2023 meeting of the Central Nation-
al Security Commission.* 8 The two terms refer to methodologies
Party cadres can supposedly use to “plan for worst-case scenarios,
and encourage adopting proactive measures.” 9 According to the tes-
timony of Manoj Kewalramani, Chair of the Indo-Pacific Research
Programme and China Studies Fellow at the Takshashila Institu-
tion, “extreme scenario thinking” enables understanding of feasible
actions in unpredictable crisis situations by imagining the greatest
level of severity that might occur in a given scenario. In contrast,
“bottom line thinking” refers to setting minimum standards or red
lines that cannot be breached, and making preparation to prevent
predictable challenges.10 Mr. Kewalramani pointed out that extreme
scenario thinking could be used by Chinese strategists when consid-
ering the repercussions of proactive behavior, which could plausibly
include a Chinese decision to attack Taiwan.11
Comprehensive National Security Concept Underpins

Stronger National Security State
The “Comprehensive National Security Concept” forms the
ideological basis for the subordination of all aspects of governance
to national security. First outlined in a 2014 speech by Xi, it ex-
pands the concept of national security beyond traditional military
threats and territorial integrity to nontraditional threats to re-
gime survival, emphasizing the connection between domestic and
foreign threats.12 The initial concept laid out 11 types of security:
political, military, territorial, economic, cultural, social, technolog-
ical, information, ecological, resource, and nuclear.13 Additional
types were added over the years, and the concept now encom-
passes 20 types, including food, finance, overseas interests, space,
deep sea, polar regions, biological, artificial intelligence, and data
security.14 Political security, however, is the most important task
and is defined as safeguarding the leadership and governing sta-
tus of the Party.15 Economic growth and the risks created by ex-
cessive debt and other issues are significant aspects of the con-
cept because the economy continues to serve as a key source of
the CCP’s legitimacy—and therefore its political security.16 While
economic and financial security are encompassed by the Com-
prehensive National Security Concept, the CCP is increasingly
willing to accept potential economic costs in order to prioritize
political security.17
14th NPC,” March 14, 2023; Wang Cong and Tu Lei, “Xiconomics in Practice: President Xi Puts
High-Quality Devt Front and Center at Two Sessions,” Global Times, March 14, 2023; Xinhua, “Xi
Stresses Enhancing Integrated National Strategies, Strategic Capabilities,” March 8 2023; Xin-
hua, “Xi Calls for Guiding Healthy, High-Quality Development of Private Sector,” March 7, 2023.
* “Bottom-line thinking” (底线思维) is sometimes translated as “worst-case scenario thinking.”
463
Assessing the Party-State’s Activity: New Measures

for Control, Mobilization, and Resilience
The CCP has undertaken robust measures over the past decade
to enhance its control, resilience, and capacity to mobilize resources
in the economic, political, and military domains. While Chinese lead-
ers’ motivations for undertaking them remain unclear, taken collec-
tively, the measures unquestionably make China better prepared to
cope with a variety of domestic and foreign challenges.
Economic Preparedness
Chinese leaders’ growing threat perceptions and concerns about
the need to prepare for a more hostile international environment
are increasingly reflected in their economic policies. This section fo-
cuses on China’s efforts to enhance food, energy, and financial se-
curity through stockpiling and other policies designed to improve
resilience, withstand temporary shocks, and weather more pro-
longed challenges. The inherent dual-use nature of Chinese eco-
nomic preparations for a crisis make them complicated indicators
of China’s intentions or future action.* Chinese efforts to improve
food and energy self-sufficiency and stockpile resources could be in-
terpreted as a way to build resilience against a U.S. blockade in a
Taiwan crisis. However, those same actions could also be a response
to the country’s widespread famines throughout the 20th century
and energy crises that have affected certain provinces as recently as
2021.18 Similarly, Chinese efforts to internationalize the RMB and
develop alternative payments systems began as a response to con-
tractions in global dollar liquidity in the aftermath of the 1997 Asia
financial crisis and the 2008 global financial crisis.19 However, the
same systems that can ensure Chinese firms and their trading part-
ners have ample access to credit and exchange during a recession
also may allow China to insulate its financial sector and external
trade from U.S. financial sanctions.
One thing is clear: the Chinese economy is more prepared today
for a crisis scenario—one catalyzed by confrontation with the United
States or another unpredictable event—than it was two decades ear-
lier when the country was first constructing its strategic petroleum
reserves and exploring RMB internationalization.20 Even if Chinese
motivations are entirely domestic, the United States can no longer
rely on intertwined food supply chains, China’s profound dependence
on seaborne oil, and the blocking power of U.S. sanctions to enhance
deterrence as strongly as they may have done in the past.
Food Security in China
General Secretary Xi has continued China’s historic focus on food
security by prioritizing efforts to increase domestic production, di-
versify supply chains, and build stockpiles. For centuries, Chinese
food security has been inseparable from social stability.† China un-
* Dual-use is meant here to reflect that these preparations are both typical efforts that many
governments undertake to reduce risks and promote resilience as well as the types of efforts that
might be used to prepare for hostilities.
† During the Qing Dynasty (1644–1911), China experienced major famines between 1810 to
1907 that resulted in the deaths of tens of millions. These famines were often the catalysts for
major rebellions or upheaval that diminished the government’s authority and worsened socioeco-
nomic conditions. These periods of starvation ultimately contributed to the dynasty’s collapse.
464
der the CCP is no different. Well before the emergence of U.S.-China

great power competition, CCP leadership has been extremely sensi-
tive about maintaining food security.21 The Great Famine in 1959–
1961, China’s last calamitous food crisis, is the largest famine in
human history and continues to inform Chinese food policy today.* 22
China faces structural challenges to long-term food security. Chi-
na must feed 21 percent of the world’s population on 8 percent of the
world’s arable land and 6 percent of the world’s water resources.23
Climate change, pollution, and rapid urbanization have magnified
the effects of China’s shortage of arable land. Between 2013 and
2019, destructive farming practices, among other contributing fac-
tors like the conversion of agricultural land for infrastructure and
real estate, caused a more than 5 percent decline in China’s culti-
vatable land.24 What remains is often contaminated. Researchers
estimate that 10.2 percent of arable soil is so polluted that it is no
longer safe to grow products for consumption, and about 2.5 percent
of China’s farmland cannot be cultivated at all, mainly due to heavy
metal contamination.25 The country now has an estimated domestic
planting area shortage of 90 million hectares.† 26 As a result, pro-
duction growth for rice, wheat, and corn has slowed down during the
last decade as land becomes increasingly unavailable.27
China also has geographic water imbalances. Eighty percent of
Chinese water resources are concentrated in southern provinces.‡ 28
This distribution is particularly damaging for food security. China’s
northern provinces account for 65 percent of the country’s cultivated
land and 50 percent of the country’s grain production.29 The mis-
match between water supply and use means that the north of the
country could run dry within 30 years.§ 30 Climate change is exac-
Kuan-Hui Elaine Lin et al., “Historical Droughts in the Qing Dynasty (1644–1911) of China,”
Climate of the Past 16:3 (June 2020): 911–931.
* Working from official statistics, scholars have estimated that the famine, which was the result
of Chairman Mao’s efforts to accelerate industrialization by shifting resources away from agricul-
ture, led to the death of 30 million people and another 33 million births were lost or postponed,
sowing the seed for the deeply tumultuous Cultural Revolution. Shige Song, “Mortality Conse-
quences of the 1959–1961 Great Leap Forward Famine in China: Debilitation, Selection, and
Mortality Crossovers,” Social Science & Medicine Vol 31:3 (August 2010), 9.
† Beijing is taking a number of actions to try and rectify this. Central Document No. 1 from
2019 set out a “farmland red line” policy with a target of preserving at least 120 million hectares
of farmland—an area slightly larger than Sweden. The National High-Standard Farmland Con-
struction Plan (2021–2030) has also implemented a national plan for enhancement of farmland
quality through farmland restoration measures, crop rotation practices, and fallow land systems.
China has also purchased agricultural land beyond its borders. In 2021, Chinese investors owned
383,935 acres of agricultural land in the United States, though more recently U.S. officials have
begun to curtail this practice. The lion’s share of Chinese international land purchases are in
Asia and Africa. Between 2011 and 2020, Chinese companies purchased or leased 6.48 million
hectares of land for agriculture, forestry, or mining. Gustavo F. C. Ferreira, written testimony
for U.S.-China Economic and Security Review Commission, Hearing on China’s Stockpiling and
Mobilization Measures for Competition and Conflict, June 1, 2024; U.S. Department of Agricul-
ture, Foreign Holdings of U.S. Agricultural Land through December 31, 2021, December 31, 2021;
Daishi Chiba, Shin Watanabe, and Yuichi Nitta, “Chinese Companies Corralling Land around
World,” Nikkei Asia, July 13, 2021; Zhang Zhilong, “ ‘Red Line’ Policy Protects China’s Arable
Land,” CGTN, February 23, 2019.
‡ Mao Zedong acknowledged this 70 years ago when he famously remarked, “The South has
plenty of water and the North lacks it, so, if possible, why not borrow some?” Carla Freeman,
“Quenching the Thirsty Dragon: The South-North Water Transfer Project—Old Plumbing for New
China?” Wilson Center.
§ To mitigate this, in 2003, China’s government launched the $60 billion South-to-North Water
Transfer Project. The project diverts water from tributaries of the Yangtze River to replenish the
dry north. China has also to tried to increase rainfall through cloud seeding, moved heavy indus-
try away from water-stressed regions, and is investing in water management infrastructure. In
April 2022, Vice Minister of Water Resources Wei Shanzhong estimated that annual investment
in water-related projects could reach $100 billion annually. Gabriel Collins and Gopal Reddy,
“China’s Growing Water Crisis,” Foreign Affairs, August 23, 2022.
465
erbating this. Researchers estimate that a combination of climate

change-related drought and heightened levels of tropospheric ozone
has accounted for yield losses of 10 percent in China.31 Between
1981 and 2010, this amounted to annual losses of 55 million tons
of crops.32
Chinese demand for food is increasing. From 1990 to 2019, Chi-
nese per capita food available for consumption increased 34 per-
cent.33 Rising incomes mean this growth will continue. Between
2020 and 2050, researchers estimate that Chinese demand will grow
a further 16 to 30 percent.34 Cheng Guoqiang, a professor of ag-
ricultural economics and rural development at Renmin University
in Beijing, estimates that rising food demand and challenges from
climate change mean national food output will likely continue to
decline as a percentage of domestic demand. Professor Cheng esti-
mates that from 2000 to 2020, China’s reliance on imports for its
overall food supply increased from 6.4 percent to 34.2 percent.35
He projects that by 2030 imports will rise by another 7 percentage
points, with domestic production accounting for just 58.8 percent of
China’s total demand.36
Informed by their past and aware of present challenges, Chinese
leaders have persistently prioritized food security as a prerequisite to
maintaining power.37 In many ways, these policies have been success-
ful for the time being. Grains are at the heart of China’s food security
efforts. They are the country’s main source of calories, animal feed,
and raw materials for processed food products.38 Since 1996, China
has aimed to maintain 95 percent self-sufficiency for its key grains.39
Though Chinese production has fallen below the 95 percent target, it
is still largely self-sufficient in corn, rice, and wheat.¶ 40
Corn: China is the second-largest corn producer in the world and
is mostly self-sufficient in the crop.41 Corn is China’s largest food
crop in terms of production. In the 2023 marketing year,† China pro-
duced 288.8 million metric tons of corn domestically.42 China is also
the world’s largest corn importer, and in 2023 it imported 26.2 mil-
lion metric tons, primarily from Brazil (11.9 million metric tons), the
United States (7.1 million metric tons), Ukraine (5.5 million metric
tons), Bulgaria (739 thousand metric tons), and Burma (Myanmar)
(381 thousand metric tons).‡ 43 In 2023, China consumed 307 million
metric tons of corn and had a dependency rate of 8.3 percent.§ 44
¶ The conclusion that China has fallen below the 95 percent target is based on calculations
below. Additionally, China now imports more grains—most notably soybeans, corn, wheat, and
rice—than any other country. Gustavo F. C. Ferreira, written testimony for U.S.-China Economic
and Security Review Commission, Hearing on China’s Stockpiling and Mobilization Measures for
Competition and Conflict, June 1, 2024; Zongyuan Zoe Liu, “China Increasingly Relies on Import-
ed Food. That’s a Problem,” Council on Foreign Relations, January 24, 2023.
† Crop production is measured across a marketing year, or the 12-month period starting just
after harvest when a crop may be sold. Since all crops have different harvest schedules, market-
ing seasons are not precisely comparable across crops or between crop production and import and
export values (which tend to reflect calendar years). To avoid confusion, all marketing years are
referred to by the year in which they started. Additionally, data on imports and exports reflect
values from the year in which the marketing year began.
‡ Figures for corn imports are determined using the HS code 1005.90 for corn crops excluding
seeds. This may include corn meant for human consumption as well as for livestock feed or other
uses. To ensure foreign producers are unable to outcompete and undermine domestic producers,
China manages its annual volume of corn imports—typically between 25 and 30 million tons.
Gustavo F. C. Ferreira, written testimony for U.S.-China Economic and Security Review Commis-
sion, Hearing on China’s Stockpiling and Mobilization Measures for Competition and Conflict,
June 1, 2024, 6.
§ Dependency rate refers to imports as a percentage of total yearly stock (domestic production
+ imports). Subtract this figure from 100 to determine the percentage of yearly stock met by
466
Rice: China is nearly self-sufficient in milled rice. China produced

144.6 million metric tons of milled rice in 2023 and imported an
additional 1.8 million metric tons, making it both the world’s larg-
est producer and importer.* 45 China’s primary sources of imported
rice were countries in South and Southeast Asia, including Vietnam,
Thailand, and Burma.† 46 In 2023, China consumed 148.1 million
metric tons of rice and had a dependency rate of 1.2 percent.‡ 47
Wheat: China is mostly self-sufficient in wheat. Wheat is China’s
third most important crop in terms of metric tons of production. In
2023, China was the largest global producer, yielding 136.6 million
metric tons of wheat while importing 11.9 million metric tons.48
Most of these imports came from Australia (6.9 million metric tons),
Canada (2.5 million metric tons), the United States (925 thousand
metric tons), and France (815 thousand metric tons).§ 49 In 2023,
China consumed 154 million metric tons of wheat and had a depen-
dency rate of 8 percent.50
Pork: In addition to these grains, China has identified pork as
important for its food security. China is nearly self-sufficient in pork.
Pork is China’s primary protein and accounts for about 60 percent of
all meat consumed in the country.51 In 2023, China produced 57.9
million metric tons of pork, making it the largest producer global-
ly.52 It imported 1.5 million metric tons, with Brazil (402 thousand
metric tons), Spain (378 thousand metric tons), Canada (132 thou-
sand metric tons), and the United States (122 thousand metric tons)
as primary suppliers.¶ 53 In 2023, China consumed 59.7 million met-
ric tons of pork and had a dependency rate of 2.5 percent.54
China’s Global Agriculture Ambitions: The Smithfield

Acquisition
In 2013 the Chinese firm Shuanghui, now called WH Global,
acquired Smithfield Foods for $4.7 billion ($7.1 billion including
debt), the biggest acquisition of a U.S. company by a Chinese firm
up to that time.55 The Committee on Foreign Investment in the
United States (CFIUS) approved the transaction.56 Four years
after being acquired by WH Group, Smithfield purchased Kansas
City Sausage Co. LLC, one of the United States’ largest sausage
producers and processors.57
As China’s largest pork producer, Shuanghui’s expansion into
overseas markets was aligned with China’s “going out” strategy to
encourage some of its national champions to become multination-
al leaders.58 Ostensibly, China aimed to learn how to scale up its
meat production, increase sanitary standards, and secure imports
China’s domestic production.

* Milled rice has been processed and had the hull removed, making it suitable for human
consumption. Rough rice has not been processed and is generally not intended for human con-
sumption. Import values for milled rice are based the six-digit HS classification for semi- or
wholly-milled rice (1006.30).
† Figures for rice imports are determined using the HS code 1006.30 for semi-milled or fully
milled rice, whether or not it is polished or glazed.
‡ Consumption can sometimes exceed production and imports combined. This likely means Chi-
na is supplementing consumption with stocks left over from previous years.
§ Figures for wheat imports are determined using the HS code 1001 for wheat and meslin.
¶ Figures for pork imports are determined using the HS code 0203 for meat of swine, fresh,
chilled, or frozen.
467
China’s Global Agriculture Ambitions: The Smithfield

Acquisition—Continued
to respond to growing domestic demand for pork.59 The deal also
meant that Shuanghui acquired 146,000 acres of U.S. farmland.60
China has an affinity for pork. The character for home or family
in Chinese, 家 jia, depicts a pig under a roof. This common charac-
ter is used in the word for country or nation (国家 guojia). Indeed,
Xi’s first trip to the United States was to study hog farming.61 As
China has gotten wealthier, its demand for meat has grown and
China’s annual pork consumption now exceeds that of the United
States by a large margin.62
Since the Smithfield acquisition, Chinese imports of U.S. pork
products have increased.* From $704 million in 2012, Chinese
pork imports from the United States peaked at $2.3 billion in
2020, settling back to $1.2 billion in 2023, still a 76 percent in-
crease from 2012 levels.† 63
A decade on, the Smithfield acquisition remains contentious.
Some argue that growing agricultural exports to China is a net
positive, as is generally the view for U.S. agricultural exports.64
Further, the United States could limit exports to China if neces-
sary, regardless of the ultimate ownership of a U.S. subsidiary.
Others have raised concerns that the deal could pose “food safe-
ty, food security and intellectual property concerns” or increase
domestic U.S. prices if exports to China decreased U.S. supply.65
Further, recent years have seen growing concern about purchases
of U.S. farmland by Chinese entities.66
Smithfield continues to have a large presence in the United
States.67 It retained the U.S. management team after the acqui-
sition, and its products continue to be available in the United
States.68 Recently, the Hong Kong-listed parent of Smithfield an-
nounced it would separate its North American and European op-
erations, though both will remain WH Group subsidiaries (with
a U.S. initial public offering of the spun-off Smithfield contem-
plated).69
Significant Import Reliance for Soybeans: The last product

China has identified as a staple is soybeans, which is the most sig-
nificant challenge to Chinese domestic food self-sufficiency. While
soybeans can be directly consumed, China primarily uses the crop as
* After Smithfield’s acquisition, exports as a share of its total pork sales increased, although
it is unclear what portion of those exports were ultimately consumed in China. Smithfield does
not break down export data by specific countries. In the five years leading up to the acquisition,
Smithfield’s export sales made up, on average, 16.2 percent of its total pork volume. Following the
acquisition, in 2014, its export sales rose to 23 percent of total volume and continued to rise to
25 percent in 2015. In 2016, Smithfield stopped publishing its annual investor report. Smithfield
Foods, Inc, “Form 10-K FY 2015,” January 3, 2016; Smithfield Foods, Inc, “Form 10-K FY 2014,”
December 28, 2014; Smithfield Foods, Inc, “Form 10-K FY 2013,” April 28, 2013; Smithfield Foods,
Inc, “Form 10-K FY 2012,” April 29, 2012; Smithfield Foods, Inc, “Form 10-K FY 2011,” May 1,
2011; Smithfield Foods, Inc, “Form 10-K FY 2010,” May 2, 2010; Smithfield Foods, Inc, “Form 10-K
FY 2009,” May 3, 2009.
† The 2020 peak occurred because Asian Swine Fever outbreaks caused China to cull domestic
hogs, severely affecting domestic production. Some in Congress wanted investigations when pork
prices increased and exports to China surged in 2020. Shibing You et al., “African Swine Fever
Outbreaks in China Led to Gross Domestic Product and Economic Losses,” Nature Food 2 (2021),
802–808; Reuters, “U.S. Senators Question Meatpackers over Exports to China during Pandemic,”
June 24, 2020.
468
animal feed or converts it into edible oils.70 Unlike its other staples,
China is heavily dependent on imported soybeans. In 2023, China
produced just 20.8 million metric tons of soybeans but imported 87.4
million metric tons.71 Of this volume, 59.7 million metric tons were
purchased from Brazil and 22.4 million metric tons (25.6 percent)
were purchased from the United States.72 In 2023, China consumed
121.7 million metric tons of soybeans and had a dependency rate
of 81.1 percent.73 China is unlikely to resolve this dependency by
increasing domestic production. It costs nearly 30 percent more to
grow soybeans in China than in the United States, while the yield
is 60 percent less.74
Table 1: China’s Foreign Dependency for Staple Foods, Million Metric Tons
Staple Domestic Global Import
Food Production Imports Dependency Rate
Corn 288.8 26.2 8.3%
Rice 144.6 1.8 1.2%
Wheat 136.6 11.9 8%
Soybeans 20.3 87.4 81.1%
Pork 57.9 1.5 2.5%

Source: Various.75
Efforts to Improve Food Security

Chinese leaders are trying to improve food security by expanding
agricultural land, investing in productivity enhancing technology,
reducing demand, and engaging in stockpiling. These policies, how-
ever, have their limits. Environmental degradation, climate change,
and growing consumption mean China’s domestic food security will
worsen in the short term—even if it becomes less reliant on the
United States.
Gustavo Ferreira, a senior agricultural economist at the U.S.
Department of Agriculture, points out that China has steadily in-
creased state investment in agricultural research and development.
Chinese officials hope to strengthen domestic scientific and techno-
logical expertise in modern agriculture and improve the country’s
agricultural equipment. In particular, China has focused resources
to boost the development of its seed industry.* 76
China has also tried to reduce domestic demand, focusing on
soybeans. China has urged domestic livestock feed producers
to incorporate alternative oilseeds like rapeseed or sunflower
seed which could be sourced from countries such as Canada or
Ukraine.77 In 2023, Chinese officials implemented a three-year
action plan to reduce soybean meal ratios in animal feed from
14.5 percent in 2022 to less than 13 percent by 2025. Such a
change could reduce imports by as much as four million metric
* The Chinese Academy of Agricultural Sciences (China’s national agricultural scientific re-
search organization) laid out a five-year development plan calling for the construction of new
laboratories, a grain crop science center, and enhancements in breeding capacity for crops and
livestock. Genevieve Donnellon-May and Zhang Hongzhou, “Hungry China’s Growing Interest in
‘Future Foods’ and Alternative Protein,” Diplomat, May 4, 2022; Xinhua, “China Aims High in
Agricultural Sci-Tech Innovation,” January 13, 2022.
469
tons a year.78 All else equal, this would reduce Chinese consump-
tion by 3.7 percent and leave them with an import dependency
rate of 80.4 percent.*
China is also diversifying soybean imports away from the United
States. While Brazil had been slowly gaining market share start-
ing about 15 years ago, the erosion of the U.S. position in China’s
market accelerated dramatically with the 2018 trade war. Chinese
purchases of U.S. soybeans collapsed in 2018 following a 25 per-
cent tariff implemented by China. During the 2016–2017 season,
immediately prior to the trade war, China sourced 41 percent of
its soybeans from the United States and 46 percent from Brazil.79
During the 2018–2019 season, this shifted. China sourced some 75
percent of imports from Brazil compared with 19 percent from the
United States.80 While trade has since stabilized, in 2023 China
still sourced 68 percent of its soybeans from Brazil compared with
26 percent from the United States.81 Expansive South American
production capacity means China could theoretically divert all its
soybean procurement to the region. However, total reliance on South
American imports would expose China to new risks from geographic
and growing season concentration.† 82
China has found other willing partners in its Belt and Road
Initiative (BRI) members. Since its introduction in 2013, China
has signed over 100 agricultural cooperation agreements with
BRI countries.83 Russia has emerged as a key supplier. In 2023,
following a meeting between General Secretary Xi and Russian
President Vladimir Putin, a Russian company signed a $26 bil-
lion agreement to supply 70 million tons of grain, legumes, and
oilseeds to Chinese buyers over the next 12 years.‡ 84 This builds
on longstanding efforts to increase two-way trade such as the
Russia-China Land Grain Corridor, an initiative launched in
2016 to build out infrastructure supporting the export of grain
by Russia and other Eurasian countries to China.85 Russia’s
abundant wheat production could serve as additional insurance
to safeguard Chinese food security.86
China’s Significant Food Stockpiling
In addition to other policies to enhance food security, China main-
tains large emergency food stockpiles of agricultural products and
* Calculation shows the change in the import dependency rate if the entirety of the reduced
demand is offset by a decline in imports with no changes to other consumption or domestic
production.
† Although the United States’ and Brazil’s soybean growing seasons are complementa-
ry, Brazil has been increasingly able to capture U.S. market share during peak U.S. ex-
port season. Typically, more than 60 percent of annual U.S. soybean exports to Chi-
na occur between October and January, when Brazilian supplies are presumably low.
However, in 2024, U.S. soybean exports to China during that four-month period were 2.8 mil-
lion metric tons more than Brazil. Historically, outside of 2018–2019 and 2019–2020, at the
gap would be a minimum 13 million metric tons and possibly up to 25 million metric tons.
Karen Braun, “Brazil’s Intrusion on US Soy Exports to China Somewhat Mimics Trade-War Era,”
Reuters, March 22, 2024.
‡ Since 2022, China has lifted numerous sanitary restrictions that have previously prevented
the import of Russian agricultural products. In 2022, China began to allow the import of spring
wheat and barley from Russia. In 2023, peas and millet received approval. The two countries
are currently negotiating lifting restrictions on the Chinese import of Russian corn and rice.
Genevieve Donnellon-May and Zhang Hongzhou, “The Sino-Russian Land Grain Corridor and
China’s Quest for Food Security,” Asia Society Policy Institute, May 8, 2024; World Grain, “Russia,
China Expand Agricultural Trade,” November 8, 2023.
470
pork, significantly out of proportion to global norms.* The compo-

sition, volume, and quality of these reserves are a state secret and
can only be estimated.87 Official communications state that China
has built nearly 700 million metric tons of grain storage capacity.88
Using data provided by the U.S. Department of Agriculture (USDA),
Nikkei estimates that China’s share of global grain stocks (corn,
rice, wheat, soybeans) increased by at least 15 percent for each crop
from 2011 to 2021.89 The USDA estimates that as of the first half of
2022, China holds 69 percent of the world’s corn reserves, 60 percent
of its rice, and 51 percent of its wheat.90 With only 18 percent of
global population, China holds just over half of global staple grain
reserves. China also maintains a strategic pork reserve. In July
2023, the Chinese government indicated it stockpiled 20,000 tons
of pork in order to replenish national reserves, suggesting the total
reserve volume is higher.91
Because the true size of its stockpiles is unknown, it is uncer-
tain how long these reserves could sustain China.92 While anec-
dotal evidence suggests China has somewhere between one to two
years’ worth of stocks of key agricultural commodities, even Chinese
officials with complete access to information likely cannot give a
precise estimate.93 The scale of China’s stocks require a very large
grain storage infrastructure and complex management to ensure the
viability of the stored commodities.94 As a result their true size and
usability is likely not fully assessable.†
Perspective on Food Security Efforts
In terms of evaluating China’s food stockpiling, it is notable
that projections of Chinese grain stockpiles have not substantial-
ly increased in recent years. The USDA projects that total Chi-
nese ending stocks—the amount of grain left in the country at
the end of each year and an imperfect proxy for reserves—peaked
for wheat and rice in 2019.95 Corn peaked even earlier, in 2016.96
Since then ending stocks have fallen, with rice declining 10.7 per-
cent.97 In contrast, Chinese soybean ending stocks have contin-
ued to rise, though they remain far below Chinese stockpiles of
corn, wheat, or rice.98
* Note that official data on these stores are not publicly available but can be pieced together
using official statements and proxy indicators.
† There are also concerns about the accuracy and reliability of grain reserves data as well as
China’s broader agriculture production data. A lack of transparency, recent arrests and investiga-
tions related to corruption, and quality concerns all obscure China’s stockpiling. For example, in
2022, the former top official at the National Food and Strategic Reserves Administration (respon-
sible for centralized control over stockpiled grain), Zhang Wufeng, was sentenced to ten years in
prison for taking bribes, and in May 2024, current Agriculture and Rural Affairs Minister Tang
Renjian was placed under investigation by the anti-graft agency for “serious violations” of the
law. More broadly, some academics have called into question the overall reliability of data in the
agriculture sector. They argue that important government subsidies to the major grain-producing
counties created incentives for over-reporting production and that the lower administration level
that generates the agricultural data has a higher risk of data manipulation and misreporting.
Gustavo F. C. Ferreira, written testimony for U.S.-China Economic and Security Review Commis-
June 1, 2024, 15; Bloomberg, “China Says Agriculture Minister Tang Renjian Is Under Inves-
tigation,” May 18, 2024; Yang Zekun, “Former Head of China’s Food Reserves Administration
Sentenced to 10 Years in Jail,” China Daily, December 15, 2023; Zhun Xu et al., “China’s Grain
Production: A Decade of Consecutive Growth or Stagnation?” Monthly Review 66:25 (May 2014).
471
Figure 1: Ending Stock of Key Chinese Food Staples, 2007—2024,
Million Metric Tons
Corn
200
150
Million metric ton
Wheat
Rice
100
50
Soybeans
0
2008 2010 2012 2014 2016 2018 2020 2022 2024
Source: U.S. Department of Agriculture Foreign Agricultural Service, “Corn ending stocks,
Wheat ending stocks, Rice ending stocks, Soybean ending stocks [2007–2024],” via FAS Production,
Supply, and Distribution, September 19, 2024.
Energy Security in China

China’s Energy Composition
China’s massive population and rapid industrialization has meant
that demand for energy has outstripped domestic sources of supply.
As a result, China has become deeply reliant on external sources
of key energy commodities. Foreign oil imports, in particular, are
China’s largest strategic energy vulnerability. Xi has continued to
push for enhanced energy security saying the country “must hold
the energy food bowl in its own hands.” 99 However, his efforts are
influenced by various factors, including concerns about market vol-
atility, making it difficult to discern the relative significance of na-
tional security as a driver for his efforts.
Coal
While China may be most concerned with oil imports, coal is the
country’s most significant energy resource. In 2022, it contributed 61
percent of the country’s total energy supply.* 100 Coal is central to
Chinese energy security. The country’s abundant domestic resources
and enormous coal power generation capacity make it a significant
* In 2022, China relied upon coal, oil, and natural gas for 86.7 percent of its total energy supply.
International Energy Agency, “China.”
472
hedge against energy insecurity and geopolitical uncertainty.101 Chi-

nese reserves also mean coal is the only major energy commodity
where the country is typically a net exporter.102 This has allowed
Chinese officials to focus energy contingency plans on production,
rather than stockpiling or energy import infrastructure. China’s nat-
ural supplies have allowed the country to pursue a strategy focused
on establishing a system of “dispatchable coal reserves.” 103 Under
the strategy, China’s National Development and Reform Commission
aims to develop the capacity to rapidly increase coal production by
300 million tons per year by 2030.104 Combined with an abundance
of coal power plants, China could surge coal production and allow its
coal-fired power capacity to fill energy production gaps.* Because of
these factors, China stockpiles a relatively meager 200 million tons
of coal at major power plants, approximately a 30-day supply.† 105
Natural Gas
Natural gas is less critical to China’s energy mix than either coal
or oil. In 2021, natural gas made up just 3.1 percent of China’s
total electricity generation.106 China primarily uses natural gas
to heat homes, to cook food, and as an input in certain industrial
processes.107 Replacements such as coal or electrical heaters can
substitute for gas’ most important use cases.108 Still, China is very
dependent on foreign natural gas. In 2023, China imported 165.6
billion cubic meters (BCM), or 42.3 percent of its total natural gas
consumption.109 China’s import dependence is worsening. In 2023,
the country’s reliance on foreign natural gas increased 1.1 percent
from 2022.110 In recent years, China has focused on rapidly expand-
ing its natural gas storage capacity. CEDIGAZ, a gas analytics firm,
estimates that Chinese firms operate 21.3 BCM of working under-
ground gas storage capacity plus an additional 8.1 BCM of tank
storage at liquefied natural gas import facilities.111 The firm fore-
casts that the country’s gas storage capacity could rise to 80 BCM of
working gas storage capacity by 2030.112 In 2023, China consumed
395 BCM of natural gas.113 By 2030, China National Petroleum Cor-
poration forecasts the country will consume between 550 and 600
BCM of natural gas.114
Chinese policymakers appear to perceive natural gas storage as
more of a market management tool than a safeguard ensuring ener-
gy security. Gabriel Collins, fellow at Rice University’s Baker Insti-
tute, notes, for example, that in China’s 2023 Energy Work Guiding
Opinion, a document produced by China’s National Energy Admin-
istration and disseminated to all relevant provincial-level agencies
to guide and help implement energy policies, policymakers associate
natural gas development with “bolstering energy system regulation
capacity.” 115 Because of this, he suggests Chinese energy officials
are more concerned with managing natural gas’s seasonal price vol-
atility—buying cheap natural gas in the summer and storing it to
* In 2022, China’s average coal plants utilization rate was 53 percent, far lower than its historic
average of 70 percent. China’s low typical utilization rate means it has ample space to surge coal
power output if needed. Bing Han and Choon Kiat William Chia, “China’s Record Coal Capacity
Approvals in 2022: Will Carbon Targets Still Be Met?” S&P Global, April 27, 2023.
† China’s stockpile size is variable and fluctuates based on a range of different factors. For
example, in January of 2024, Chinese coal stockpiles were as low as 120 million tons before low
prices allowed stocks to climb to 162 million tons by May 2024. Bloomberg News, “China’s Glut
of Coal Delivers Early Success in Dodging Summer Shortages,” June 25, 2024.
473
use when prices spike in the winter—than ensuring the country has
a robust, contingency supply.116
Oil
China is deeply reliant on foreign oil. However, unlike natural
gas, which is nonessential and can be substituted with coal, oil’s
centrality to both the domestic economy and the military make it
China’s most significant resource vulnerability in a crisis scenar-
io.117 Chinese officials have noted that electricity supply problems
“can be solved by ourselves” but that “oil imports are different . . . . If
our oil imports are cut off, it affects the whole nation, not just cer-
tain provinces, and we no longer maintain self-reliance.” 118 Chinese
strategists have long viewed the country’s increasing reliance on
foreign oil imports as a key vulnerability and a potentially serious
constraint on Chinese strategic action.119 This has compelled China
to pursue a series of diversification and stockpiling initiatives to
mitigate the impact of potential future disruptions.
China became a net oil importer in 1993.120 In 2023, the country
was only able to produce 27 percent of its oil domestically.121 China
imported an average of 11.3 million barrels a day while produc-
ing 4.2 million barrels a day. China has tried to minimize the risks
brought about by its overreliance on foreign sources by maintaining
a diverse mix of friendly suppliers. In 2023, China sourced 4.4 per-
cent of its oil imports from the G7 (with the United States and Can-
ada being the largest suppliers).122 Instead, China has historically
sourced around half of its imports from Gulf countries.123 Because
of this, China has sought closer ties with the region. (For more on
China’s engagement with the Middle East, see Chapter 5, “China in
the Middle East.”) China is also slowly building a naval presence in
the area. The U.S. Department of Defense lists the Strait of Hormuz
as a “known focus area” for Chinese military planners.124 Analysts
suggest China is building a robust presence to potentially counter
U.S. efforts to block oil transit during a crisis.125
In 2023, Russia emerged as China’s most important single suppli-
er.126 Buoyed by the “no limits” partnership they declared in Febru-
ary 2022, Chinese refiners have rapidly expanded purchases of the
Russian crude that had flowed to Europe prior to Russia’s invasion
of Ukraine.* 127 However, even among its partners, China is wary
of the risks that come from overreliance. Shipping insiders believe
China caps oil imports from any country at around two million bar-
rels per day.128
Despite China’s supply diversification, most of these oil imports
reach China via seaborne tankers. Asia’s island geography means
that 80 percent of China’s total oil imports must pass through
the Strait of Malacca, separating Indonesia and Singapore, mak-
ing the waterway a critical vulnerability.129 Xi’s predecessor,
General Secretary Hu Jintao was profoundly concerned by this
* In response to the invasion of Ukraine, the G7 has tried to impose a price cap of $60 dollar
per barrel on Russian crude oil exports. While the G7 has not been able to fully enforce it, their
sanctions and pressure has led to a minor discount in Russian crude. As a result, in 2023, China
was able to purchase Russian crude at an average price of $77 per barrel. This was around a $6
dollar per barrel discount and resulted in a nearly $5 billion total discount in 2023. Bloomberg,
“Russia Becomes Top China Oil Supplier for First Time since 2018,” January 22, 2024; U.S. En-
ergy Information Administration, Brent Crude Oil Prices Averaged $19 Per Barrel Less in 2023
than 2022, January 2, 2024.
474
and called China’s overreliance on the route the “Malacca Dilem-

ma.” 130 However, under Xi, China’s susceptibility to a disruption
in the Strait of Malacca has worsened. In 2013, Xi’s first full year
as General Secretary, China relied on imports for 57 percent of
its total crude oil supply. By 2023, its import rate had grown to
76 percent.131 China’s less secure seaborne oil imports have also
similarly risen, growing from 91 percent in 2009 to 97 percent in
2023.132 China has had some options to slow this growth, such
as a new oil pipeline with Russia that has been discussed since
2018.133
Instead, Chinese officials have prioritized constructing large oil
storage facilities and developing and encouraging substitutes, such
as electric vehicles (EVs), wherever possible.* In 2021, 49 percent
of total final consumption of oil products was used for transporta-
tion.134 As a result, one way China is hoping to decrease its overall
demand is through alternatives such as transportation electrifica-
tion. Starting in 2001, China’s Ministry of Science and Technology
issued a strategic plan to develop new energy vehicles and conduct-
ed research into them under the 863 Program, a high-tech develop-
ment plan.135 Over the next two decades, China continued to focus
resources into the program.
With strong state support, China’s domestic EV sector was able
to develop quickly, and starting in 2020, it began to rapidly gain
market share in new consumer car sales. The International Energy
Association projects that in 2024, EVs could account for up to 45
percent of new car sales in China, up from 30 percent in 2022.136
This would mean that by the end of 2024, around 10 percent of
China’s total passenger vehicle fleet is likely to be either an EV or a
plug-in hybrid.137 By 2030, one in three cars on Chinese roads could
be EVs.138 Chinese EV adoption is meaningfully slowing China’s oil
consumption growth.† If trends continue, the International Energy
Association estimates that by 2030, EVs could reduce the country’s
daily oil consumption by two million barrels a day and, by 2035,
over three million barrels a day.139
While such widespread adoption would be an important milestone,
it still only represents a fraction of China’s overall oil demand. Re-
searchers affiliated with China National Petroleum Corporation
project that China’s oil demand is expected to peak by 2030 at be-
tween 780 million and 800 million metric tons per year, or around
15.6 million to 16 million barrels per day.‡ 140 To ensure China can
satisfy its consumption needs in a crisis scenario, Chinese leaders
have undertaken a massive buildout of its domestic oil storage.
* Chinese firms continue to also engage in domestic drilling efforts, but limited natural reserves
constrain their ability to become a meaningful replacement for China’s foreign dependence and
instead appear to emphasize “running harder to stay in place.” Gabriel Collins, written testimony
Mobilization Measures for Competition and Conflict, June 1, 2024; Reuters, “China’s Oil Produc-
tion Rises to 208 Mln Tons in 2023—CCTV,” January 9, 2024.
† While EVs can slow consumption, it is unclear how long and where the bright line sits for
EVs to reduce overall gasoline demand. It is dependent on a number of factors, most notably
how many new internal combustion engine vehicles also are sold in the coming years. Gabriel
Collins, using Norway’s substantial EV adoption as a reference point, estimates that China would
need around 80 million EVs for this to happen. Gabriel Collins, written testimony for U.S.-China
Economic and Security Review Commission, Hearing on China’s Stockpiling and Mobilization
Measures for Competition and Conflict, June 1, 2024.
‡ It is unclear how China National Petroleum Corp accounts for EV adoption within its projec-
tions. Nonetheless, the numbers show the absolute scale of Chinese oil demand.
475
From 2016 to 2024, China’s aboveground crude oil inventory has

ranged from 850 million to just over one billion barrels.141 As of late
May 2024, China had about 942 million barrels of crude oil stored
in aboveground tanks onshore.* † 142 China’s total storage capacity
is likely larger. Kayrros, an energy data provider, suggest that Chi-
na’s total crude storage capacity is currently a little over 1.8 billion
barrels.143
China has grown its storage capacity considerably over the last
two decades. From 2005 to 2024 storage has roughly tripled while
overall oil consumption has doubled.144 Chinese capacity tends to
cluster around oil ports capable of accepting very large crude car-
riers.145 This means they are predominantly located in Shandong,
Zhejiang, Liaoning, and Guangdong provinces. Shandong and the
Greater Shanghai Area is China’s largest oil import and storage
zone. The region is home to more than 500 million barrels of storage
capacity.146
China’s Strategic Petroleum Reserve (SPR) is a subset of its overall
reserve capacity. Discussions of an SPR began in the 1980s, though
a drawn-out debate over its potential costs and utility delayed con-
struction until 2004.147 China’s growing foreign dependence justified
its creation, and, by 2009, the Phase I SPR sites—located at Zhen-
hai, Zhoushan, Huangdao, and Dalian—were built and filled with
103 million barrels of oil.148 Phase 2 was completed in 2019 and can
store roughly 200 million additional barrels of oil.149 A third phase
of the project is currently under consideration and would bring the
SPR’s total capacity to around 500 million barrels.150
Notably, after Russia’s invasion of Ukraine demonstrated the vul-
nerability of aboveground storage, China has likely accelerated the
development of underground oil storage.‡ 151 In 2023, China Nation-
al Petroleum Corporation (CNPC) announced the launch of a spe-
cial “Mined Cavern Underground Oil Storage Laboratory” signifying
a long-term commitment to expanding underground oil storage in
China.§ 152
Offsetting Potential of China’s Oil Stockpiles in a

Complete Blockade
China’s enormous oil storage capacity provides a considerable
lifeline to help the country weather a complete blockade of its sea-
borne oil supply. In addition to its storage, China has a number
of other levers it can pull to reduce and prioritize demand. China
* This specific estimate comes from commercial data provider BreakWave Advisors, though it
is broadly in line with similar firms such as Kayrros and Ursa Space Systems. Gabriel Collins,
written testimony for U.S.-China Economic and Security Review Commission, Hearing on China’s
Stockpiling and Mobilization Measures for Competition and Conflict, June 1, 2024.
† This number includes strategic petroleum reserve sites with a total storage capacity of ap-
proximately 300 million barrels of crude oil. Michal Meidan, “China’s SPR Release: A Test of
Mechanisms Rather than a Show of Market Might,” OIES, September 2021.
‡ Aboveground oil and refined product storage tanks are vulnerable to even small strikes from
drones, cruise missiles, and other munitions. Successful attacks not only disrupt supplies but can
also trigger catastrophic fires. Both Russia and Ukraine have targeted oil production and storage
facilities with success. Constant Méheut, “Ukraine, Stalled on the Battlefield, Targets Russia’s Oil
Industry,” New York Times, May 14, 2024.
§ Planning for the Mined Cavern Underground Oil Storage Laboratory began in 2019. China
also already had at least 100 million barrels of underground storage capacity before Russia’s
invasion of Ukraine. Gabriel Collins, written testimony for U.S.-China Economic and Security
Review Commission, Hearing on China’s Stockpiling and Mobilization Measures for Competition
and Conflict, June 1, 2024, 21.
476
Offsetting Potential of China’s Oil Stockpiles in a

Complete Blockade—Continued
can stop the export of refined oil products, implement rationing
to reduce non-military demand, continue to receive shipments via
land-based pipelines from Burma, Kazakhstan, and Russia, and
even work with Russia to rapidly bring online additional pipe-
lines that would replace the existing seaborne supplies China
gets from the Russian port of Nakhodka.
Mr. Collins estimates that taken together, a large stockpile,
aggressive rationing, and secondary fuel supply measures mean
China’s total stocks could last between two to four years in a
crisis situation. Each incremental 100 million barrels of storage
meets approximately two months of consumption needs in the “no
additional overland supplies” scenario and closer to six months
when augmented with Russian overland pipeline expansions.153
Aggressive Chinese Efforts to Ensure Financial Sanctions

Resilience
China’s reliance on payments networks that are vulnerable to
U.S. financial sanctions to process a majority of its external trade
and finance is an asymmetric vulnerability that could be leveraged
against it. Chinese leaders are acutely aware of this weakness and
are building alternative financial networks to help circumvent or
evade U.S. financial sanctions. Despite these efforts, China is un-
likely to succeed in the short term. As a result, a maximalist U.S.
sanctions campaign against China could place at least $3 trillion
in annual trade and financial flows, not including foreign reserve
assets, at immediate risk of disruption.* 154
The possibility of U.S. financial sanctions has motivated China
to pursue the creation of an alternative payments network. To
circumvent U.S. financial sanctions, China must succeed across
three areas: (1) promote international adoption of China’s cur-
rency, the renminbi (RMB), as a viable alternative to the U.S.
dollar; (2) develop payments systems capable of facilitating RMB
transactions without U.S. oversight or interference; and (3) secure
willing partners to conduct RMB transactions using Chinese pay-
ments systems.
Sufficiently internationalizing the RMB as a viable alternative to
the dollar and identifying partners willing to transact in RMB are
likely the most difficult challenges Chinese authorities face. Policies
that internationalize the RMB involve explicit tradeoffs that affect
Chinese political imperatives to maintain financial and exchange
rate stability.155 Additionally, the threat of U.S. sanctions and sec-
ondary sanctions could prove to be an insurmountable obstacle for
* Chinese banks do not fully report the total value of their cross-border transaction set-
tlements so this number is a conservative estimate of the scale of disruption if China’s Big
Four banks (the Industrial and Commercial Bank of China, the China Construction Bank,
the Bank of China, and the Agricultural Bank of China) were sanctioned. The number cap-
tures the estimated role of China’s Big Four banks in facilitating trade in goods and ser-
vices, repatriation of income from investments, direct investment, and portfolio investments.
Charlie Vest and Agatha Kratz, “Sanctioning China in a Taiwan Crisis: Scenarios and Risks,”
Atlantic Council, June 21, 2023.
477
many of China’s trading partners that are aligned with, or reliant

on, the United States and its financial infrastructure.
RMB Internationalization
China is actively promoting the internationalization of the
RMB to reduce reliance on the U.S. dollar. Chinese officials are
motivated by the economic and security benefits that would ac-
crue to China’s economy from controlling an internationally used
currency. China is trying to internationalize the RMB through
the development of offshore RMB pools and the settlement of bi-
lateral trade in RMB.
The internationalization of the RMB can be understood and
measured in two interrelated but distinct ways: its use in trans-
actions and its role as a store of value. The RMB’s use in trans-
actions refers to its ability to denominate the value and facilitate
the exchange of goods, services, or other currencies.* The RMB’s
role as a store of value refers to its ability to maintain value
over time. For government actors it is the currency in which they
choose to hold their reserves. In the private sector it is often the
currency in which they choose to issue debt.156 Encouraging the
use of the RMB in transactions is more important than promoting
its use as a store of value within the context of sanctions circum-
vention.157
RMB internationalization is also best understood as a spectrum.
Across this spectrum, China can achieve a high-threshold of inter-
nationalization where the RMB surpasses the U.S. dollar’s role in
transactions and as a store of value. Crossing this threshold would
mean the RMB has become a truly international currency,† used
not only by China but also by third countries in transactions that
do not involve a Chinese party. However, it is unlikely China will
be able to reach this level of RMB internationalization. Achieving
this would require China to implement structural changes to its
economy, including liberalizing its capital account and adopting pol-
icies that would easily allow foreign entities to accumulate claims
on RMB-denominated assets.‡ 158
Nevertheless, China may still be able to achieve a low-threshold of
internationalization by using the RMB in bilateral transactions.159
With sufficient bilateral use of the RMB, China could potentially
circumvent some U.S. sanctions because the RMB has become suffi-
ciently internationalized for its trading partners to exclusively rely
on it to conduct China’s most important business.160 In this scenario
U.S. sanctions would still cause significant disruptions to China’s
* This captures what is sometimes referenced as money’s unit of account and medium of ex-
change function. A currency that is the unit of account for a specific transaction is highly likely
to also function as the medium of exchange for that transaction. Richard Friberg, “The Currency
Denomination of Exports—A Questionnaire Study,” Journal of International Economics, Vol 75:
1 (May 2008): 54–69.
† A currency that is preferred in international exchanges in which that currency is neither the
importer nor the exporter’s official currency. Linda S. Goldberg and Cédric Tille, “Vehicle Curren-
cy Use in International Trade,” Federal Reserve Bank of New York, January 2005.
‡ For example, a sustained current account deficit would lead to other countries accumulating
RMB-denominated claims on Chinese assets. An open capital account would also allow for the
accumulation of RMB-denominated claims while building investor confidence that they would be
able to easily sell those assets at any time. Michael Pettis, “Will the Chinese Renminbi Replace
the US Dollar?” Review of Keynesian Economics 10:4 (October 2022); Barry Eichengreen and Ma-
sahiro Kawai, “Issues for Renminbi Internationalization: An Overview,” Asia Development Bank
Institute, No. 454 (January 2014): 11.
478
normal trading relationships. However, China would still be able

to use the RMB to facilitate its most important trade, including in
energy and raw materials.161
History of RMB Internationalization
China’s interest in RMB internationalization began as an eco-
nomic policy response to perceived weaknesses and limitations
in the dollar-denominated international financial system. Chinese
concerns about the impact of a volatile external financial environ-
ment on its economic growth date back to at least the 1997 Asian
financial crisis.162 The 2008 global financial crisis amplified these
fears and catalyzed Chinese policymakers to begin pursuing RMB
internationalization.163 In the aftermath of the global financial
crisis, Chinese policymakers lost confidence in the U.S. financial
system and observed a reduction in available dollar liquidity.164
The lack of adequate trade financing constrained China’s recov-
ery by limiting China’s ability to export.165 Chinese officials saw
RMB internationalization as a way to avoid future disruptions to
dollar-denominated trade transactions.166 Chinese officials also
believed an international RMB would improve China’s ability to
influence global monetary conditions to the benefit of Chinese
businesses.167
Following Xi’s rise to power in 2013, Chinese officials became
increasingly focused on how RMB internationalization could en-
hance financial security. Just one year earlier, Chinese experts
had observed how the United States utilized financial sanctions
to remove Iran from the dollar-denominated financial system.168
Xi viewed RMB internationalization as a way China’s economy
could build resilience against similar sanctions that could be im-
posed on the country in response to a crisis in Taiwan.169 U.S.
financial sanctions on Russia have amplified Chinese concerns.170
U.S. willingness to use sanctions has led some Chinese scholars
to argue that the security benefits of RMB internationalization
may be more important than the economic advantages of an in-
ternational RMB.171
479
Figure 2: Proportion of Chinese Goods Trade Denominated in RMB,
Three-Month Rolling Average, Mar 2012–Aug 2024
1000 30%
800 25%
RMB billion
600 20%
400
15%
200
10%
0
Jan 12 Jan 14 Jan 16 Jan 18 Jan 20 Jan 22 Jan 24
RMB trade settlement (LHS) Portion of Total Trade (RHS)
Source: People’s Bank of China, “Total Cross-Border Merchandise Trade Settled in Yuan, Ex-
ports, Imports [2012–2024],” via Haver Analytics, 2024.
Policy Support for RMB Internationalization

Chinese officials have supported RMB internationalization by
implementing policies that encourage RMB trade settlement and
investments in RMB-denominated assets. The internationalization
process began in July 2009 with a set of trial measures enabling
cross-border trade settlements between five mainland cities and
certain enterprises in Hong Kong, Macau, and ASEAN member
countries.* 172 China allowed the establishment of offshore RMB
clearing banks in Hong Kong and Macau to carry out and clear
RMB in cross-border trade transactions.173 In the following years,
the program expanded to new offshore RMB centers including Tai-
wan, Singapore, and London.† 174 To allow for offshore transactions
while still maintaining its stringent capital controls, China split the
RMB into two currencies. One was used in the onshore market in
mainland China (CNY) and the other in the offshore market outside
* Shanghai City, Guangzhou City, Shenzhen City, Zhuhai City and Dongguan City were selected
as the test area of mainland China. Sekine Eiichi, “Relationship Between the Renminbi Interna-
tionalization Strategy and the Digital Yuan, and the Future Outlook,” Policy Research Institute,
Ministry of Finance, Japan, Public Policy Review 20:.2, (March 2024), 5.
† The majority of offshore RMB-denominated transactions still take place in Hong Kong (83.3
percent), followed by the United Kingdom (4.4 percent), Singapore (2.9 percent), and the United
States (2 percent). As a result, offshore RMB transactions that are used to avoid sanctions would
likely flow via Hong Kong. SWIFT, “RMB Tracker,” September 2024.
480
mainland China (CNH).175 Policies supporting RMB international-

ization focus on the offshore RMB.
Companies began to utilize the offshore RMB in transactions and
corporate RMB bank deposits located in foreign financial centers
grew rapidly from 2010 to 2015.* 176 Concurrently, China sought to
develop a deep and liquid pool of high-quality offshore RMB assets
to encourage foreign use of the RMB as a store of value.177 China
began encouraging the issuance of offshore RMB bonds—commonly
referred to as “dim sum” bonds.178 In October 2009, China’s Minis-
try of Finance (MOF) became the first central government entity to
issue a “dim sum” bond.† 179 The MOF issuance was soon followed
by foreign firms including McDonald’s, Volkswagen, and Caterpillar,
and, in 2012, HSBC issued the first “dim sum” bond outside of Hong
Kong.180
In September 2016, with the Obama Administration’s support,
China successfully lobbied the International Monetary Fund (IMF)
to include the RMB in the Special Drawing Rights (SDR) ‡ bas-
ket.§181 The inclusion of the RMB in the SDR signaled that the
IMF believed the RMB should be held as an international reserve
asset.182 Inclusion also meant the IMF considered the RMB—spe-
cifically the offshore RMB, as the onshore RMB was still subject to
capital controls—as “freely usable” in international financial mar-
kets.183 This designation helped alleviate foreign investors’ concerns
that China might restrict their RMB holdings, and growth in foreign
holdings of RMB assets followed.184
* In 2010 the IMF estimated there was around 100 billion RMB in offshore deposits. From
December 2013, the first time the PBOC released complete data, to December 2014, the value
of RMB deposits held outside of China rose from RMB 1.6 trillion to RMB 2.4 trillion. Malhar
Nabar and Camilo E. Tovar, “Renminbi Internationalization,” International Monetary Fund, Jan-
uary 14, 2017; People’s Bank of China, “China: Domestic RMB Finl Assets Held Abroad: Deposits
[2013–2015],” via Haver Analytics, 2024.
† While the first “dim sum” bond was issued in 2007 by the China Development Bank, the
MOF issuance was particularly notable in the development of the overall market. Repeated MOF
issuances helped establish a benchmark yield curve to facilitate pricing of “dim sum” bonds. Kev-
in Chow and Daniel Law, “Offshore Renminbi Dim Sum Bonds,” International Monetary Fund,
January 17, 2017.
‡ The SDR is an interest-bearing international reserve asset maintained by the IMF that sup-
plements sovereign reserves. Since the creation of the SDR, the IMF has allocated a total of
SDR 660.7 billion ($935.7 billion) to its member countries. IMF members can hold SDRs as part
of their foreign exchange reserves, exchange SDRs for freely usable currencies, or use SDRs in
transactions with the IMF, such as paying interest or repaying loans. International Monetary
Fund, “Special Drawing Rights (SDR);” International Monetary Fund, “Special Drawing Rights
(SDRs) Allocations and Holdings for All Members as of September 30, 2024.”
§ In 2015, the Commission explicitly warned against inclusion of the RMB in the SDR basket
writing, “Despite these limited steps forward, PBOC Governor Zhou Xiaochuan noted in April
2015 that the Chinese government will maintain control over cross-border financial transactions,
external debt, short-term capital flows, and temporary capital control measures . . . The IMF’s de-
cision to include the RMB would legitimize China’s managed convertibility approach.” U.S.-China
Economic and Security Review Commission, 2015 Annual Report to Congress, November 2015,
157.
481
Figure 3: Overseas Holdings of RMB-Denominated Assets,
Dec 2013–Jul 2024
10 Equities
Bonds
RMB trillion
Loans
2
Deposits
0
Jan 14 Jan 16 Jan 18 Jan 20 Jan 22 Jan 24
Source: People’s Bank of China, “Domestic RMB Finl Assets Held Abroad: Deposits, Loans,
Bonds, Equities [2013–2024],” via Haver Analytics, 2024.
China must balance policies that improve access to RMB liquidi-

ty and enhance external willingness to use the currency with their
impact on domestic economic stability and Party control over the fi-
nancial system. Central to this tradeoff are China’s robust domestic
capital controls. The Party’s ability to control capital flows has been
essential to the country’s financial security and RMB exchange rate
stability.185 However, capital controls also strongly deter foreign
banks and businesses from holding and conducting transactions in
RMB.186 Capital controls prevent market participants from freely
exchanging the currency and from fully participating in Chinese fi-
nancial markets.* While Chinese capital controls do not completely
prevent RMB transactions, they slow down or constrain these flows
considerably and create risks for foreign firms that Chinese officials
can tighten or halt them, trapping assets in China or altering their
value independent of market forces.187 This is a strong disincentive
for foreign entities to transact in RMB.
* Chinese citizens are limited by a $50,000 per year quota on foreign exchange conversions.
Corporations are also similarly limited by a series of restrictions on outbound investments and
rules limiting access to foreign exchange. Bank of China, “Individual Foreign Exchange Purchas-
ing;” Erin Ennis and Jake Laband, “China’s Capital Controls Choke Cross-Border Payments,”
U.S.-China Business Council, February 8, 2017.
482
The success of Chinese efforts to internationalize the RMB has

been mixed at best. Despite China representing 17 percent of global
gross domestic product (GDP), the RMB currently accounts for a
much smaller share of various measures of currency international-
ization.188 While it is unrealistic for the RMB to surpass the dollar
as the dominant international currency, Western sanctions on Rus-
sia and continued Chinese efforts to increase the attractiveness of
the RMB may help increase international use of the currency over
the coming years.189
Table 2: Measures of Currency Internationalization
Role of
Money Indicators RMB USD
Use in Share in international payments (2023) 3% 44.4%
Transactions
Share in trade finance markets (2023) 4.8% 84%
Share in global FX transactions (2022) * 7% 88%

Store of Share of global sovereign reserve alloca- 2.5% 58.9%
Value tion (2023)
Share of international debt markets 0.7% 46.9%
(2023)
Source: Various 190
RMB Payment Infrastructure

China is developing an RMB payments network that can execute
and conceal RMB-denominated transactions. An indigenous pay-
ments network is an essential counterpart to an international RMB.
Without a payments infrastructure capable of functioning indepen-
dent from the dominant, U.S.-led global financial system, Chinese
firms will still face difficulties and delays in conducting RMB-de-
nominated transactions in a sanctions scenario.
Banks rely on a clearing settlement institution as well as a
electronic financial message system to effectively transfer funds
across borders.191 The Society for Worldwide Interbank Financial
Telecommunication (SWIFT), headquartered in Belgium, is the
dominant global payments messaging platform. SWIFT is not a
bank and does not manage accounts or hold funds. SWIFT does
not actually transfer money; it is a secure messaging platform
banks use to send instructions with standardized codes and for-
mats to banks in other countries.192 Standardization simplifies
translation and the need to confirm the identity of counterpar-
ties and customers.193 Prior to SWIFT, a cross-border transac-
tion often required the exchange of more than ten messages and
labor-intensive authentication procedures.194 The cost and effi-
ciency gains offered by SWIFT mean it has completely displaced
other systems.195 Although there are no comprehensive estimates
of its share of global payment messaging, SWIFT’s largest com-
petitors facilitated transactions worth less than half of a percent
of SWIFT’s volume.196
* Because FX transactions involve two currencies, the total percent share of all currencies adds
to 200 percent.
483
SWIFT’s ubiquitous role in cross-border transactions makes it an

integral component of the enforcement of U.S. financial sanctions.
SWIFT shares data with the United States to monitor global com-
pliance with U.S. sanctions and secondary sanctions.* 197 The Unit-
ed States has used its leverage to exclude sanctioned entities from
using SWIFT.198 The United States has several ways to pressure
SWIFT to comply with U.S. sanctions. A vote by SWIFT shareholders
can compel it to take such action.199 While U.S. banks do not make
an outright majority, other banks, fearing secondary sanctions, may
side with them. U.S. officials could also pressure the government
of Belgium or the EU to enforce U.S. sanctions. Finally, the United
States could structure its sanctions such that SWIFT would have
to comply with them if they wanted to continue to do business with
U.S. institutions.† 200
Transactions coordinated via SWIFT still must be processed by
a separate clearing settlement institution. Clearing settlement in-
stitutions act as intermediaries between transacting parties, en-
suring that transactions are completed smoothly while minimizing
risk.201 U.S. and EU institutions also likely account for a majority of
cross-border clearing settlement transactions. The Clearing House
Interbank Payments System (CHIPS), based in the United States,
facilitated $407 trillion of transactions in 2021.‡ 202 TARGET2, a
European Central Bank-run payments system, facilitated about
$520 trillion in transactions in 2020.203 Both of these platforms are
critical to global cross-border payments, though the presence of oth-
er clearing and settlement competitors mean they face more compe-
tition than SWIFT.204
China is actively building and promoting its own alternatives
to SWIFT and Western clearing settlement institutions. Central
to these efforts are the Cross-Border Interbank Payments System
(CIPS) and its wholesale Central Bank Digital Currency (CBDC),
which is still being developed. Both platforms could help the country
facilitate and settle some domestic and cross-border RMB transac-
tions, even in the face of a maximalist sanctions scenario.205 Sanc-
tions would still impose some adjustment costs as banks and their
willing counterparties onboard onto the new system. The complexity
and dominance of U.S. institutions in the global financial system
also likely mean parts of China’s alternative infrastructure may still
rely on the United States for payments—and therefore remain open
to disruptions.206 Still, Chinese officials perceive both CIPS and its
wholesale CBDC as central tools in their financial sanctions con-
tingency plans and have tried to accelerate their development and
adoption.207
* SWIFT initially resisted sharing private transaction data with the United States. However,
after the attacks of September 11, 2001, SWIFT allowed the United States access when Congress
threatened to sanction the society itself. More recently, including after U.S. and/or EU sanctions
on Iran in 2012, North Korea in 2017, and Russia in 2014 and 2022, SWIFT continues to comply
with legislation or regulations to share information about transactions involving sanctioned per-
sons or institutions. Marco Cipriani, Linda S. Goldberg, and Gabriele La Spada, “Financial Sanc-
tions, SWIFT, and the Architecture of the International Payment System,” Journal of Economic
Perspectives Vol 32:1 (Winter 2023), 37–38, 46–48.
† In 2012, the United States threatened sanctions against SWIFT itself unless it removed sanc-
tioned Iranian financial institutions from its system. SWIFT complied and removed the sanc-
tioned entities. Liana Wong and Rebecca M. Nelson, “International Financial Messaging Sys-
tems,” Congressional Research Service CRS R46843, July 19, 2021, 2.
‡ CHIPS relies on the Fedwire Funds Service, the U.S. Federal Reserve’s settlement platform, to
facilitate it transactions. The Clearing House, “About CHIPS;” Modern Treasury, “CHIPS.”
484
Cross-Border Interbank Payments System (CIPS)

China developed CIPS as an alternative payment system de-
signed to process RMB for cross-border transactions. Launched by
the People’s Bank of China (PBOC) in 2015 with the explicit goal of
promoting RMB internationalization, CIPS integrates international
RMB settlement into the existing global financial architecture, most
notably through its interoperability with SWIFT.208
CIPS currently relies on SWIFT messaging capabilities for the
vast majority of its transactions.209 However, CIPS maintains its
own messaging system for use by its direct participants. While CIPS’s
own messaging platform is interoperable with SWIFT through the
use of the ISO 20022 international payments messaging standard, it
is fully separated from any Western institution.210 Therefore, if the
Chinese banking system were excluded from SWIFT and U.S.-based
payments clearing networks, China’s financial institutions and their
counterparties could rely on CIPS to communicate and settle pay-
ments.211 CIPS’s own messaging platform could also help protect
Chinese transactions from secondary sanctions.
CIPS adoption has been rapidly growing and likely could man-
age and onboard China’s global trading relationships in the event
of U.S. sanctions. In Q4 2023, the system processed 35 trillion RMB
($4.9 trillion) worth of transactions—on average, $53.6 billion in
transactions per day.212 China’s total imports and exports over the
same period averaged around $16.2 billion per day.213 CIPS usage
continues to grow. Its Q4 2023 transaction total was 56.6 percent
higher than in Q1 2022, when the United States imposed sanctions
on Russia.214 As of August 2024, CIPS reports having 152 direct
participants and 1,412 indirect participants covering 117 countries
and regions globally.215
Wholesale Central Bank Digital Currency (CBDC)
The Chinese government is developing a cross-border CBDC that
could also be leveraged to bypass the U.S. payments system, offer-
ing additional sanctions resilience. Unlike China’s domestic retail
CBDC, commonly called the digital yuan, or e-CNY, which is used for
person-to-person transactions, a wholesale CBDC is designed to be
used exclusively among financial intermediaries to settle interbank
transfers and similar wholesale transactions.216 China is exploring
a wholesale CBDC through a project named Multiple Central Bank
Digital Currency (m-CBDC) Bridge, or Project mBridge.* China’s
wholesale CBDC development has key implications for U.S. national
security. Like CIPS, transactions made with it are conducted outside
of the current U.S. dollar and global payments infrastructure.217 As
a result, China’s wholesale CBDC could eventually become an alter-
native cross-border settlement system for countries willing to work
with China to evade U.S. sanctions. While China’s wholesale CBDC
* The PBOC collaborated with the Bank for International Settlements (BIS) Innovation Hub,
the Bank of Thailand, the Central Bank of the United Arab Emirates and the Hong Kong Mone-
tary Authority on Project mBridge. Project mBridge aims to address inefficiencies in cross-border
payments, including high costs, slow transaction speeds, the decline of correspondent banking,
and operational complexities. In June 2024, Project mBridge reached the minimum viable product
stage, enabling participants to conduct real-value transactions. Project mBridge members are
now working with private sector firms to further develop the platform. Bank for International
Settlements, “Project mBridge Reaches Minimum Viable Product Stage and Invites Further In-
ternational Participation,” June 5, 2024.
485
should mostly be viewed as an alternative platform to CIPS, it does

provide some additional security to the Chinese financial system in
a sanctions scenario. This is because China’s wholesale CBDC relies
on the PBOC to execute payments.218 As a result, attempts by the
United States to disrupt it would require sanctions or secondary
sanctions directly on China’s central bank.219 This would likely be
perceived by China and third countries as a major escalation and
increases the risk of instability in the global financial system.220
RMB Internationalization across China’s Trade Partners
China is actively promoting RMB-denominated trade through
multilateral institutions and in bilateral partnerships.221 In the
first half of 2024, China was able to settle 26.6 percent of its to-
tal trade in RMB, up 12.6 percentage points from the first half of
2021.* 222 China has leveraged its influence over global commodity
markets in particular to encourage commodity-exporting countries
to use the RMB in their trade.223 In a sanctions scenario, China
hopes to rely on these countries to supply it with critical energy and
commodity imports.224
Bilateral and Multilateral Currency Partnerships
China has proliferated local currency use partnerships among
developing economies through multilateral organizations including
the Shanghai Cooperation Organization (SCO),† BRICS,‡ and ASE-
AN+3.§ Chinese support for local currency partnerships accelerated
following Western sanctions against Russia.225 China has sought to
capitalize on unease around Western sanctions among some mem-
bers of these groups.226 For example, during the September 2022
SCO Summit, Xi proposed accelerating the development and use
of local-currency cross-border payments and settlement systems.227
Iran has joined the SCO explicitly because of the organization’s
potential to help it circumvent U.S. sanctions.228 China has also
promoted local currency transactions across BRICS economies.229
Among other efforts, BRICS is also exploring alternative payments
systems such as the BRICS Pay system for retail payments and
transactions across member countries.230
ASEAN+3 is particularly important as its members currently set-
tle the largest volumes of RMB-denominated trade with China.231
ASEAN+3 is researching and pursuing deals to streamline local cur-
rency settlement.232 China has capitalized on this and has signed
* As of October 11, 2024, the PBOC has not released data for April and June of 2024. As a
result, both the estimate for the first half of 2024 and the growth since 2021 exclude data for
April and June. People’s Bank of China, “Total Cross-Border Merchandise Trade Settled in Yuan,
Exports, Imports [2012–2024],” via Haver Analytics, 2024.
†The SCO is an intergovernmental organization comprising Belarus, China, India, Iran, Ka-
zakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan and Uzbekistan. It focuses on issues related to
politics, economics, international security, and defense. Astana Times, “SCO Welcomes Belarus as
Its 10th Member State,” July 4, 2024; Shanghai Cooperation Organization, “General Information,”
January 9, 2017; Matthew Southerland, Will Green, and Sierra Janik, “The Shanghai Cooperation
Organization: A Testbed for Chinese Power Projection,” U.S.-China Economic and Security Review
Commission, November 12, 2020.
‡ BRICS is an intergovernmental organization comprising Brazil, Russia, India, China, and
South Africa. Following an invitation in summer of 2023, as of January 2024, Egypt, Ethiopia,
Iran, and the UAE have also joined. Saudi Arabia was also invited but they have yet to accept the
invitation. BBC, “Brics: What is the Group and Which Countries Have Joined?” February 1, 2024.
§ ASEAN+3 includes all Association of Southeast Asian Nations (ASEAN) members (Brunei
Darussalam, Cambodia, Indonesia, Laos, Malaysia, Burma, Philippines, Singapore, Thailand, and
Vietnam) as well as Japan, South Korea, and China.
486
local currency settlement agreements with Cambodia, Indonesia,

Laos, Malaysia, Burma, Thailand, and Vietnam.* 233 Since 2009,
China has also been ASEAN’s largest trading partner.† 234 The ex-
tensive and longstanding economic connections between China and
ASEAN have led to multiple cross-border uses of the RMB, includ-
ing the recycling of RMB received in exchange for exports to pay for
imports from China.235 In 2021, the most recent year with available
data, approximately 70 percent of the 5.8 trillion RMB China settled
in trade was with Asian economies.236
China Targets Commodity Exporters for RMB-Denominated Trade
China is working to increase the influence of the RMB in global
commodities markets by encouraging the commodities it trades to
be priced in and exchanged using RMB. Efforts to increase the use
of the RMB in global commodities markets synergize with Chinese
efforts at the SCO and BRICS. Zoe Liu, senior fellow at the Council
on Foreign Relations, points out SCO and BRICS members include
some of the world’s largest hydrocarbon and minerals exporters.237
Four of the ten largest oil producers and seven of the ten largest
iron producers are members of the SCO and/or BRICS.‡ §
China has leveraged its position as the world’s largest oil importer
and a critical node in the supply chains of key minerals to encour-
age commodity trade in RMB.238 As a key buyer, China can more
easily seek to impose RMB payment requirements on its imports
from foreign companies.239 Countries that are significant exporters
to China, primarily in raw materials or commodities, tend to denom-
inate more trade in RMB.240 For example, in 2021, major commod-
ity exporters including Argentina, Algeria, Brazil, Chile, Indonesia,
Kazakhstan, and Nigeria used the RMB for a significant portion of
their trade with China.241 The portion of China’s commodity trade
denominated in RMB continues to grow. In 2022, cross-border RMB
settlement for major commodities amounted to 985.73 billion RMB
($140 billion). In the first nine months of 2023, it grew to 1.5 trillion
RMB ($210 billion).242
To enhance the RMB’s use and pricing power in global commod-
ities markets, China is developing new trading platforms and fi-
nancial instruments. In 2018, China launched RMB-denominated oil
futures and, in 2020, copper futures on the Shanghai International
Energy Exchange.243 Shanghai crude oil futures are now the world’s
third-largest crude oil futures after the WTI Crude and Brent Crude
futures.244 China also launched the Ganzhou Rare Metal Exchange
in 2019, to capitalize on its dominant role in supply chains to quote
RMB prices for spot trading of rare earths and critical minerals that
are essential to the clean energy transition.245 As of 2023, there
* Vietnam’s arrangement only applies to towns on its border with China. Nikkei Asia, “Vietnam
to let Traders Use Yuan Along China Border,” August 29, 2018.
† In 2020, ASEAN became China’s largest trading partner. Arendse Huld, “China-ASEAN Trade
and Investment Relations,” Dezan Shira & Associates, August 9, 2024.
‡ Oil producers include Russia (third largest), Brazil (seventh largest), the UAE (eighth largest),
and Iran (ninth largest). BRICS has also invited the world’s second-largest oil exporter, Saudi
Arabia, to join—although it has not yet joined. U.S. Energy Information Administration, “What
countries are the top producers and consumers of oil?” April 11, 2024; Reuters, “Saudi Arabia Has
Not Yet Joined BRICS - Saudi Official Source,” February 1, 2024.
§ Iron producers include Brazil (second largest), China (third largest), India (fourth largest),
Russia, (fifth largest), Iran (sixth largest), South Africa (eighth largest), and Kazakhstan (ninth
largest). U.S. Geological Survey, “Iron Ore Statistics and Information,” 2024.
487
are 23 varieties of international standardized futures and options

commodity products listed in China and denominated in RMB.246
Chinese officials are encouraging their foreign partners to utilize
RMB trading and settlement systems. In a 2022 address to the Chi-
na-Gulf Cooperation Council, Xi emphasized the need for increased
use of the RMB in oil and natural gas trading and settlement
through the Shanghai Petroleum and Natural Gas Exchange over
the next three to five years.247
Still, RMB usage remains significantly behind the U.S. dollar in
global commodity markets. Volumes traded on the Shanghai and
Ganzhou exchanges trail the preeminent commodity pricing centers
of New York, Chicago, and London, and the U.S. dollar still denomi-
nates around 90 percent of major commodities trade in global mar-
kets.248 Substantial adoption of the RMB would not make commod-
ity exporters immune from dollar sanctions. Most countries would
still rely on the dollar for transactions not involving China.
Sanctioning China in a Crisis Scenario

The United States and its allies have three broad avenues
through which they can impose economic sanctions targeting Chi-
na’s financial system. They can implement full blocking sanctions
which would prohibit any transactions between U.S. individuals
and companies and Chinese entities.249 Importantly, this approach
would include key parts of the global payments infrastructure,
including clearing and settlement institutions and correspondent
bank networks, which are formal agreements or relationships be-
tween banks to provide cross-border payments services for each
other. Full blocking sanctions would not only prevent transactions
between China and the United States but also disrupt transac-
tions between China and other countries that rely on U.S. pay-
ments infrastructure. The United States can also impose sover-
eign debt restrictions that would block debt issued by the Chinese
government, central bank, national wealth fund, and companies
from U.S. markets. Finally, the United States could compel SWIFT
to impose a ban on Chinese institutions. This would prohibit the
provision of the SWIFT financial messaging service to sanctioned
Chinese entities. Full blocking sanctions and a SWIFT ban would
have the biggest impact on the Chinese economy.* 250
The disruptions to global supply chains caused by completely
cutting off the world’s largest exporter from access to U.S. dollar
financing, however, would likely generate political opposition in
the United States and globally.† A 2024 analysis from Rhodium
* In addition to these options, the United States could freeze a large share of China’s $3.22
trillion in foreign exchange reserves. However, a 2024 study from Rhodium Group and the At-
lantic Council argues this would neither be credible nor desirable for the United States. The
primary effect would be to limit China’s capacity to defend its currency. Without Chinese support
the RMB would experience a sharp depreciation and make China’s exports more competitive in
global markets. Logan Wright et al., “Retaliation and Resilience Chinese Economic Statecraft in
a Taiwan Crisis,” Atlantic Council, April 1, 2024, 33.
† U.S. and allied sanctions against Russia demonstrate how political resistance in both the
sanction imposing countries and other global economies can block certain actions. While sanc-
tions aim to cause the most disruption to the targeted country, they may have unintended side
effects. For example, the United States and EU scaled back plans to ban the provision of financial
services to companies transporting Russian oil for fear that fully crippling Russian oil exports
would cause a surge in the global price of oil and a global recession. Lutz Kilian and David
488
Sanctioning China in a Crisis Scenario—Continued

Group and the Atlantic Council suggests that as a result, China
believes complete restrictions on the country’s financing channels
are implausible.251 While the United States would sanction some
institutions, China could respond by reallocating critical trade
and financial transactions with willing partners through very
large or very small financial institutions.252 China can designate
a series of small, structurally insignificant financial institutions
to conduct its trade, knowing they will be sanctioned. China’s use
of the Bank of Kunlun to circumvent U.S. sanctions on Iran il-
lustrate this. China designated this small, state-owned bank to
continue to finance payments to Iran using the RMB. China’s use
of the Bank of Kunlun ensured it could continue to trade with the
sanctioned country without risking the impact of U.S. sanctions
on more important actors in its financial sector.* 253 Alternatively,
China could look to its largest financial institutions. Chinese offi-
cials may be calculating that the possibility of substantial disrup-
tions in permitted trade and dislocations in global supply chains
could be threatening enough to deter the imposition of sanctions
and secondary sanctions.254
China could also rely on its alternative payments infrastruc-
ture to circumvent financial sanctions or secondary sanctions
that are designed to prevent non-U.S. entities from transacting
with countries subject to U.S. sanctions.255 China could route
energy imports and source critical commodities and components
via countries that are unlikely to cooperate with U.S. sanctions.
To do so, they would use the RMB as a payment currency.256
Dr. Liu argues this could require minimal adjustment time.257
Many commodity exporters to China already receive some RMB
for their current transactions.258 Still, sanctions—including freez-
ing China’s official dollar reserves—would make dollars in Chi-
na scarce, driving down the value of the RMB exchange rate.
A weaker exchange rate would make goods imports into China
more expensive, distort China’s export trade, and generate sub-
stantial financial stress for Chinese companies operating in glob-
al markets.259 Secondary sanctions would still cause disruptions
to Chinese trade, but, because these would be perceived by third
countries as a significant escalation by the G7, the United States
would face broader constraints on such sanctions.260
In both scenarios, the limiting factor jeopardizing China’s abil-
ity to evade sanctions will not be its financial infrastructure—
China can always admit new institutions into CIPS or, once live,
central banks into its wholesale CBDC. The functionality of these
networks will be restricted by the willingness of third countries
to use them. Authors of the Rhodium Group and Atlantic Coun-
cil study suggest the imposition of U.S. sanctions would likely
intensify fears around the liquidity and attractiveness of RMB
financial assets and raise the specter of the tightening of capital
Rapson, “How Global Oil Sanctions Lowered Russian Oil Export Prices,” Dallas Fed Economics,
May 14, 2024.
* For more examples of China’s sanctions evasion approach see Chapter 5, “China and the
Middle East.”
489
Sanctioning China in a Crisis Scenario—Continued

controls.261 This risk could likely deter many countries from con-
tinuing economic engagement with China.
Access to the dollar still matters far more than the RMB for
the vast majority of China’s trading partners. For example, Dr.
Liu points out that China’s global commodity suppliers depend
on the dollar-based system to price and trade their commodity
exports.262 Their banks, as well as most of China’s other trading
partners, remain reliant on SWIFT and CHIPS for their domestic
banking system as well as their international payments settle-
ments. The few countries that are willing to risk the impact of
U.S. sanctions and secondary sanctions on their economy, namely
Russia, Iran, and North Korea, cannot fully provide China with
the substantive material support needed to mitigate U.S. finan-
cial sanctions.263
Party-State Enhances Political Control over Institutions and

Society
Although CCP leaders’ language suggests they feel the risks they
face are escalating, their actions in the political realm do not yet
clearly indicate they are preparing for an imminent war. Official
rhetoric aimed at Taiwan and the United States has become con-
siderably more negative and intense, but it has not taken on the
escalatory tone that preceded China’s conflicts with its neighbors
in past decades, and it appears—for now—to be leaving the door
open for dialogue and delay. That said, observers of China should
not rely wholly on indicators from past conflicts, as China’s political
environment and culture has evolved and official rhetoric is unlikely
to exactly match that seen in the Mao era. What is evident, however,
is that the Party-state has accelerated efforts to deepen its control
over the political system and daily life.264 These include measures
to build out the national security apparatus under CCP control, re-
vive Maoist-era methods of mobilizing the public, coerce industry
into heeding government directives, and deter Chinese citizens from
engaging with foreign individuals. These efforts undoubtedly assist
General Secretary Xi in his ongoing consolidation of power over Chi-
na but also create a system that is more agile in the face of external
threats and useful for sustaining a military conflict.265
CCP Rhetoric Intensifies but Falls Short of What Experts
Expect in Wartime
China’s rhetoric toward the United States and Taiwan appears
to have intensified, although it has not yet taken on the harsh
tone and phrasing that preceded China’s prior conflicts and does
not foreclose the possibility of communication. In their testimony to
the Commission, both Mr. Kewalramani and Timothy Heath, senior
international defense researcher at the RAND Corporation, stated
they would expect to see top Chinese leaders demonize the United
States and Taiwan and assert that all peaceful means of resolving
the dispute had been exhausted if China were imminently prepar-
ing for conflict.266 During the 1950s and 1960s, Mao directly exco-
490
riated the United States in the harshest terms and called for mass
sacrifice amid his country’s proxy conflict with the United States
in Korea.267 Prior to the Sino-Indian border war in the 1960s and
China’s attack on Vietnam in 1979, Chinese leaders and state media
steadily escalated rhetorical attacks on their enemies, transitioning
from threats to declarations that they would punish them or teach
them a lesson.268
The CCP’s rhetoric today exhibits some of these escalatory aspects
but not others. For example, CCP officials have arguably already de-
monized Taiwan President Lai Ching-te, as when Foreign Minister
and Director of the Central Committee’s Foreign Affairs Commis-
sion Wang Yi called him a traitor to the nation and his ancestors
and warned that all “ ‘Taiwan independence’ separatists” would be
“nailed to the pillar of shame in history.” 269 At the same time, se-
nior Chinese leaders are typically oblique in their condemnations
of the United States, with Xi mostly opting to refer indirectly to
“certain countries” or “Western countries” when discussing threats
of containment.* 270 There are some Chinese state media-sponsored
“documentaries” that paint the United States as a warmonger and
a handful of recent films that depict conflict between the United
States and China, but as Dr. Heath points out, there is far less
media demonizing the United States than was the case in Maoist
times.271 Most importantly, the CCP continues to signal an openness
to dialogue with the opposition party in Taiwan and to emphasize
that Taiwan separatists are only a tiny minority of the popula-
tion.272 In these respects, the CCP’s contemporary rhetoric is clearly
milder than that it employed in the runup to clashes with India in
the 1960s and Vietnam in the 1970s.
Building Out the National Security Apparatus under Party
Control
The CCP has taken steps to expand the power and refine the
workings of its national security apparatus, framing these measures
as elements of a “new security pattern.” 273 These include creating
a commission to coordinate national security policy, increasing the
number of personnel with security experience in high-ranking posi-
tions, passing a raft of new laws relating to national security, and
tightening the vise on Party cadres perceived as undisciplined or
corrupt.
Xi-Led Commission Centralizes National Security Policy
A critical institution in the CCP’s national security apparatus is
the Central National Security Commission (CNSC), which now plays
a prominent role in coordinating national security decision-mak-
ing.† 274 The CNSC is a CCP Central Committee body mandated to
* A notable exception was Xi’s choice to explicitly name the United States during his comments
at the “two sessions” in March 2023. Chun Han Wong, “China’s Xi Jinping Takes Rare Direct Aim
at U.S. in Speech,” Wall Street Journal, March 6, 2023.
† Xi presided over the creation of the CNSC in 2014 by elevating the previously ad hoc Cen-
tral National Security Leading Small Group to the status of a permanent commission, thereby
granting it a permanent staff office, a regular membership, and a position of greater influence
within the bureaucracy. He officially heads the CNSC. For more on the creation of the CNSC and
its role in decision-making, see U.S.-China Economic and Security Review Commission, Chapter
1, “CCP Decision-Making and Xi Jinping’s Centralization of Authority,” in 2022 Annual Report
to Congress, November 2022, 38, 40–42, 61–62, 80; Communist Party Members Net, “Xi Jinping:
Persist in the Comprehensive National Security Concept, Walk the Path of National Security with
491
examine all foreign and domestic issues through the lens of national
security, effectively giving it the power to determine who or what
constitutes a threat to national security.275 National security com-
missions have also been established at all levels of the Party-state
system, from provincial down to township and district levels, to car-
ry out various research, national security law enforcement, and ed-
ucation functions.276 Although the workings of the CNSC are highly
secretive, Sheena Chestnut Greitens, an associate professor at the
University of Texas at Austin, observes that the CNSC focuses on
both domestic security and foreign policy issues.277 The March 2023
meeting of the CNSC, which was presided over by Xi and attended
by top security officials, offered a glimpse of the high-level national
security discourse and decisions at such meetings.278 According to
Xinhua’s readout of the meeting, officials assessed that national se-
curity problems facing China had “increased dramatically,” stressed
that they “must be prepared for worst-case and extreme scenarios,”
and stated that “more efforts must be made to modernize our nation-
al security system and capacity, and get prepared for actual combat
and dealing with practical problems.” 279 The meeting also reported-
ly approved new guidelines for “nationwide security risk monitoring
and early warning system” and public education on national securi-
ty.280 In an April 2024 article in the Party’s main theoretical journal
Qiushi, Ministry of State Security (MSS) Secretary Chen Yixin cred-
ited the CNSC with establishing a “centralized, unified, and highly
authoritative national security leadership system.” 281
Personnel Appointments Reflect Growing Importance of Security
Experience
Recent trends in leadership appointment suggest that experience
with “national security” issues, broadly defined, is increasingly im-
portant among China’s leadership. Multiple analysts have suggest-
ed that the composition of the senior Party-state leadership with
experience in national security has recently risen, especially since
the most recent 20th Party Congress in October 2022 and 14th Na-
tional People’s Congress in March 2023. For example, Guoguang Wu,
senior research scholar at the Stanford Center on China’s Economy
and Institutions, observed in November 2022 that at least ten of the
15 new leaders who joined the Politburo and Central Secretariat at
the 20th Party Congress could be described as having a national
security background.* 282 According to an analysis from the Brook-
ings Institution in March 2023, the makeup of the newly appointed
State Council “reflects the renewed focus on state security and so-
ciopolitical stability,” with half of its members possessing a securi-
Chinese Characteristics” (习近平：坚持总体国家安全观走中国特色国家安全道路), April 15, 2024.
Translation; Matthew D. Johnson, “Safeguarding Socialism: the Origins, Evolution and Expansion
of China’s Total Security Paradigm,” Sinopsis, November 6, 2020; People’s Daily, “CCP Central
Committee Politburo Holds a Meeting, Studies and Decides on Setting Up the Central National
Security Commission, Considers and Reviews the Situation Report on the Implementation of the
Eight Regulations” (中共中央政治局召开会议研究决定中央国家安全委员会设置审议贯彻执行中央八
项规定情况报告), Chinese Communist Party News Network, January 25, 2014. Translation.
* He defined having a national security background as belonging to one of four categories: indi-
viduals with past experience and current responsibilities in the security sector of the Party-state;
military leaders; individuals with a background in the military industrial sector; and individuals
who in their tenure have advanced Xi’s agenda for either aggressive “warrior wolf” diploma-
cy internationally or domestic repression in the name of “stability.” Guoguang Wu, “The China
Challenge: New Leadership Focuses on the Struggle for Security,” Discourse, November 15, 2022.
492
ty or military background.* 283 Dr. Greitens assessed in November

2023 that all other members of the Politburo Standing Committee
have at least some experience with nonmilitary security policy, with
that experience being quite extensive for some.† 284 She also argued
that some noteworthy appointments under Xi have “hybrid careers
within the internal security apparatus,” with experience spanning
policing, intelligence, and Party discipline.‡ 285 In her testimony for
the Commission, Katja Drinhausen, head of the politics and society
program at the Mercator Institute for China Studies, also assessed
that there is a rise in officials with a security background, “mostly
in domestic security, but also focusing on technological security and
the economy.” 286
Updated Legal Canon Underpins the National Security Apparatus
The CCP has codified its expansive notion of national security
through a series of laws over the past decade, constituting what one
Chinese official termed a “legal Great Wall to safeguard national
security.” 287 These include the 2015 National Security Law and its
2020 counterpart for Hong Kong as well as additional laws on coun-
terespionage, counterterrorism, anti-foreign sanctions, access of for-
eign investments, managing foreign nongovernmental organizations
(NGOs), intelligence, and “state secrets.” They also include laws on
cybersecurity, data security, transportation security, and biosecuri-
ty as well as more political topics such as protecting “heroes and
martyrs” from defamation.288 Notably, many of the laws criminalize
the disclosure of information the CCP deems sensitive on national
security grounds to foreigners, and they obligate Chinese citizens to
contribute to the authorities’ national security activities. One 2023
commentary in the People’s Daily offers statistics measuring this
purported legal progress, claiming that since 2015, 20 pieces of spe-
cialized national security legislation and 110 other laws and regu-
lations containing national security clauses had been promulgated,
formulated, or revised.289 Ms. Drinhausen assesses that China now
has a “very well-established legal canon” and that some of these
* The authors note that most of the members also possesses “extensive provincial-level econom-
ic leadership experience,” suggesting that a security background is not likely the only consider-
ation. They also point out that economic issues are firmly intertwined with concerns about social
stability, making even economic experience potentially germane to Xi’s broadly defined concept of
national security. Cheng Li and Mallie Preytherch, “China’s New State Council: What Analysts
Might Have Missed,” Brookings Institution, March 7, 2023.
† Zhao Leji is vice chairman of the Central National Security Commission (CNSC) and for-
mer chair of the Central Commission on Discipline Inspection (CCDI). Ding Xuexiang previously
served as the head of the CNSC office and as a secretary of Shanghai’s Political-Legal Committee.
Cai Qi was previous director of the CNSC office, and he may oversee the Central Guards Bureau,
which provides security for China’s top leadership. Li Xi is the current chair of the CCDI. Li
Qiang previously served as the secretary of Zhejiang’s Political-Legal Committee and oversaw the
CCP’s lockdown policies while he was general secretary of Shanghai. Wang Huning reportedly
sits on the CNSC and is thought to have previously chaired a leading small group on internet
security. Sheena Chestnut Greitens, “New Leaders in ‘National’ Security After China’s 20th Party
Congress,” China Leadership Monitor, November 30, 2023.
‡ An example is Chen Wenqing, a new member on the Politburo who is also secretary of the
Central Secretariat, secretary of the Central Political-Legal Affairs Commission, and chief police
inspector. His past experience includes leadership or service at the Ministry of State Security, at
the office of the Central National Security Commission, for the Central Committee on Discipline
Inspection, in the procuratorate, in Party discipline, and as a PLA commissar. Chen Wenqing is
also the first former minister of state security to serve on the Politburo. Sheena Chestnut Greit-
ens, “New Leaders in ‘National’ Security After China’s 20th Party Congress,” China Leadership
Monitor, November 30, 2023; Xinhua, “CCP 20th Central Leadership Structure Member Resumes:
Resume of Comrade Chen Wenqing” (中共二十届中央领导机构成员简历: 陈文清同志简历), October
23, 2022. Translation; South China Morning Post, “China’s Power Players: 20th Politburo.”
493
laws have shifted what are considered national security-related of-

fenses under Chinese law in ways that affect Chinese citizens and
foreigners alike.290
Recent revisions to the Counterespionage Law in 2023 and State
Secrets Law in 2024 in particular have elicited international con-
cern due to their expansive scope and the possibility they could be
invoked to prosecute foreign companies and personnel carrying out
normal business activities in the Mainland.* 291 Revisions to both
laws added Xi’s broad definition of national security into the text
by invoking the Comprehensive National Security Concept, raising
uncertainty in terms of the issues to which their relevant legal au-
thorities will be applied.292 The revision of the Counterespionage
Law simultaneously expanded the definition of “espionage” to in-
clude certain efforts to obtain “items related to national security”
where it had previously mentioned only “state secrets” and “intelli-
gence.” 293 Additionally, it added conditions for the imposition of exit
bans on individuals of any nationality should they be “suspected of
acts of espionage” under the expanded definition.† 294 The revised
State Secrets Law added a new reference to a category of informa-
tion known as “work secrets,” information that does not qualify as
state secrets but would cause an adverse effect if leaked.‡295 Legal
observers have noted that what constitutes a “work secret” subject
to protection remains unclear under the law and thus vulnerable to
expansive, inconsistent, or arbitrary enforcement.296 For example,
it could potentially be interpreted to include information obtained
through conventional research and due diligence efforts or investi-
gative journalism.297
Crackdowns on Ideological “Laxity,” Lack of Political Discipline, and
Corruption within the Party
Xi has led a continuing effort to tighten political control and crack
down on perceived problems with ideology, discipline, and corruption
in an effort to make the Party-state more efficient and responsive
to leadership directives.§ The CCP under Xi has sought to increase
ideological conformity through a combination of regulatory chang-
es, education campaigns, and grassroots measures. The Party has
sought to strengthen the connectivity between the Party center and
the grassroots levels through more frequent events and mandatory
use of a smartphone app focused on ideological indoctrination.298 It
has also emphasized the importance of Party-wide education cam-
* In 2023, China’s state security authorities raided the offices of the international advisory firm
Capvision, questioned employees of the consulting firm Bain & Company, and detained five em-
ployees of the due diligence firm Mintz Group. Ryan McMorrow and Demetri Sevastopulo, “China
Raids Multiple Offices of International Consultancy Capvision,” Financial Times, May 8, 2023.
† For more on China’s Counterespionage Law, see U.S.-China Economic and Security Review
Commission, Chapter 1, Section 2, “U.S. China Security and Foreign Affairs,” in 2023 Annual
Report to Congress, November 2023, 116.
‡ Separately, the revised law includes new provisions requiring increased publicity and edu-
cation, including through mass media, in order to enhance awareness on secrecy issues within
society writ large. These are added despite the general public not having access to state secrets
or classified information. Jeremy Daum, “Open Thoughts on the Secrets Law,” China Law Trans-
late, February 27, 2024; China Law Translate, “PRC Law on the Protection of State Secrets,”
February 27, 2024.
§ According to a document known as a “historical resolution,” whose production Xi directed
ahead of the 20th Party Congress, a serious lack of political conviction, rampant corruption, and
lax implementation of Party policies have presented serious challenges for both maintaining the
image of the Party and adopting the policy approaches China needs to succeed. U.S.-China Eco-
nomic and Security Review Commission, 2022 Annual Report to Congress, November 2022, 30–31.
494
paigns as a necessary tool for guiding Party members and cadres.299

For example, in 2023 Xinhua pointed to the CCP’s 2012–2013 cam-
paign on the “mass line” and cleaning up “undesirable work styles,”
a 2015 campaign on strict self-discipline, a 2016 campaign on study-
ing Party documents and Xi’s major policies, a 2019 campaign on
the Party’s “founding mission,” and a 2021 campaign on Party his-
tory as important efforts to educate cadres in light of “complex cir-
cumstances facing the Party both at home and abroad.” 300 Under
Xi’s leadership, the CCP has additionally issued three revisions of
its “Regulations on Disciplinary Actions of the Chinese Commu-
nist Party” in 2015, 2018, and 2023, strengthening the documents’
emphasis on ideological conformity, organizational discipline, and
implementation of Party policies.301 During Xi’s tenure, the Party
has also released multiple versions of its “National Cadre Educa-
tion and Training Plan,” the most recent of which in 2023 laid out
extensive new requirements for ideological study among CCP offi-
cials and aimed to improve cadres’ “political judgment.” 302 In 2023,
Xi warned that Party members and cadres had become complacent
after a long period of relatively peaceful conditions, creating a risk
that future struggles will cause them to “panic and lose their confi-
dence easily.” 303 Shortly thereafter, the Central Commission on Dis-
cipline Inspection (CCDI) launched a major campaign against the
phenomenon of officials “lying flat” or doing only the bare minimum
in their obligations.304
Throughout his tenure, Xi has made expansive use of his signa-
ture politically motivated anticorruption campaign in an attempt
to bolster the legitimacy of the Party, curb undesirable behavior,
and solidify his personal power.* 305 Now in its 12th year, the cam-
paign shows no signs of abating but rather continues to expand.
According to numbers released from the CCDI in January of 2024,
about 110,000 CCP officials faced disciplinary action as part of the
campaign in 2023 alone.306 At an address to the third plenary ses-
sion of the CCDI in January 2024, Xi reportedly stressed that “in
the continued grave and complex situation, there is no possibility
of stopping, slackening or compromising the anti-corruption cam-
paign.” 307 (For more on Xi’s speech at the CCDI plenary session,
see Chapter 2, “U.S.-China Security and Foreign Affairs (Year in
Review).”) According to one tally, more than 30 Chinese state regu-
lators, bankers, and senior financial executives had been detained
for corruption-related charges between the start of 2024 and mid-
May.308 Over just two days in mid-July, the CCDI announced new
investigations into a former deputy director at China’s Ministry of
Emergency Management, two leading officials from separate railway
state-owned enterprises (SOEs), and a Party committee secretary at
a vocational college.309 Senior PLA officers have also been targeted
by the wide-ranging campaign.310 (For more on the anticorruption
campaign and punishment of PLA officers, see Chapter 2, “U.S.-Chi-
na Security and Foreign Affairs (Year in Review).”)
* While the Party does view the misuse of state resources as a threat to its legitimacy, its an-
ti-corruption campaigns should be understood primarily as tools to ensure loyalty and political
control. These objectives are evident in revised regulations on disciplinary actions released in
2024, as well as Xi’s increased promotion of the concept of “self-revolution,” a Maoist phrase urg-
ing the Party to continuously monitor and control itself. For more on the ongoing anti-corruption
campaign, see Chapter 2: “U.S.-China Security and Foreign Affairs (Year in Review).”
495
Revival of Maoist Tools for Mass Mobilization

The CCP is currently reviving Maoist approaches to mobilizing
the public to assist it with detecting and eliminating perceived se-
curity threats. This has been partially evident in Chinese officials’
public statements; Party leaders have explicitly referred to the Mao-
era “mass line” method of bringing the Party closer to the people
in security matters, invoked historical events such as the “Fengq-
iao experience” * and “Chaoyang masses” † to encourage the revival
of an informant culture, and called for mobilizing all of society to
“wage the people’s war” to maintain national security.311 But more
concrete examples include the CCP’s cooptation of the public for sur-
veillance and law enforcement activities as well as its renewed em-
phasis on mass education campaigns designed to boost patriotism
and national security awareness.
Coopting the Public for Surveillance and Law Enforcement
The Party is recruiting local community members to help supple-
ment its law enforcement efforts as well as maintain political and
social control. In March 2023, China’s Ministry of Public Security
issued a three-year action plan for strengthening the work of police
stations.312 The plan calls for cultivating grassroots law enforce-
ment personnel who “love their jobs, perform their duties loyally,
and are trusted by the people,” as well as creating more “Fengq-
iao-style police stations,” which help the Party maintain social and
political stability.‡ 313 In November 2023, Radio Free Asia reported
* Named after the Fengqiao Township in Zhejiang, the “Fengqiao experience” is an approach
of social and political governance promoted by Mao Zedong in the 1960s, which involved mobi-
lizing local people to target “reactionar[ies]” and “class enemies.” Xi endorsed the system nearly
a decade prior to becoming paramount leader, reportedly stating during a 2003 visit to the town
as Party Secretary of Zhejiang that the ‘Fengqiao experience’ was not outdated. As paramount
leader, Xi called for the upholding and development of this system as early as 2013. Under Xi, the
system has been adapted to co-opt citizens to assist the Party in governing them to help achieve
its objectives. One example that can illustrate the contemporary conception of the “Fengqiao
experience” is the Cyberspace Administration of China’s creation of a hotline in April 2021 that
encourages members of the public to report others online who criticize the CCP and its history.
Manoj Kewalramani, written testimony for U.S.-China Economic and Security Review Commis-
sion, Hearing on China’s Stockpiling and Mobilization Measures for Competition and Conflict.
June 13, 2024, 17–18; Vivian Wang, “Xi Jinping’s Recipe for Total Control: An Army of Eyes and
Ears,” New York Times, May 25 2024; Zhejiang Daily, “Draw a More Beautiful New ‘Feng’ Scene” (
绘出更美新 “枫” 景), November 29, 2023. Translation; China Media Project, “Fengqiao Experience,”
April 16, 2021.
† The term “Chaoyang Masses” is a related concept that focuses on using community mobi-
lization to assist the Party in security and governance. It originally referred to a network of
volunteers and public informants from the Chaoyang district in Beijing, but over time, the term
gradually became synonymous with forms of mass mobilization for political objectives of the CCP.
During a 2017 tour in Beijing, for instance, Xi praised groups such as the “Chaoyang Masses”
and “Xicheng Aunties,” stating that the “cities of the people should be built and managed by the
people . . . where there are more red armbands, there is greater safety and greater peace of mind.”
The concept’s revival can be understood as the citizen-informant culture that has been developed
under Xi. Manoj Kewalramani, written testimony for U.S.-China Economic and Security Review
Commission, Hearing on China’s Stockpiling and Mobilization Measures for Competition and
Conflict, June 13, 2024, 18–19; Stella Chen, “Chaoyang Masses,” China Media Project, November
1, 2021.
‡ Since 2019, there have been three batches of “Fengqiao-style police stations” that have been
established across the country. The stations were created to help carry out the “mass line” con-
cept, whereby the Party organizes citizens to help achieve its governance objectives, including
public security. Qi Zongzhu, “The List of the Third Batch of 100 ‘Fengqiao-Style Police Stations’
in China Was Announced, and Shengli Road Police Station Was on the List” (全国第三批100个 “
枫桥式公安派出所” 名单公布胜利路派出所榜上有名), Xihai Metropolis Daily, November 26, 2023.
Translation; Wang Lei and Gu Yanwen, “The Second Batch of 100 ‘Fengqiao-Style Police Stations’
in China Was Announced, and Liyang Zhuji Police Station Won the Honor” (全国第二批百个 “枫桥
式公安派出所” 公布溧阳竹箦派出所获殊荣), Changzhou Evening News, May 18, 2022. Translation;
People’s Public Security News, “The Ministry of Public Security Made a Decision to Name the
496
that as part of this effort, police stations around the country were
laying off auxiliary police officers in order to save and consolidate
local resources and instead outsourcing the daily work of auxilia-
ry police officers to neighborhood officials and local militias under
the “grid management” * system.314 Although China has mobilized
local residents en masse for law enforcement activities before, the
new plan seeks to make this mobilization permanent, granting lo-
cal officials law enforcement powers to recruit “grid officers.” 315 For
instance, in the city of Heshan, located in Guangdong Province, one
recruitment ad posted on the city government’s website said that
grid workers primarily serve as “information collectors, policy pro-
pagandists, liaison [officers] for social situations and public opinion,
conflict and dispute mediators,” and other roles.316 These workers
are also tasked with reporting social issues, damage to public fa-
cilities, and details on other illegal and criminal activities, such as
theft or robbery.317 According to an analysis examining 88 online
job postings from 2019 to 2020 by Jean Christopher Mittelstaedt, a
departmental lecturer in modern Chinese studies at the University
of Oxford, political requirements are “highly important for aspiring
grid members,” as 47 recruitment notices mentioned a political or
ideological requirement.318
So-called “vigilante groups” are also helping aid neighborhood law
enforcement efforts and assist the Party in maintaining control over
local communities. According to Jessica Batke, the senior editor for
investigations at ChinaFile, Party-organized vigilante groups func-
tion “yet another layer—in addition to the police, grid workers, fa-
cial-recognition cameras, and online monitoring and censorship—of
the PRC’s surveillance regime.” 319 Vigilantes appear to be distin-
guished from grid workers as civilian volunteers, although these
volunteers do receive some forms of compensation.† 320 Grid mem-
bers are employees that are part of a political and administrative
hierarchy, bound to it through a contract system.321 Although grid
workers are neither public servants nor attached to a work unit,
they are assessed in the same way as civil servants.322 Vigilante
volunteers, in contrast to what their name suggests, are individuals
deemed trustworthy by authorities, working under the direction of
local police forces and the Party-state.323 Students, retirees, mid-
dle-aged workers, local cadres, Party members, and veterans, among
other demographics, serve as vigilantes.324 Vigilantes bolster local
First 100 ‘Fengqiao Public Security Police Stations’ ” (公安部作出决定命名首批100个“枫桥式公安派
出所”), November 29, 2019. Translation.
* According to Minxin Pei, a professor of government at Claremont McKenna College, the CCP
embraced grid management in the mid-2000s as a tool of social control. Dr. Pei asserts that grid
management entails dividing communities into small units (typically 1,000 residents per unit)
and equipping them with information and surveillance technology. Dr. Pei asserts that although
on paper China has largely finished setting up more than one million grids in local communities,
it will likely take years to complete such a system, with only wealthy cities seeming to have made
genuine progress in the development of grid management. He argues that most grids are merely
neighborhood committees that have been relabeled. Minxin Pei, “Grid Management: China’s Lat-
est Institutional Tool of Social Control,” China Leadership Monitor, March 1, 2021, 1.
† Prospective vigilantes have been incentivized to participate by authorities through perks and
sometimes cash rewards. For instance, one safety promotion association in Shenzhen’s Bao’an
district handed out cash to people who could catch suspects. Furthermore, some volunteers may
receive discounts at hotels and stores. Ms. Batke also notes that around the 70th anniversary
of the founding of the People’s Republic of China in 2019, one Guangdong-based vigilante group
sought to organize 300 people from different villages to assist the police with guard duty, paying
each around $21 to $25 per day. Jessica Batke, “The Police’s Strength Is Limited, but the People’s
Strength Is Boundless,” ChinaFile, June 17, 2024.
497
law enforcement efforts by taking on patrol duties and handling

low-level incidents in lieu of the police.325 Vigilantes are also used
for Party-state aims to suppress dissent.326 For instance, Ms. Bat-
ke says that in 2021, the Nancun Safety Promotion Association, a
vigilante group based in Guangdong Province, stated that the group
should “work to persuade petitioners—individuals seeking redress
from higher-level authorities, often for perceived injustices at the
hands of local officials—to return to Nancun from Beijing.” 327 Fur-
thermore, the association also said it would keep 24-hour watch over
“key persons,” or people the CCP deems politically threatening.328 In
2022, the association was also directed to carry out “stability main-
tenance” activities, ranging from monitoring and managing migrant
workers to “preventing and properly resolving mass incidents,” such
as peaceful protests.329
COVID-19 Response Hones Methods for Controlling

Public Movements
China’s response to the COVID-19 pandemic relied on social
and digital methods to control the public.330 Xi declared a “peo-
ple’s war on COVID” in February 2020, initiating a nationwide
campaign that mobilized all of the Party-state government, non-
state sector, and Chinese public to contain the spread of the dis-
ease.331 Essential to this mass campaign were the grassroots
neighborhood organizations at the lowest level of administration,
the grid management system, throughout the country.* 332 During
the COVID lockdowns, the grid workers controlled residents’ en-
try to and exit from buildings, implemented quarantines, and dis-
tributed food and medicine supplies.333 The CCP also mandated
that all Chinese citizens use health code apps, which served as
COVID-19 health status certificates, travel passes, vaccination re-
cords, contact-tracing devices, and an apparent tool for suppress-
ing protest activity.† 334 Depending on the color of one’s health
code app, Chinese citizens were either afforded freedom of move-
ment (green) or required to quarantine (yellow or red); those with
yellow and red health codes had to submit a negative PCR test
before travel restrictions could be lifted.335
Although the chaotic end of Zero-COVID policy in December
2022 demonstrated the dysfunction of CCP decision-making and
the limits of the Chinese public’s tolerance for extreme controls on
their movements, the grid system and digital apps have persisted
beyond the pandemic, creating latent capacity that the CCP could
use to reimpose controls on public movement during a crisis or
conflict if needed.336 In April 2024, the State Council and Central
* The grid management system divides cities and rural areas into areas of approximately 10,000
square meters or approximately 200–300 households. Each grid has several staff and volunteers
tasked with both providing services and maintain stability by collecting data, patrolling and
monitoring the community, and meditating disputes. Jean Christopher Mittelstaedt, “The Grid
Management System in Contemporary China: Grass-Roots Governance in Social Surveillance and
Service Provision,” China Information 36:1 (2022): 3-22; Jue Jiang, “A Question of Human Rights
or Human Left?—The ‘People’s War Against COVID-19’ under the ‘Gridded Management’ System
in China,” Journal of Contemporary China 31:136 (2021): 491–504.
† In June 2022, authorities in the Chinese province of Henan were suspected of restricting some
residents’ movements using the COVID-related health apps, following protests by customers of
rural banks who had attempted unsuccessfully to make cash withdrawals. Tessa Wong, “Henan:
China Covid App Restricts Residents after Banking Protests,” BBC, June 14, 2022.
498
COVID-19 Response Hones Methods for Controlling

Public Movements—Continued
Committee issued rules that sought to expand, professionalize,
and enhance the “political quality” of grassroots community work-
ers, a broad category including grid workers, and set a target of
18 community workers for every 10,000 residents.337 Rules such
as these have arguably placed grassroots neighborhood organiza-
tions in what scholars Taisu Zhang and Yutian An call a state of
“permanent ‘emergency readiness,’ ” positioning them to “respond
quickly whenever higher authorities need to reimpose tighter
control, perhaps even pandemic-era kinds of control.” 338
Some cities and provinces are retaining or repurposing their
COVID-era apps in an effort to “hold onto the power and discre-
tion granted to them under the COVID-sparked ‘state of emer-
gency,’ ” according to Patricia M. Thornton, an Associate Professor
in the Department of Politics and International Relations at the
University of Oxford.339 For example, the Guangdong Provincial
Public Security Department rolled out a new WeChat app, the
“Ao Residence Code” to replace its “Ao Health Code” in Septem-
ber 2022.340 The new app, which links personal information such
as a resident’s ID number and address in a scannable QR code,
is mandatory for Guangdong-based household registration certifi-
cate holders, migrants, and foreign residents.341 Dr. Thornton ob-
serves that the app “allows users to enter libraries, museums, and
hospitals, effectively granting access to public spaces and ‘bun-
dled conveniences’ to an officially recognized subset of residents,
while providing local officials with an easy means of excluding at
will objectionable ‘key populations’ from public places.” 342
Education Campaigns Emphasize National Security and Patriotism

National security education has gained increasing prominence
under Xi’s rule, highlighting security as a key priority for the Par-
ty-state. As noted previously, in April 2014, Xi proposed the concept
of “Comprehensive National Security” at the first meeting of the
Central National Security Commission, which was closely followed
by the adoption of the National Security Law in July 2015.343 The
law stipulated that the state would incorporate national security ed-
ucation into the country’s education system and the training system
for civil servants.344 The law also designated April 15th as National
Security Education Day, with the first one being held in 2016.* 345
In a recent article published on National Security Education Day in
2024, MSS Secretary Chen Yixin emphasizes the importance of ideo-
logical security, saying the Party and people must “guard the ideo-
logical position, oppose and resist all kinds of erroneous thoughts,
resist and guard against the infiltration of religious extremism, and
strictly prevent all kinds of risks from spreading to the political
security field.” 346
* The first National Security Education Day in Hong Kong was held in 2021. Kenji Kawase,
“Hong Kong Embraces Xi’s ‘Holistic’ Security Dogma on Education Day,” Nikkei Asia, April 15,
2024.
499
China has also promoted national security as a cross-disci-

plinary field of study in recent years, opening new specialized
research centers, programs, and funds.347 China’s Ministry of Ed-
ucation first announced a plan to set up national security stud-
ies departments in universities across the country in 2018.348 In
December 2020, the Academic Degrees Committee of the State
Council and the Ministry of Education finalized the creation of
a new “interdisciplinary” education category, which included “na-
tional security studies” as a formal topic.349 In 2021, the China
Institutes of Contemporary International Relations (CICIR), a
think tank linked to the MSS, opened the Research Center for
Comprehensive National Security.350 CICIR has also released
publications on national security, and the think tank’s president,
Yuan Peng, held trainings for cadres at different government lev-
els on the issue.351 In December 2023, the South China Morn-
ing Post also reported that in the previous five years, more than
a dozen Chinese universities had established national security
studies departments.352 According to Ms. Drinhausen and Helena
Legarda, both of the Mercator Institute for China Studies, these
efforts are part of a broader attempt by the CCP to “future-proof
the party state against domestic resistance, [as] the leadership
places a strong focus on inoculating China’s next generation
against harmful influences.” 353
China has also worked on expanding and codifying its patri-
otic education campaign in recent years to consolidate support
around the Party. The patriotic education campaign has been a
longstanding feature of Chinese schooling, having been instituted
at large scale in the 1990s.354 The main features of patriotic ed-
ucation in China center around incorporating material related to
national concepts of patriotism, such as the CCP’s vision of histo-
ry and traditional culture, as well as emphasizing political loyalty
to the Party.355 Since 2016, a series of directives and opinions for
enhancing patriotic education have been issued by the Ministry
of Education, merging patriotic themes into exams and course-
work across subjects and adding Xi Jinping Thought to all grade
levels’ curricula in 2021.356 In a more recent development, the
Patriotic Education Law was passed in October 2023, mandating
that love of the Party and motherland must take place not only
in schools but also across society, including various government
departments, enterprises, united front groups, and within fami-
lies.357 The law also emphasized the CCP’s desire to strengthen
publicity and education on unifying with Taiwan and opposing
Taiwanese independence.358
Party-State Stokes Fears of Foreign Espionage, Foreign
Contacts
China’s national security propaganda increasingly raises the spec-
ter of foreign spies and is creating an atmosphere where citizens are
encouraged to be hypervigilant about interactions with foreigners.
This trend has manifested in the increasingly active social media
presence of China’s chief spy agency and a slew of measures that
appear intended to hinder contact with foreigners.
500
MSS Goes Online to Raise Alarm about Foreign Espionage

The MSS launched its social media presence on WeChat in July
2023, transforming itself into a highly visible presence imploring
Chinese citizens to join its fight against foreign espionage. Its first
post emphasized that counterespionage requires the mobilization of
all of society, offering citizens rewards and promises of protection for
reporting espionage threats through tip lines.359 The MSS account
posts frequently, often describing the details of supposed espionage
activities or recruitment efforts by the U.S. and British intelligence
services.360 It tries to make its propaganda engaging, using short
videos and comic strips to convey warnings that China is facing
omnipresent espionage threats.361
Notably, the MSS is also using its online presence to combat neg-
ative narratives about China’s economy and emphasize the impor-
tance of data protection. Following the December 2023 Economic
Work Conference, the MSS account made a post describing foreign
assessments of China’s slowing economy as an attempt by exter-
nal forces to contain China’s development.362 In January 2024, the
MSS’s WeChat account published a comic depicting foreign spies at-
tempting to access secrets related to the rare earths industry.363 In
March 2024, the MSS released a propaganda video warning compa-
nies not to allow foreign due diligence firms to investigate them.364
In May 2024, the MSS also used its WeChat account to accuse for-
eign academics, universities, and NGOs of illegally collecting geo-
graphic and biological data from nature reserves, claiming in one
case that a foreign NGO had helped “a certain Western country” to
“steal core, sensitive data.” 365
Suppressing Foreign Contacts
China’s government has taken other measures to control its
population’s contacts with foreigners. Supplementing nation-
al-level laws discussed above, provinces have issued further reg-
ulations, as in the case of Chongqing, which issued implementa-
tion regulations for the Counterespionage Law requiring strict
oversight of government and SOE employees’ travel overseas and
of institutions engaged in foreign exchange or travel, among oth-
er provisions.366 Reporting in mid-July 2024 also suggests that
some localities increased travel restrictions on students, teachers,
and banking sector staff ahead of the summer vacation.367 Some
Chinese nationals have also experienced retaliation for meeting
with foreigners. Dong Yuyu, editor of the CCP newspaper Guang-
ming Daily, was arrested in April 2023 for meeting a Japanese
diplomat at a restaurant.368 In late 2023, the Chinese wife of a
U.S. citizen was detained and accused of providing state secrets
to overseas parties after briefly doing administrative work for a
U.S. logistics firm.369
China also appears to be increasing its restrictions on contract
between foreign diplomats and Chinese citizens within the country.
China’s regulation of foreign diplomatic activity within its borders
has always been restrictive, requiring advance notification and of-
ten permission in order for diplomats to meet with provincial or
local officials and placing strict geographical limits on diplomats’
501
travel.* 370 Yet in 2024, U.S. Ambassador to China Nicholas Burns

stated that China’s government had also begun disinviting U.S. Em-
bassy staff from university fairs they had previously attended, cit-
ing national security reasons.† 371 There is also new evidence that
China is applying pressure on its own population, with Ambassador
Burns stating that Chinese nationals are pressured not to attend
U.S. Embassy events,‡ and EU Ambassador to China Jorge Toledo
stating that China now often withholds permission for academics
and students to meet with EU diplomatic staff.372 (For more on the
Chinese government’s recent efforts to restrict people-to-people ties
within China despite an agreement with the United States to deep-
en them, see Chapter 2, “U.S.-China Security and Foreign Affairs
(Year in Review).”)
China Refines Capabilities and Processes for Military
Mobilization
There is ample evidence that China’s armed forces are enhanc-
ing their general military preparedness but little evidence they are
mobilizing for an imminent conflict at this time.373 Dr. Heath ar-
gued in testimony before the Commission that observers should be
careful to distinguish between “normal” activities that all militaries
undertake to carry out their assigned missions and the series of
abnormal, costly, disruptive activities that would need to occur for
the People’s Liberation Army (PLA) to transition from peacetime
to a war footing.§ 374 He stated that much of the evidence cited for
the claim that China is preparing for imminent conflict—such as
new weapons procurement and increased defense spending—is more
accurately characterized as evidence of military preparedness, and
crucial steps to mobilize Chinese society for war—such as mass call-
ups of its conscripts and the large-scale transfer of resources from
civilian to military use—have not occurred.375
* For more on China’s regulation of U.S. and other foreign diplomatic activity within its borders,
see Lauren (Greenwood) Menon and Jonathan Roberts, “China’s Foreign Missions in the United
States,” U.S.-China Economic and Security Review Commission, July 17, 2024.
† According to Ambassador Burns, roughly half of participants chosen for U.S.-funded exchange
programs have pulled out over the past two years due to pressure from authorities, schools, and
employers. Jonathan Cheng, “In Rare Rebuke, U.S. Ambassador Accuses China of Undermining
Diplomacy,” Wall Street Journal, June 25, 2024.
‡ Ambassador Burns said China’s MSS or other government bodies had pressured Chinese cit-
izens not to go, or attempted to intimidate those who attended, in the case of at least 61 public
events since November 2023. Jonathan Cheng, “In Rare Rebuke, U.S. Ambassador Accuses China
of Undermining Diplomacy,” Wall Street Journal, June 25, 2024.
§ According to Dr. Heath, normal activities associated with “military preparedness” include
investments in and development of new weapons and equipment, recruitment and training of
personnel, and planning and preparation for contingencies. He states that “military preparedness
is a normal activity undertaken regardless of whether a country’s leadership believes a war is
likely or not.” By contrast, Dr. Heath argues that more reliable indicators that China is preparing
for conflict would be activities associated with “national defense mobilization” or “national war
preparation,” terms similar to the phrases the PLA itself uses to describe two forms of prepara-
tion for conflict (“war mobilization” 战争动员 and “war preparation” 战争准备). National defense
mobilization consists of “state-directed activity to transition part or all of the country from a
peacetime to war footing through such measures as conscription and the large-scale transfer of
resources from civilian to military use.” He notes that national defense mobilization can great-
ly improve a state’s war-making capacity, but it is also “enormously costly and disruptive and,
therefore, rarely undertaken outside a conflict.” By contrast, the national war preparation con-
sists of “changes to policy and procedures in nonmilitary domains to facilitate the execution of
combat operations” and can occur in peacetime or wartime. “Although national war preparation
is less disruptive and costly than mobilization, it still is premised on an expectation of conflict,”
Dr. Heath observes. “Thus, it is inherently more political and potentially controversial in a way
that military preparedness is not.” Timothy Heath, written testimony for U.S.-China Economic
and Security Review Commission, Hearing on China’s Stockpiling and Mobilization Measures for
Competition and Conflict, June 13, 2024, 2–3.
502
Some of the improvements China has made to its mobilization

capabilities and processes over the past ten years do merit concern
and greater scrutiny, however, because their cumulative effect has
been to improve the speed with which the armed forces can mobilize
and the ease with which they can requisition civilian resources. In
particular, China has passed new measures to improve the processes
for mobilizing available manpower, revitalized its militias, stream-
lined the bureaucracy responsible for defense mobilization, honed its
armed forces’ skills through emergency response activities, and en-
hanced the Chinese public’s familiarity with defense matters and air
raid shelters. At minimum, these reforms have likely given Chinese
leaders “moderate and increasing confidence in the system’s ability
to perform during a conflict,” Devin Thorne, a Principal Threat In-
telligence Analyst at Recorded Future, testified before the Commis-
sion.376 At maximum, these measures can be read as gradual—and
purposely less detectable—steps to position the armed forces for a
smooth transition to a war footing, should China’s leadership direct
them to do so. All in all, it is clear China is more ready now than it
was five years ago to launch a war at short notice, and the United
States will have less time to identify the warning signs than before.
China Takes Steps to Ensure Manpower Availability
China has refined its system for calling up conscripts and re-
serves to ensure it can access a sizeable pool of manpower, like-
ly motivated by longstanding military readiness concerns as well
as by the CCP’s observation of Russia’s manpower issues amid its
war with Ukraine.377 Like the PLA,* the Russian military has fo-
cused its modernization efforts on creating a smaller, higher-quality
force, which ran into manpower issues as the high-intensity con-
flict became protracted.378 PLA observers note that Russia found
it required more troops for the campaign than originally anticipat-
ed and needed to increase personnel numbers by adjusting its con-
scription policy and its defense mobilization system.379 Moreover,
the announcement of a partial mobilization by the Russian govern-
ment led to an exodus of young men from the country, prompting
the Russian government to de-publicize its conscription efforts and
focus on the conscription of rural Russians.380 China’s changes to its
conscription and reservist policies are intended to preempt some of
these problems, which could just as well emerge in the context of a
high-intensity war over Taiwan.
Changes to Conscription Policy Aim to Boost Quality of Conscripts,
Speed of Wartime Mobilization
Changes to PLA conscription policy are intended to enhance the
quality of conscripts and to streamline the process by which they are
mobilized in wartime.† In 2023, the PLA updated its 2001 “Regula-
* China’s longstanding modernization effort has focused on professionalizing the military and
increasing the quality and technical proficiency of troops, resulting in a reduction in numbers of
active-duty troops by design and by dint of recruitment and retention struggles. Kenneth W. Allen
et al., “Personnel of the People’s Liberation Army,” BluePath Labs (Prepared for the U.S.-China
Economic and Security Review Commission), November 3, 2022, 8, 24, 39.
† It is estimated that about 700,000 personnel out of the PLA’s two million active-duty person-
nel are conscripts, who are obliged to perform two years of mandatory service. Conscripts are
considered to be the least trained and capable troops in the PLA but are considered necessary
for manpower-intensive missions such as ground combat. Over the past two decades, the PLA
503
tions on Conscription Work,” with official Xinhua coverage asserting

that the changes would improve the overall quality of conscripts
within the PLA, standardize procedures, clearly delegate responsi-
bilities, create a fast and efficient conscription system capable of
transitioning between peace and wartime, and provide for military
personnel replenishment.381 The regulations appear to place great-
er priority on recruiting more educated personnel, call on colleges
to assist in military conscription work, and offer incentives for col-
lege-educated recruits.382 In a change from the 2001 version, the
new regulations also specifically include wartime provisions that al-
low the Central Military Commission (CMC) to adjust conscription
requirements “according to wartime needs” after issuing a national
defense mobilization order.383 These provisions give the CMC the
legal authority to loosen conscription criteria as needed and make
more of China’s populace eligible for conscription into the PLA.384
The 2023 regulations also state that former soldiers should be pri-
oritized for recruitment in wartime and offer incentives for retired
conscripts who did not initially meet the criteria for promotion the
chance to re-enlist at a higher rank during peacetime.* 385 Enhanc-
ing the PLA’s ability to call up former soldiers and conscripts would
be a straightforward way to build up force numbers in an emergen-
cy.386
Reservist Changes
China has refined the bureaucratic system for the PLA’s esti-
mated 510,000 reserve personnel and sought to improve the at-
tractiveness of reserve duty through the passage of a Reservists
Law in 2022.† 387 The law clarifies the division of responsibility
for reservist work among various departments of the CMC, nam-
ing the National Defense Mobilization Department as responsi-
ble for assigning reservists to units and calling them up when
needed.388 The law also introduces increased benefits to enhance
the attractiveness of reserve duty, including financial aid, subsi-
dies for essentials like food and transportation, and entitlement
to medical insurance and compensation during military training
and operations.389
China Seeks to Adapt Militias to Demands of Modern Warfare
China has revitalized its militia system over the past decade, tar-
geting skilled professionals in high-tech industries and improving
has sought to recruit better educated and more technically skilled people into the enlisted force,
but it will conscript high school and ninth grade-educated personnel where it fails to fill volun-
tary quotas. Kenneth W. Allen et al., “Personnel of the People’s Liberation Army,” BluePath Labs
(Prepared for the U.S.-China Economic and Security Review Commission), November 3, 2022, 3,
28–29; Marcus Clay, Dennis J. Blasko, and Roderick Lee, “People Win Wars: A 2022 Reality Check
on PLA Enlisted Force and Related Matters,” War on the Rocks, August 12, 2022.
* The PLA continues to experience retention issues, particularly with enlisted conscripts. Since
2021, the PLA has offered conscripts incentives to take a “second enlistment” after their two-year
initial service period has expired. Kenneth W. Allen et al., “Personnel of the People’s Liberation
Army,” BluePath Labs (Prepared for the U.S.-China Economic and Security Review Commission),
November 3, 2022, 39–40, 60.
† “Reservists” are defined by law as Chinese citizens aged 18 or older who are either “pre-
assigned” to active-duty units in the PLA or are assigned to units made entirely of reservists.
Reservists include both enlisted personnel and officers. During wartime, PLA reservists serve
as an “important source” of supplementary officers and enlisted personnel. Reservists are to be
sourced primarily from former PLA active-duty personnel and technicians, with a minimum ser-
vice requirement of four years for new reservists. Center for Naval Analysis, “PLA Update: March
23, 2023,” March 2023.
504
the training that militia members receive.* 390 In wartime, militia

units assist the PLA with military operations and provide support
and additional manpower; in peacetime, militia units assist in hu-
manitarian aid and disaster relief, support military training, and
contribute to internal security activities.† 391 Militia personnel re-
tain their civilian jobs during peacetime, and many are employed
in nonstate enterprises.‡ Mr. Thorne testified that “militias are an
outcome of the [military civil fusion] MCF strategy that seeks to
locate and make use of military-relevant resources and skills within
the PRC’s civilian economic and social base.” 392
China is increasingly forming specialized “new-type militia” forc-
es to leverage civilian technical talent in specialized technology ar-
eas for the needs of modern warfare, although practical problems
with their incorporation remain. According to Mr. Thorne, “new-type
militias” are “armed forces units established among civilian profes-
sionals, including those from the private sector,” but they can also
be established in SOEs and universities.§ 393 The professionals in
“new-type militias” may be drawn from industries such as informa-
tion technology, communications, cybersecurity, software, electron-
ics, robotics, unmanned systems, and artificial intelligence, among
others.394 They may be assigned to units focused on cyber offense
and defense, online information control, intelligence support, drone
operations, maritime search and rescue, and undersea target detec-
tion, among others.395 “New type” militias are not always embraced
by the private enterprises in which they are embedded, however.
According to Mr. Thorne, militias face practical problems such as a
lack of complex and standardized training, insufficient equipment,
and the reluctance and noncompliance of enterprises to commit often
valuable personnel and equipment to militia responsibilities.396 For
* The People’s Militia (民兵) is one of the three branches of China’s armed forces, along with
the PLA and the People’s Armed Police (PAP). At the national level, the Central Military Com-
mission’s National Defense Mobilization Department Militia Reserve Bureau (民兵预备役局)
manages militia-related policies, procedures, and requirements. Militias are established under
the Provincial Military District system and are managed by the People’s Armed Forces Depart-
ments (PAFDs, 人民武装部) at the county level and below. There are county-level PAFDs manned
by active-duty PLA personnel and grassroots PAFDs manned by civilian cadres whose salaries
are paid by local governments and sometimes work on a part-time basis. Devin Thorne, written
testimony for U.S.-China Economic and Security Review Commission, Hearing on China’s Stock-
piling and Mobilization Measures for Competition and Conflict, June 13, 2024, 15–16; Conor M.
Kennedy and Andrew S. Erickson, “China Maritime Report No. 1: China’s Third Sea Force, The
People’s Armed Forces Maritime Militia: Tethered to the PLA,” China Maritime Studies Institute,
March 2017, 4.
† In the case of a conflict, the 2020 edition of the PLA textbook Science of Military Strategy
emphasizes the importance of rapid mobilization in order to make effective use of militia forces.
The Science of Military Strategy identifies rear-echelon duties for the militia such as conducting
transportation, resupply, rescue, repair, intelligence, and communication support operations. The
Science of Military Strategy further notes that the militia can be assigned to perform combat
duties independently or in support of active-duty PLA personnel. China Aerospace Studies Insti-
tute, “In Their Own Words: Science of Military Strategy 2020,” NDU Press, January 2022, 441.
‡ In 2016, Chinese media claimed that 114 private enterprises had established PAFDs and
more than 1,000 private enterprises had established militia units, though Mr. Thorne notes that
the total number of militia working in the civilian economy is unknown. Devin Thorne, written
testimony for U.S.-China Economic and Security Review Commission, Hearing on China’s Stock-
piling and Mobilization Measures for Competition and Conflict, June 13, 2024, 16.
§ For example, there are reportedly cybersecurity-focused militia in SOEs China Mobile, China
Telecom, China Unicom, and China Tower as well as the nonstate enterprise Qihoo 360 Technol-
ogy. 360 Security Technology Stock Co., Ltd. Chinese Communist Party Committee, “360 Group
Network Security Militia Fendui Defends the ‘Fifth Dimension’ ” (360集团网络安全民兵分队守护 “
第五维空间”), China Comment Net, May 18, 2021. Translation; Government of Yongxiu, Notice
of the Yongxiu County People’s Government and the Yongxiu County People’s Armed Forces De-
partment on Issuing the Implementation Plan for the Rectification of the Militia Organization in
Yongxiu County in 2021 (永修县人民政府永修县人民武装部关于印发永修县2021 年民兵组织整顿工
作实施方案的通知), April 25, 2021. Translation.
505
example, some technology companies have reportedly established

militia units from non-technical sales staff and members of compa-
ny Party organizations—instead of from specialized personnel—to
ensure the absence of staff for militia training does not undermine
productivity.397
China has sought to address these problems with improvements
to training and incentives.398 According to Mr. Thorne, some local
authorities have instituted consultative mechanisms and reduced
the disruptiveness of training to improve the participation of tech-
nology enterprises in militia enrollment efforts.399 He noted one re-
port of a district in Shenzhen, Guangdong, that promised to offer
housing and economic assistance to non-state enterprises that es-
tablished militias.400 Efforts are underway to improve the content
and manner of militia training, and militia units are now training
more frequently with the PLA theater commands and the services
than they did before.401
Streamlining the National Defense Mobilization System
China’s national defense mobilization system has historically
suffered from several flaws, which have prompted a number of re-
forms under General Secretary Xi over the past decade to improve
it.402 Critically, local governments were reluctant to share the bur-
den of peacetime administrative work with the PLA and opted to
prioritize economic projects that could stimulate GDP growth over
defense mobilization projects.403 Another problem was a lack of
clarity regarding the roles and responsibilities within the national
defense mobilization bureaucracy.404 For example, one PLA source
from 2018 noted a lack of clear policies for coordinating work and
a common problem of organizations failing to even maintain an ac-
curate list of their leadership.405 It even recounts an “embarrassing
scene” of a critical staff member at the municipal level who was
unable to name the units of his own organization or explain his
own responsibilities, noting that this situation was “not an isolated
case.” 406 Finally, civilian transportation infrastructure often did not
meet military specifications, which could restrict the ability of PLA
equipment to be transported via civilian assets in a mobilization
scenario.407 Such deficiencies helped spur a series of reforms in ar-
eas such as the national defense mobilization system’s bureaucratic
structure, information collection system, and relevant laws.
Improved Coordination through National Defense Mobilization
Offices
Structural changes to China’s national defense mobilization sys-
tem, most importantly the establishment of National Defense Mo-
bilization (NDM) Offices, have mitigated longstanding difficulties
in division of labor between the PLA and state governments. The
national defense mobilization system consists of National Defense
Mobilization Commissions (NDMCs) at the national, provincial, mu-
nicipal, and county levels that are each jointly led by civilian and
military authorities under the leadership of the CCP.* 408 In 2022,
* NDMCs are supported by national defense mobilization “working offices” that perform work
related to specific elements of national defense mobilization. An individual office will provide
guidance, develop capacity, and align military requirements with available resources in its area
of specialization. These offices are staffed by various civilian and military organizations, and
506
new civilian organizations called National Defense Mobilization Of-

fices were established within local governments at subnational lev-
els to take over administrative matters that had previously been
managed by the PLA’s provincial military regions.409 As Mr. Thorne
explains, locating these new offices within the local governments,
specifically local Development Reform Commissions, helps “institu-
tionalize the mandate” that civilian authorities focused on economic
planning must consider national defense mobilization requirements
in their work.410 In addition, these new NDM offices also contribut-
ed to better coordination between government and military branch-
es of the bureaucracy by forming “joint offices” for subnational-level
NDMCs to coordinate with the local PLA mobilization bureaus.411
China Deploys Surveys to Identify National Defense Resources across
Its Vast Economy
China’s “national defense potential surveys” have sought to help
authorities identify resources throughout China’s economy that can
be utilized during a crisis, but they have historically faced short-
comings in their reliability.412 Efforts to collect, maintain, and verify
records of the resources are crucial for the NDM system, making
national defense potential surveys an important tool for developing
insights into existing resources.413 The surveying process involves
the PLA defining its requirements and government agencies imple-
menting the surveys through national defense mobilization offic-
es.414 Further assistance is provided by government statistical offic-
es and NDM working offices at and above the county level.415 The
surveys are conducted on an annual, monthly, and ad hoc basis.416
Military authorities gain data from local governments, enterprises,
working units, and social organizations, which provide insights into
the type, quantity, and quality of resources that are available.417
However, Mr. Thorne asserts that “like other aspects of the NDM
system, national defense potential survey work has been impaired
by many problems for a long time.” 418 Some of these problems in-
clude ill-defined responsibilities among government and military
organizations, overreliance on the military and passivity among
government officials, unwillingness (in violation of the law) on the
part of some organizations to fully disclose relevant information,
low-skill workforces that are tasked with data collection and verifi-
cation, and the treatment of national defense potential data surveys
as a formality.419
In recent years, China has sought to improve the survey process
through the adoption of improved information technologies—efforts
that have yielded moderately successful results.420 For instance,
their configuration is not uniform across NDMCs. The national-level NDMC, for example, has
six working offices. Some PLA sources suggest that many local-level NDMCs have eight working
offices. Devin Thorne, written testimony for U.S.-China Economic and Security Review Commis-
June 13, 2024, 9, 34; An Yongbing and Liu Qiang, “With the Help of Information, Co-Location of
Offices Blazes a New Trail” (信息助力, 合署办公蹚新路), People’s Liberation Army Daily, posted
by China’s Ministry of National Defense, March 13, 2020. Translation; An Yongbing and Li Rui,
“Co-location of the ‘Eight Offices’ to Improve the Efficiency of Investigations” ( “八办” 合署提高调
查效率), People’s Liberation Army Daily, posted by China’s Ministry of National Defense, May 17,
2019. Translation; Tian Ye, Zhang Kai, and Qiao Zhenyou, “National Defense Mobilization Com-
mission Three Questions Clarify Responsibilities: Who Am I, What Do I Do, How Do I Do It?” (
国防动员委员会三问明责:我是谁,干什么,怎么干), People’s Liberation Army Daily, posted by China’s
Ministry of National Defense, June 27, 2018. Translation.
507
in 2018, the CMC National Defense Mobilization Department im-

plemented a new set of annual national defense potential data au-
diting practices to address issues of data quality, reliability, and
specificity.421 In 2021, the CMC’s National Defense Mobilization
Department also rolled out a new indexing system for cataloging
over 4,000 military and civilian resources that the Party-state and
PLA can bring to bear during wartime mobilization.* 422 The new
survey guidance allegedly improved the quality of the reported na-
tional defense potential data based on an annual audit conducted
after the implementation of the new survey guidance, but calls to
continue improving the indexing system, particularly with regard to
resources in emerging domains, continued in 2021.423 Furthermore,
there have been efforts to implement data-driven and networked
solutions to improve data collection as well as resource tracking and
tasking.424 For instance, a January 2023 Ningxia Military District
training event demonstrated use of a “national defense mobilization
comprehensive information system,” and a “veterans information
management system,” among others.425 Mr. Thorne argues, howev-
er, that as of early 2022, “the overall effort to modernize national
defense potential data management with information technology
was likely impeded by poor integration, with different information
systems using different standards and interfaces,” further asserting
that the implementation of technology solutions at the county level
was also likely incomplete as of mid-2023.426
Chinese Laws Enable the Party-State to Requisition Civilian Assets
for National Defense
China has institutionalized its ability to mobilize nonstate re-
sources by enshrining the Party-state’s powers into law. Through the
Chinese constitution, the 2010 National Defense Mobilization Law,
and other regulations such as the 2015 National Security Law, the
Party-state may requisition virtually any nonstate resource in the
context of “public interest” and “national defense requirements.” 427
Furthermore, Chinese scholars have said that the state may be able
to requisition moveable, immovable, and intangible property, as well
as personal labor, goods, and materials that are yet to be produced.428
Under the 2000 Foreign Enterprise Law, the state may requisition
foreign-owned property and, “under special circumstances,” appro-
priate foreign-invested enterprises.429 The 2019 regulations govern-
ing civilian transportation national defense mobilization allows the
owners of a requisitioned resource to receive compensation if the
resource is damaged or modified during national defense construc-
tion or military activities.430 Under the regulations, people or orga-
nizations that own or manage civilian transportation tools, includ-
ing ports, airports, and train stations, will be compensated if they
suffer damage or depreciation, and the state will likely cover the
salaries of operating and support personnel.† 431 Foreign enterprises
* The indexing system is divided into nine categories, each with various subclasses of resources.
For instance, the “national economy class” includes subclasses of resources including major and
supplemental foodstuffs, fuel logistics resources, medicine and healthcare resources, nuclear and
chemical disaster emergency response resources, and others. Devin Thorne, written testimony
Mobilization Measures for Competition and Conflict, June 13, 2024, 26–27.
† The requisition of civilian resources has remained a point of contention among PLA experts
along with other aspects of the NDM system. For instance, in 2021, a professor and graduate
508
may also be entitled to compensation in the context of expropriation

under special circumstances.432
In recent years, China has sought to ensure that its transpor-
tation infrastructure is compatible with national defense require-
ments through the National Defense Transportation Law (NDTL).
According to Mr. Thorne, “The NDTL has likely eased some of the
difficulties that military authorities previously faced in adding na-
tional defense requirements to transportation infrastructure con-
struction plans.” 433 The Party-state implemented the National De-
fense Transportation Law in 2017,* which sought to strengthen the
legal basis for ensuring the military has access to and can make
use of China’s transportation infrastructure.434 The law requires
the State Council to consult with the PLA regarding national de-
fense transportation planning and technical standards, and it estab-
lished consultation mechanisms between civilian government and
PLA units at the provincial level and above to coordinate plans for
transportation projects.435 The law seeks to ensure that the plan-
ning, construction, and use of railroads, roads, waterways, airways,
pipelines, and postal services, among other forms of infrastructure,†
are compatible with national defense transportation requirements,
and provide priority access to China’s armed forces.436 Various Chi-
nese cities and provinces have reported increased compliance with
the law. For instance, in April 2020, a state-owned railway operator
agreed not to demolish an out-of-service track connecting Anhui and
Guangxi Provinces due to its military value, and it also added new
military-use stations, ration supply stations, and other military-use
improvements to its lines.437 In December 2020, a Qingdao port re-
ported building a military-civilian dual-use terminal for naval ves-
sels and large civilian roll-on/roll-off ships, a large assembly area,
and water and power supply facilities.438
Although the National Defense Transportation Law has likely im-
proved adherence to these requirements, problems and limitations
still remain.439 In March 2024, participants at a forum on NDM
hosted by the National Defense University Joint Operations College
expressed dissatisfaction with the ambiguous responsibilities of dif-
ferent parties in implementing national defense requirements for
student at the Army Command College argued that the specifics of the process are not defined
by law and suggested improving incentives for supporting requisitions as well as issuing punish-
ments for obstructing them. PLA experts have also discussed issues of ambiguity and diverging
interests in how compensation could be implemented, while others have argued that the military
should have the latitude to approve decisions about the requisition of civilian resources indepen-
dent of the government. Devin Thorne, written testimony for U.S.-China Economic and Security
and Conflict, June 13, 2024, 13.
* The National Defense Transportation Law stipulates that governments at or above the county
level may “requisition civilian transportation vehicles, transportation facilities, transportation
materials and other civilian transportation resources based on the needs of national defense.”
The National Defense Law includes a clause allowing the state to “expropriate or requisition the
equipment, facilities, means of transportation, premises, and other properties of organizations
and individuals in accordance with the law for the purpose of national defense mobilization.” Law
of the People’s Republic of China on National Defense (China), 2020; National Defense Transpor-
tation Law of the People’s Republic of China (China), 2017.
† The law asserts that the state and military develop a catalog of projects required to imple-
ment national defense requirements. The 2016 version of this catalog includes railways, road-
ways, airports, ports, and refined oil pipelines as well as fixed, mobile, satellite, and broadcast
communications systems; data centers and data exchange platforms of government departments;
geopolitical, meteorological, and hydrological information systems; radio frequencies; and civil air
defense infrastructure. Devin Thorne, written testimony for U.S.-China Economic and Security
and Conflict, June 13, 2024, 18–19.
509
building infrastructure such as roads, bridges, and ports.440 Other

issues that have impacted the transportation sector’s ability to meet
national defense requirements include cost and bureaucracy issues
impeding efforts to retro fit existing civilian ships and airport facil-
ities.441 Furthermore, underfunding and poor-quality training pro-
grams have beset railway national defense transportation teams.442
Mr. Thorne asserts that “a more wholistic assessment of how the
NDTL has been implemented in the context of preparing transpor-
tation networks for NDM requires more research,” as implementa-
tion efforts have been inconsistently present in national and subna-
tional transportation-focused five-year plans.443
China’s Transportation System Would Reveal Wartime

Mobilization
Civilian transportation networks will be essential to PLA oper-
ations in wartime, and changes in patterns of activity on China’s
transportation networks could provide advanced warning of mili-
tary action against Taiwan. According to estimates from the PLA
Logistics Academic Research Center, a large-scale PLA joint op-
eration would require approximately “3,000 train trips, 1 million
vehicle trips, 2,100 aircraft sorties, 15 oil pipeline battalions . . .
and more than 8,000 ship voyages.” 444 According to Mr. Thorne,
the military’s use of the transportation sector would likely result
in “large disruptions in civilian passenger and cargo flights as the
military amasses required materiel and abnormal patterns of be-
havior by civilian vessels, especially roll-on/roll-off ships but also
deck cargo ships and others.” 445 There are approximately 33 mil-
itary and civilian airports likely to be used by the PLA as points
of embarkation for a campaign against Taiwan, which foreign ob-
servers could monitor for atypical activity.446 Mr. Thorne notes
that the PLA would attempt to conceal its mobilization through
measures such as covering military equipment being loaded onto
civilian ships with tarps, but such measures could be detected
through satellite imagery and potentially exposed by Chinese so-
cial media users documenting military mobilization activities in
their localities.447 Citing other analysts’ estimates that the CCP
is likely to order a general mobilization “at least three or four
months” before an invasion of Taiwan, Mr. Thorne suggests that
changes in the civilian transportation sector would be noticeable
just a few months before the onset of a large-scale military op-
eration, providing a shorter amount of warning time than other
indicators.448
Enhancing First Responder Capabilities amid Disasters

China’s armed forces—namely the PLA and the People’s Armed
Police (PAP)—are the first responders to major disasters and emer-
gencies in China and are a key part of China’s emergency man-
agement system.449 By responding to internal emergencies, China’s
armed forces are able to practice skills applicable to military op-
erations in wartimes, such as rapid mobilization, logistics, airlift,
transportation, and emergency engineering.450 The PLA and PAP’s
responses to the COVID-19 pandemic and recent flooding afforded
510
the forces with some relevant operational practice but also exposed
gaps in communication with civilian counterparts that could under-
mine mobilization during wartime.451
COVID-19 Response Strengthens PLA Logistics Capability
The COVID-19 pandemic offered a real-world test of the PLA’s
logistics and mobilization capabilities, yielding insights the force
will likely keep in mind if it is ordered to engage in a conflict. The
PLA undertook large-scale deployments of military personnel and
launched the first significant mobilization of the PLA Joint Logis-
tics Support Force (JLSF) in order to combat the pandemic.452 The
JLSF played a significant role in the initial response to the pan-
demic, coordinating transportation and sustainment to over 4,000
PLA medical personnel over a six-week period.453 The PLA made
extensive use of information technology to track and rapidly deliver
supplies throughout the country, demonstrating the “informatizing”
of its logistics system.454 The PLA was able to directly test its air-
lift capabilities during the early response to the pandemic, debuting
its Y-20 large transport aircraft as part of an airlift that brought
nearly 1,000 personnel and 47 tons of cargo from cities across the
country.455 The pandemic also allowed the PLA opportunities to test
new command and control relationships between the JLSF, theater
commands, and the CMC; to balance frontline and rear echelon re-
quirements; to identify and mobilize finite resources; to maintain re-
liable communications; and to transport personnel and sustain them
at their destination.456
At the same, the PLA’s response to the COVID-19 pandemic also
highlighted some weaknesses in civil-military communication and
did not feature conditions that would rival the difficulty of a war-
time environment. Lack of communication between local officials
and the central government, as well as the Party’s initial delay in
making information about the pandemic public, slowed the PLA’s
initial deployment to Wuhan.457 In addition, while the pandemic
provided an opportunity to practice logistics, the PLA did not have
to manage the transportation of weapons and ammunition or ac-
count for doing so under fire, which would necessitate defensive and
concealment measures.458
Flood Response by PLA and PAP Hones Rescue Capabilities
Throughout 2024, PLA, PAP, and militia troops have been mo-
bilized to respond to major flooding events in China, offering the
opportunity to practice rapid deployment, logistics, and rescue op-
erations.* 459 The practical utility of flood response has even been
recognized by China’s top leadership; following emergency response
deployments of over a million PLA, PAP, and militia troops across
17 provinces in 2020, Xi reportedly told the military that the “flood
battle is a practical test of the leadership and command system of
our army, and the army’s combat readiness and ability to perform
* While China has experienced severe floods throughout its history, record-breaking floods and
severe typhoons have become a yearly occurrence, requiring evacuations of hundreds of thou-
sands and sometimes upward of a million people and causing billions of dollars’ worth of damage
and numerous deaths. Al Jazeera, “China’s Heaviest Rains in 140 Years Kill At Least 20, Leave
27 Missing,” August 2, 2023; Global Facility for Disaster Reduction and Recovery at the World
Bank, “Natural Disaster Challenges in China: Key Trends and Insights,” August 2020.
511
the tasks.” 460 During heavy flooding in Guangdong during April

2024, for example, the JLSF deployed to set up relief stations, the
Rocket Force engaged in landslide recovery, and PAP troops cleared
roads and delivered supplies.461 Like the COVID-19 response, flood
response has sometimes illustrated difficulties in civil-military coor-
dination that could undermine the efficacy of future mobilization ef-
forts. In 2023, flooding in Hebei demonstrated the political nature of
emergency response; some analysts believe that CCP General Office
Director Cai Qi was empowered to make decisions regarding flood
response rather than the local Party secretaries, including the deci-
sion to cut embankments to protect Beijing and the Xiong’an New
Area, and that this decision led to deaths of civilians and military
responders in Hebei.462
Enhancing Civil Defense Capabilities
China’s leadership is building upon previously existing programs
designed to impress the importance of national defense upon Chi-
na’s citizenry. It has done so by expanding national defense educa-
tion in schools and building out civil air defense shelters.
China Enhances National Defense Education for the Youth
Chinese leaders see national defense education as an important
method for improving the Chinese public’s appreciation of the mil-
itary and positioning it to contribute to the Party-state’s military
and political goals.463 The 2001 National Defense Education Law
requires defense education to be provided across society, enabling
citizens to “enhance their awareness of the importance of national
defense, master the basic knowledge of national defense, learn the
necessary military skills, develop patriotic enthusiasm and conscien-
tiously perform their obligations to defend the country.” 464 Defense
education activities typically include lectures and visits to bases, as
well as programs targeting students from the primary school to uni-
versity levels, aimed at improving public perceptions of the armed
forces and encouraging recruitment.465 Some universities are now
providing much more intensive training than the traditional march-
ing and drills, including involving students in simulated battlefield
situations and using weapons systems such as drones and rocket
launchers.466
China has taken a number of steps to enhance national defense
education in the past five years. In 2023, the Ministry of Education
and the Political Work Department of the CMC issued a notice de-
claring that some primary and secondary schools would be recog-
nized as “national defense education demonstration schools,” creat-
ing a way to recognize institutions that excelled in national defense
education.* 467 In 2022, the central leadership issued an opinion
framing national defense education as a means of grappling with
increased risks China faces in the world and proposing a number
of enhancements, including the recommendations that university
students and high school students be required to undertake three
* The first batch of 2,687 schools was announced in February 2023, and in January 2024, an
additional 2,431 new primary and secondary schools were identified as “national defense educa-
tion demonstration schools.” Xinhua, “An Additional 2,431 New Primary and Secondary Nation-
al Defense Education Demonstration Schools” (中小学国防教育示范学校新增2431所), January 16,
2024. Translation.
512
weeks and two weeks of military training, respectively, with certain

middle schools encouraged to provide one week of training.468 A re-
vised National Defense Education Law was passed by the National
People’s Congress in September, 2024, strengthening national de-
fense education requirements for students at each level of the ed-
ucational system from primary through university.469 For example,
revisions require primary schools to provide lessons to create a basic
level of “national defense awareness” in students and require junior
high school students to “master preliminary national defense knowl-
edge and skills.”470 The revisions also improve the level of military
training for university and high school students.471
China Expands Civil Air Defense Shelters in Coastal Cities
Although China’s civil air defense policy spans decades, Xi has
made it a national goal to improve existing facilities and build
out new ones.* In a meeting held during the Seventh National
Civil Air Defense Conference in 2016, Xi signaled to provincial
and local leaders that the civil air defense system still needed
advancement, urging the country to improve its ability to fight
against air raids and carry out “functions and missions of war-
time air defense.” 472 China’s national emergency management
plan for the 14th Five-Year Plan period states that it intends to
update the standards for shelter construction and improve the
planning and layout of emergency shelters as national goals for
2020–2025.473 In recent years, large-scale efforts to restore and
construct new civil air defense infrastructure have picked up,
while localities have launched education campaigns that attempt
to increase citizens’ awareness about how to use civil air defense
facilities.474 According to the written testimony of Lauri Palte-
maa, a professor at the University of Turku, the China Civil Air
Defense Office is responsible for the maintenance and construc-
tion of shelters.475
Cities located in provinces close to Taiwan have been the key lo-
cations of recent efforts to renovate, enhance, and expand local civil
air defense facilities.476 According to Mr. Thorne, Fujian provincial
authorities, as well as authorities in cities such as Fuzhou, Xiamen,
and Quanzhou, have inspected, maintained, upgraded, and approved
the building of new civil air defense facilities.477 Examples include
the following:
• In March 2024, the Xiamen National Defense Mobilization Office
inspected over 30 “early-stage civil air defense projects,” which
were originally built in the 1960s and 1970s.478 The projects
were inspected for their safety, potential for development, and
other factors, indicating they are being checked for continued
use in civil air defense and for commercial purposes.479
* China’s civil air defense policy dates back to the founding of the People’s Republic of China,
and the government later increased air raid shelter construction significantly in the 1960s before
allowing them to fall into disrepair due to constraints on local budgets. After the Taiwan Strait
missile crisis, the Party-state codified its civil air defense policies into law in the 1997 Civil
Air Defense Law, mandating that all civilian buildings could serve as air raid shelters if they
fit appropriate size specifications. Katsuya Yamamoto, “The Revitalization of Renmin Fangkong
(Civil Air Defense), China’s Civil Protection: A Barometer of Xi Jinping’s Resolve in Preparation
for Armed Conflict with the United States,” Sasakawa Peace Foundation, July 3, 2023; Civil Air
Defense Law of the People’s Republic of China (China), 1997.
513
• In March 2023, a Quanzhou district issued a list of 18 construc-

tion projects with potential civil air defense components, includ-
ing middle schools, health service areas, residential communi-
ties, industry parks, and other facilities.480
• In December 2022, Xiamen took measures to improve its civ-
il air defense, including a new “Civil Air Defense Navigation”
platform that could aid citizens’ discovery of evacuation routes,
upgrades to emergency broadcast systems, renovations for “ear-
ly-stage civil air defense projects,” and related educational pro-
grams.481
The renewal and modernization of China’s civil air defense pos-
ture in proximity to Taiwan, combined with increased public educa-
tion, may indicate that the Party anticipates a need for them in the
near future.482 However, Mr. Thorne argues that civil air defense
projects likely represent ongoing, long-term efforts to strengthen
civil air defense infrastructure and improve national defense mo-
bilization readiness broadly, rather than an urgent effort to brace
for near-term conflict.483 Chinese law mandates that civilian-use
construction projects in urban areas include underground facilities
that can be used as air raid shelters, making it difficult to tell if the
shelters are a signpost of an imminent theat.484 Nonetheless, Mr.
Thorne also notes that since Chinese authorities are still focused on
improving civil air defense readiness, “this aligns with the national
leadership’s very likely assessment that the possibility of an armed
conflict in coming years is increasing.” 485
China’s political, military, and economic activities covered in this
chapter are likely intended to serve multiple purposes. In addition
to preparing for war, many of these actions evidently reflect Chi-
nese leaders’ concerns about regime stability, offering them tools of
political control to tamp down dissent, better manage the economy,
and respond more effectively to external shocks. For example, Chi-
na’s defense mobilization system can be used to respond to natural
disasters or to call up troops. Aside from enhancing readiness for
armed conflict, activities discussed in this chapter can also help to
prepare China for a long-term strategic competition with the United
States and allies and to insulate itself from “de-globalization” and
“de-risking” efforts and shocks to the global economy.
Some have argued that the actions identified in this chapter in-
dicate China’s leadership has concluded that a conflict is inevita-
ble and is preparing for a war or major hostilities against Taiwan
or the United States to commence in the near future.486 Many of
the activities described above could accelerate China’s ability to
mobilize its military, civilian resources, and the public should its
leaders choose hostile action. U.S. military and intelligence officials
have stated that Xi has instructed the PLA to be capable of taking
Taiwan by 2027, although they have also said there is no evidence
China’s leadership has made a decision to attack Taiwan.487 Other
observers argue that this target date is intended to give energy and
focus to reforms and modernization efforts rather than on setting a
timeline for war.488 Nevertheless, Xi has made clear that a central
514
aspect of his policy of “national rejuvenation” is China’s complete

“reunification” with Taiwan.489 The PLA’s practice of strategic de-
ception and its increased activity around Taiwan further complicate
attempts to discern whether or not China is actively preparing for
an imminent war.
If the political, economic, and military activities covered in this
chapter were part of an imminent march to war, some experts ar-
gue that one would expect to see additional, unambiguous indica-
tors and activities. For example, Chinese military training patterns
would shift, with a noticeable uptick in defense mobilization training
efforts such as amphibious exercises involving civilian shipping.490
China’s emergency management system may launch education cam-
paigns and hold trainings on how to evacuate, take shelter, and ad-
minister first aid, particularly in Chinese provinces closest to the
anticipated conflict area.491 There would probably be a significant
upward departure from the trailing three-year and five-year average
aboveground crude oil storage utilization rates. Aboveground tank
storage capacity utilization beyond 65 percent should therefore be
treated as a “yellow flag” justifying deeper scrutiny.492 China might
shift some of its currency reserves into alternative currencies or as-
sets such as gold as well as the currency of key trading partners
such as Brazil, South Africa, Turkey, Malaysia, and Indonesia.493
Various explanations for China’s activities are not mutually exclu-
sive, and many of the activities being undertaken are “dual-use”—
capable of serving multiple policy goals, some consistent with prepa-
rations for conflict and others likely less directly aggressive. Any
judgment about the significance of the activities described in this
chapter should be tempered by the fact that motives are not al-
ways—or even often—singular, particularly as here when the ob-
served activities are so varied that numerous disparate policy ra-
tionales are likely involved. Policies often can and do have multiple
motivations and advance multiple goals. Oversimplification, and
premature conclusions about intentions, however appealing or ap-
parently compelling, can lead to flawed policy responses.
Ultimately, U.S. policymakers have powerful reasons to be con-
cerned about China’s actions and intent. China’s aggressive control,
resilience, and mobilization activities have made it more prepared
to engage in a conflict over Taiwan or elsewhere in Asia and more
capable of conducting hostilities today than it was even a few years
ago. Furthermore, many of China’s recent policies, combined with
tightened controls on access to information, could reduce the visibili-
ty of actions that might be signals of preparations for imminent war.
Finally, these activities have reduced the deterrent effect of various
nonmilitary policies and external constraints on China. Thanks to
their recent actions, China’s leaders are now likely less constrained
by domestic political concerns, food security concerns, energy short-
age challenges, or threats of U.S. financial sanctions. Accordingly,
greater emphasis may need to be placed on the deterrent effect of
credible preparations for coordinated military and international po-
litical action.
515
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516
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517
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61. Kirk Johnson, “For the Vice President of China, Tea Time in Iowa,” New York
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62. McKinsey & Company, “For Love of Meat: Five Trends in China That Meat
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519
63. U.S. Department of Agriculture Foreign Agricultural Service, “Global Agricul-
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64. Li Ya, “Does Shuanghaui’s Acquisition Threaten US National Security?” (双汇收
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65. U.S. Representative Rosa DeLauro, “DeLauro Statement on CFIUS Decision on
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66. Lauren Greenwood, “China’s Interests in U.S. Agriculture: Augmenting Food
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67. ESS Feed, “Top 3 Largest Pork Producers in the USA—Volume, Turnover, and
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68. ESS Feed, “Top 3 Largest Pork Producers in the USA—Volume, Turnover, and
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70. Missouri Soybeans, “Soybeans Are Food, Feed, Fuel, and Fiber”; Joana Colussi
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71. U.S. Department of Agriculture Foreign Agricultural Service, “China Soybean
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74. Economic Daily, “Comprehensively Enhance the Production Capacity of Oil-
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eign Agricultural Service, “China Soybean Area, Yield and Production,” May 10, 2024;
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28, 2024; U.S. Department of Agriculture Foreign Agricultural Service, China Corn
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78. Dominique Patton, “Food Security Drives China to Cut Soymeal Use in Animal
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79. UN Comtrade Database, “Trade Data—HS 1201, China, All, Imports [2016–
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83. Cecilia Tortajada and Zhang Hongzhou, “When Food Meets BRI: China’s
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520
85. Jeff Pao, “China, Russia to Accelerate Grain Corridor Project,” Asia Times, May
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86. Genevieve Donnellon-May and Zhang Hongzhou, “The Sino-Russian Land
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88. Cui Can, “Official: China’s Ability to Safeguard Food Security Enhanced,” State
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89. Shin Watanabe and Aiko Munakata, “China Hoards over Half the World’s
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90. Genevieve Donnellon-May and Zhang Hongzhou, “What Do We Really Know
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97. U.S. Department of Agriculture Foreign Agricultural Service, “Rice ending
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98. U.S. Department of Agriculture Foreign Agricultural Service, “Soybean ending
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102. Reuters, “China Aug Coal Imports Up, but Net Exporter Again,” September
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103. National Development and Reform Commission of the People’s Republic of
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104. Bloomberg News, “China to Build More Coal Mines to Feed Surging Power
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106. International Energy Agency, “China, Natural Gas.”
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111. Gabriel Collins, written testimony for U.S.-China Economic and Security Re-
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521
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128. Agathe Demarais, “Why China Hasn’t Come to Russia’s Rescue,” Foreign Af-
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134. International Energy Agency, “China, Oil.”
135. Feng Kaidong and Lei Shaohua, “What Did the Chinese Government Do Right
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139. International Energy Administration, “Global EV Outlook 2024,” April 23,
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522
140. Reuters, “China Oil Demand Seen Peaking by 2030 - CNPC Research,” De-
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142. Emma Li, “China Builds Crude Stock amidst Turnaround Peak, Hope for New
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148. Reuters, “China Makes First Announcement on Strategic Oil Reserves,” No-
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149. Michal Meidan, “China’s SPR Release: A Test of Mechanisms Rather than a
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150. Oil & Gas Journal, “China Fills First SPR Site, Faces Oil, Pipeline Issues,”
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152. China Petroleum News Center, China Petroleum Cavern Underground Stor-
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154. Charlie Vest and Agatha Kratz, “Sanctioning China in a Taiwan Crisis: Sce-
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156. George S. Tavlas, “The International Use of Currencies: The U.S. Dollar and
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157. Logan Wright et al., “Retaliation and Resilience Chinese Economic Statecraft
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159. Gerard DiPippo and Andrea Leonard Palazzi, “It’s All about Networking:
the Limits of Renminbi Internationalization,” Center for Strategic and International
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160. Chen Hongxiang, “Logical Analysis of U.S. Financial Sanctions and China’s
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161. Peter Harrell, “How to China-Proof the Global Economy,” Foreign Affairs, De-
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162. Haihong Gao and Yongding Yu, “Internationalisation of the Renminbi,” BIS
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163. Jamil Anderlini, “China Calls for New Reserve Currency,” Financial Times,
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164. Alessia Amighini and Alicia García-Herrero, “Third Time Lucky? China’s Push
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165. Arthur Kroeber, “China’s Global Currency: Lever for Financial Reform,”
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166. Arthur Kroeber, “China’s Global Currency: Lever for Financial Reform,”
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523
167. Yukon Huang and Clare Lynch, “Does Internationalizing the RMB Make
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169. Zongyuan Zoe Liu, “China’s Attempts to Reduce its Strategic Vulnerabilities
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170. Zongyuan Zoe Liu, “China’s Attempts to Reduce its Strategic Vulnerabilities
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171. Xu Wenhong, “SWIFT系统:美俄金融战的博弈点” (SWIFT System: The Game of
Financial Warfare between the United States and Russia), Russian, Eastern Europe-
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Hirson and Meg Rithmire, “Chinese Assessments of Countersanctions Strategies,”
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172. Jenny Zheng, Yuande Zhu, and Ya-Lan Liu, “RMB Cross-Border Trade Settle-
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173. Sekine Eiichi, “Relationship between the Renminbi Internationalization
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174. Alessia Amighini and Alicia García-Herrero, “Third Time Lucky? China’s Push
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175. Mizuho Bank, “China’s Dual Exchange Rate System (CNY vs CNH),” March
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176. Malhar Nabar and Camilo E. Tovar, “Renminbi Internationalization,” Interna-
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178. European Central Bank, “The International Role of the Euro,” July 2013, 45.
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181. International Monetary Fund, “IMF Adds Chinese Renminbi to Special Draw-
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182. International Monetary Fund, “IMF Adds Chinese Renminbi to Special Draw-
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183. Sekine Eiichi, “Relationship between the Renminbi Internationalization
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185. Max J. Zenglein and Maximilian Kärnfelt, “China’s Caution About Loosening
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186. Barry Eichengreen and Masahiro Kawai, “Issues for Renminbi International-
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187. Daniel McDowell, “What Is Holding the Yuan Back? Xi Is,” Georgetown Jour-
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188. Iori Kawate, “China’s Dollar-Denominated GDP and Share of Global Economy
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189. Bastian von Beschwitz, “Internationalization of the Chinese Renminbi: Prog-
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190. SWIFT, “RMB Tracker,” January 2024; Bank for International Settlements,
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191. Liana Wong and Rebecca M. Nelson, “International Financial Messaging Sys-
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192. Stripe, “What Is SWIFT? What to Know About the International Banking
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524
193. Barry Eichengreen, “Sanctions, SWIFT, and China’s Cross-Border Interbank
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194. Susan V. Scott and Markos Zachariadis, “Origins and Development of SWIFT,
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195. Marco Cipriani, Linda S. Goldberg, and Gabriele La Spada, “Financial Sanc-
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196. Robert Greene, “How Sanctions on Russia Will Alter Global Payments Flows,”
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197. Marco Cipriani, Linda S. Goldberg, and Gabriele La Spada, “Financial Sanc-
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198. Rachelle Younglai and Roberta Rampton, “U.S. Pushes EU, SWIFT to Eject
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201. European Central Bank, “Glossary of Terms Related to Payment, Clearing and
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206. Zongyuan Zoe Liu, written testimony for U.S.-China Economic and Security
207. Chen Hongxiang, “Logical Analysis of U.S. Financial Sanctions and China’s
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208. Emily Jin, “Why China’s CIPS Matters (and Not for the Reasons You Think),”
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209. Barry Eichengreen et al., “Is Capital Account Convertibility Required for the
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210. Reuters, “What is China’s Onshore Yuan Clearing and Settlement System
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211. China’s National Bureau of Statistics, “China Imports, Exports [2024],” via
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212. People’s Bank of China, “Cross-Border Interbank Payment System, Transac-
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213. China’s National Bureau of Statistics, “China Imports, Exports [2024],” via
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214. People’s Bank of China, “Cross-Border Interbank Payment System, Transac-
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215. Cross-Border Interbank Payment System, “CIPS Participants Announcement
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216. Hyun Song Shin, “CBDCs: An Opportunity for the Monetary System,” Bank
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525
217. Julia Friedlander, “Friedlander Testifies to the House Committee on Financial
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218. BIS Innovation Hub, “Experimenting with a Multi-CBDC Platform for
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221. Zongyuan Zoe Liu, “China Wants to Ditch the Dollar,” Noema, January 11, 2024.
222. People’s Bank of China, “Total Cross-Border Merchandise Trade Settled in
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228. Iran International, “Iran Can Thwart US Sanctions via Shanghai Organiza-
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229. Sumayya Ismail, “Can BRICS Dethrone the US Dollar? It’ll be an Uphill
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230. BRICS Business Council, “BRICS Pay,” 2024.
231. Gerard DiPippo and Alex Isakov, “The Big Winner from Putin’s War? The
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232. Hoang Nam Nguyen et al., “Expanding Local Currency Transactions in ASE-
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233. Bank of Thailand, “Financial Cooperation between the Bank of Thailand and
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liance on US dollar,” South China Morning Post, March 15, 2022; People’s Bank of
China, “PBC and BI Launch a Framework for Local Currency Settlement,” September
6, 2021; Lusha Zhang and Se Young Lee, “China’s Central Bank Signs Currency Set-
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234. ASEAN, “ASEAN-China Economic Relations.”
235. Goldman Sachs, “China’s Currency Rises in Cross-Border Trade but Remains
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236. Gerard DiPippo and Alex Isakov, “The Big Winner from Putin’s War? The
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239. Goldman Sachs, “China’s Currency Rises in Cross-Border Trade but Remains
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526
241. Hector Perez-Saiz and Longmei Zhang, “Renminbi Usage in Cross-Border Pay-
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242. People’s Bank of China, 2023 RMB Internationalization Report, 2023, 18.
248. Bank of China, “The Evolution of Global Commodity Pricing Mechanism and
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Translation.
249. U.S. Department of the Treasury Office of Foreign Assets Control, Updated
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253. Jing Yang and Rebecca Feng, “Why China’s Banks Won’t Come to Russia’s
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265. Manoj Kewalramani, oral testimony for U.S.-China Economic and Security
Review Commission, Hearing on China’s Stockpiling and Mobilization Measures
for Competition and Conflict, June 13, 2024; Katja Drinhausen, oral testimony for
U.S.-China Economic and Security Review Commission, Hearing on China’s Stockpil-
ing and Mobilization Measures for Competition and Conflict, June 13, 2024.
266. Manoj Kewalramani, oral testimony for the U.S.-China Economic and Security
527
267. Timothy Heath, oral testimony for the U.S.-China Economic and Security
Review Commission, Hearing on China’s Stockpiling and Mobilization Measures
for Competition and Conflict, June 13, 2024; Mao Zedong, “Our Great Victory in
the War to Resist U.S. Aggression and Aid Korea and Our Future Tasks” (抗美援朝
的偉大勝利和今後的任務), CCTV, September 12, 1953. Translation; USCUS-China
Institute, “Mao Zedong’s ‘Order to the Chinese People’s Volunteers,’ ” October 1,
1950.
268. Paul H.B. Godwin and Alice L. Miller, “China’s Forbearance Has Limits: Chi-
nese Threat and Retaliation Signaling and Its Implications for a Sino-American Mil-
itary Confrontation,” Institute for National Strategic Studies National Defense Uni-
versity, April 2013.
269. Xinhua, “ ‘Taiwan Independence’ Separatist Activities Most Destructive Ele-
ments to Peace across Taiwan Strait: Chinese FM,” May 22, 2024.
Competition and Conflict, June 13, 2024, 69; Keith Bradsher, “China’s Leader, with
Rare Bluntness, Blames U.S. Containment for Troubles,” New York Times, March 7,
2023; Chun Han Wong, “China’s Xi Jinping Takes Rare Direct Aim at U.S. in Speech,”
Wall Street Journal, March 6, 2023.
Competition and Conflict, June 13, 2024; David Bandurski and Stella Chen, “Battle
at Lake Changjin,” China Media Project, December 8, 2021.
272. Consul General of the People’s Republic of China in Osaka, Consul General
Xue Jian’s Keynote Speech at the Seminar on “Looking Back to the Original Intention,
Looking Forward to the Future - Upholding the One-China Principle” (Full Text), (薛
剑总领事在 “回首初心, 展望未来——坚持一个中国原则” 专题研讨会上的主旨演讲(全文))
May 22, 2024. Translation; Xinhua, “Xi Jinping Meets with Ma Ying-jeou and His
Delegation” (习近平会见马英九一行), April 10, 2024. Translation.
273. Sheena Chestnut Greitens, “National Security after China’s 20th Party Con-
gress: Trends in Discourse and Policy,” China Leadership Monitor, August 29, 2023.
274. Katja Drinhausen, oral testimony for the U.S.-China Economic and Security
Competition and Conflict, June 13, 2024, 8; U.S.-China Economic and Security Review
Commission, 2022 Annual Report to Congress, November 2022, 41.
gress: Trends in Discourse and Policy,” China Leadership Monitor, August 29, 2023;
Chris Buckley and Steven Lee Myers, “In Turbulent Times, Xi Builds a Security
Fortress for China, and Himself,” New York Times, August 6, 2022.
tor Institute for China Studies, September 15, 2022; Jude Blanchette, “The Edge of an
Abyss: Xi Jinping’s Overall National Security Outlook,” China Leadership Monitor,
September 1, 2022.
gress: Trends in Discourse and Policy,” China Leadership Monitor, August 29, 2023.
278. Xinhua, “Xi Urges Accelerated Efforts to Modernize National Security Sys-
tem, Capacity,” May 31, 2023; William Zheng, “China Facing ‘More Complex’ Security
Challenges, President Xi Jinping Says, Warns of ‘Worst-Case’ Situation,” South China
279. Xinhua, “Xi Urges Accelerated Efforts to Modernize National Security System,
Capacity,” May 31, 2023.
280. William Zheng, “China Facing ‘More Complex’ Security Challenges, President
31, 2023; Xinhua, “Xi Urges Accelerated Efforts to Modernize National Security Sys-
tem, Capacity,” May 31, 2023.
281. Chen Yixin, “Fully Implement the Overall National Security Outlook,” Qiushi,
April 15, 2024.
282. Guoguang Wu, “The China Challenge: New Leadership Focuses on the Strug-
gle for Security,” Discourse, November 15, 2022.
283. Cheng Li and Mallie Preytherch, “China’s New State Council: What Analysts
Might Have Missed,” Brookings Institution, March 7, 2023.
284. Sheena Chestnut Greitens, “New Leaders in ‘National’ Security after China’s
20th Party Congress,” China Leadership Monitor, November 30, 2023.
285. Sheena Chestnut Greitens, “New Leaders in ‘National’ Security after China’s
20th Party Congress,” China Leadership Monitor, November 30, 2023.
528
287. Xinhua, “China Builds Legal Great Wall to Safeguard National Security: Of-
ficial,” April 25, 2022.
288. Lester Ross and Tingting Liu, “China Revised the State Secrets Law,” Wilmer
Hale, March 1, 2024; Beth Peters and Ben Kostrzewa, “China Amends the Anti-Es-
pionage Law,” Hogan Lovells, May 26, 2023; Katja Drinhausen and Helena Legarda,
“ ‘Comprehensive National Security’ Unleashed: How Xi’s Approach Shapes China’s
Policies at Home and Abroad,” Mercator Institute for China Studies, September 15,
2022, 9; Simon Denyer, “China Criminalizes the Slander of Its ‘Heroes and Martyrs,’
as It Seeks to Control History,” Washington Post, April 27, 2018.
289. People’s Daily, “Building a Strong Legal Guarantee for National Security in
the New Era (Jintai Sharp Comments)” (筑牢新时代国家安全的法治保障(金台锐评))
July 7, 2023. Translation; Katja Drinhausen and Helena Legarda, “ ‘Comprehensive
National Security’ Unleashed: How Xi’s Approach Shapes China’s Policies at Home
and Abroad,” Mercator Institute for China Studies, September 15, 2022.
291. Yukio Tajima, “China Begins Smartphone Inspections as Part of Espionage
Law,” Nikkei Asia, July 1, 2024; Katja Drinhausen, oral testimony for the U.S.-China
Economic and Security Review Commission, Hearing on China’s Stockpiling and Mo-
bilization Measures for Competition and Conflict, June 13, 2024, 8; Daisuke Wakaba-
yashi, Keith Bradsher, and Claire Fu, “China Expands Scope of ‘State Secrets’ Law
in Security Push,” New York Times, February 28, 2024; Kate O’Keeffe, “New Chinese
Law Raises Risks for American Firms in China, U.S. Officials Say,” Wall Street Jour-
nal, June 30, 2023; CK Tan and Shunsuke Tabeta, “China’s Anti-Espionage Law Set
to ‘Politicize’ Business,” Nikkei Asia, June 29, 2023.
292. Jeremy Daum, “Bad as It Ever Was: Notes on the Espionage Law,” China
Law Translate, May 2, 2023; National People’s Congress, Counterespionage Law of
the People’s Republic of China, April, 26, 2023; Jeremy Daum, “Open Thoughts on
the Secrets Law,” China Law Translate, February 27, 2024; China Law Translate,
“PRC Law on the Protection of State Secrets,” February 27, 2024; National People’s
Congress, PRC Law on the Protection of State Secrets (中华人民共和国保守国家秘密
法), February 28, 2024. Translation.
293. Kai von Carnap, “Amended Anti-Espionage Law Aims to Curate China’s Own
Narrative,” Mercator Institute for China Studies, May 25, 2024; Jeremy Daum, “Bad
as It Ever Was: Notes on the Espionage Law,” China Law Translate, May 2, 2023;
National People’s Congress, Counterespionage Law of the People’s Republic of China,
April 26, 2023.
294. Jeremy Daum, “Bad as It Ever Was: Notes on the Espionage Law,” China Law
Translate, May 2, 2023; Nadya Yeh, “Should You Be Frightened by China’s Revision
to the Anti-Espionage Law?” China Project, May 2, 2023; National People’s Congress,
Counterespionage Law of the People’s Republic of China, April, 26, 2023.
295. Jeremy Daum, “Open Thoughts on the Secrets Law,” China Law Translate,
February 27, 2024; China Law Translate, “PRC Law on the Protection of State Se-
crets,” February 27, 2024; National People’s Congress, PRC Law on the Protection of
State Secrets (中华人民共和国保守国家秘密法), February 28, 2024. Translation.
296. Lester Ross and Tingting Liu, “China Revised the State Secrets Law,” Wilmer
Hale, March 1, 2024; Jeremy Daum, “Open Thoughts on the Secrets Law,” China Law
Translate, February 27, 2024.
297. João da Silva, “Beijing Tightens Grip on China Social Media Giants,” BBC
News, May 1, 2024; Lester Ross and Tingting Liu, “China Revised the State Secrets
Law,” Wilmer Hale, March 1, 2024.
298. Jean Christopher Mittelstaedt, “Rebuilding Authority: The Party’s Relation-
ship with Its Grassroots Organizations,” China Quarterly 248 (2021): 244-264; John
Dotson, “The CCP’s Renewed Focus on Ideological Conditioning, Part 2: The New
Five-Year Plan for Training Party Cadres,” Jamestown Foundation, December 31,
2019.
299. Xinhua, “How CPC Empowers Itself with Party-Wide Education Campaigns,”
State Council of the People’s Republic of China, April 3, 2023; Jean Christopher Mit-
telstaedt, “Party-Building through Ideological Campaigns under Xi Jinping,” Asian
Survey 63:5 (2023).
300. Xinhua, “How CPC Empowers Itself with Party-Wide Education Campaigns,”
State Council of the People’s Republic of China, April 3, 2023.
529
29, 2023. Translation; Chinese Communist Party, “Regulations on Disciplinary Ac-
tions of the Chinese Communist Party (Approved by the CCP Central Committee
Politburo on December 23, 2003, Issued by the CCP Central Committee on December
31, 2003, Revised for the Third Time by the CCP Central Committee Politburo on
December 8, 2023, and Issued by the CCP Central Committee on December 19, 2023)”
(中国共产党纪律处分条例 (2003 年12 月23 日中共中央政治局会议审议批准 2003 年12 月
31 日中共中央发布 2023 年12 月8 日中共中央政治局会议第三次修订 2023 年12 月19 日
中共中央发布)), China Military Online, December 19, 2023. Translation; Banyue Tan
Network, “ ‘Two Safeguards’ and ‘Four Consciousnesses’ ” (“两个维护” 和 “四个意识”),
CCP Central Committee Propaganda Department-Sponsored Xinhua News Agency,
August 27, 2018. Translation; People’s Daily, “Regulations on Disciplinary Actions of
the Chinese Communist Party” (中国共产党纪律处分条例(全文)), CCP News Net, Au-
gust 27, 2018. Translation; Xinhua, “Relevant Officials of the Central Commission
for Discipline Inspection Answered Questions About the Promulgation of the Newly
Revised ‘Code of Conduct for Integrity and Self-Discipline of the Communist Party of
China’ and ‘Regulations on Disciplinary Actions of the Communist Party of China’ ”
(中央纪委有关负责人就颁布新修订的《中国共产党廉洁自律准则》《中国共产党纪律处分
条例》答问), Government of the People’s Republic of China, October 25, 2015. Trans-
lation; Chinese Communist Party Members Net, “Regulations of the Communist Party
of China on Disciplinary Actions (Revised in 2015)” (中国共产党纪律处分条例(2015年
修订)), October 22, 2015. Translation.
302. John Dotson, “CCP Ideological Indoctrination, Part 2: The New Plan for Train-
ing Party Cadres,” Jamestown Foundation, January 5, 2024; Xinhua, “The Central
Committee of the Communist Party of China Issued the ‘National Cadre Education
and Training Plan (2023–2027)’ ” (中共中央印发《全国干部教育培训规划(2023–2027
年)》), Government of the People’s Republic of China, October 16, 2023. Translation;
Xinhua, “The Politburo of the CPC Central Committee Held a Meeting to Review the
‘Regulations on Cadre Education and Training’ and the ‘National Cadre Education
and Training Plan (2023–2027)’ Xi Jinping, General Secretary of the CPC Central
Committee, Presided over the Meeting” (中共中央政治局召开会议审议《干部教育培训
工作条例》《全国干部教育培训规划(2023－2027 年)》中共中央总书记习近平主持会议),
Government of the People’s Republic of China, August 31, 2023. Translation.
303. William Zheng, “China Officials Unprepared for Struggle, Xi Jinping Told
CCDI ahead of ‘Lying Flat’ Campaign,” South China Morning Post, March 16, 2024.
304. William Zheng, “China Officials Unprepared for Struggle, Xi Jinping Told
CCDI ahead of ‘Lying Flat’ Campaign,” South China Morning Post, March 16, 2024.
to Congress, November 2022, 35–36; Christopher Carothers, “Xi’s Anti-Corruption
Campaign: An All-Purpose Governing Tool,” China Leadership Monitor, March 1,
2021.
306. William Zheng, “China’s Anti-Corruption Watchdog Says 100,000 Communist
Party Officials Faced Disciplinary Action Last Year,” South China Morning Post, Jan-
uary 30, 2024.
307. Xinhua, “Xi’s Uncompromising Fight Against Corruption,” State Council Infor-
mation Office of the People’s Republic of China, January 11, 2024.
308. William Zheng, “Dozens of China’s State Regulators, Bankers, Finance Bosses
in Corruption Net as Crackdown Stepped up in New Year,” South China Morning
Post, May 18, 2024.
309. CCP Central Commission for Discipline Inspection and People’s Republic of
China National Supervisory Commission, Weifang Vocational College Party Com-
mittee Secretary Liu Jiancheng Is Subject to Disciplinary Review and Supervisory
Investigation (潍坊职业学院党委书记刘建成接受纪律审查和监察调查), July 24, 2024.
Translation; CCP Central Commission for Discipline Inspection and People’s Repub-
lic of China National Supervisory Commission, Wen Zhiming, Party Secretary and
Chairman of Jiangxi Railway and Aviation Investment Group Co., Ltd., Is Subject
to Disciplinary Review and Supervisory Investigation (江西省铁路航空投资集团有限公
司党委书记、董事长温治明接受纪律审查和监察调查), July 24, 2024. Translation; CCP
Central Commission for Discipline Inspection and People’s Republic of China Nation-
al Supervisory Commission, Niu Zhanwen, Vice Chairman and General Manager of
Danda Express Railway Co., Ltd. of the Shenyang Railway Bureau, Is under Review
and Investigation (原沈阳铁路局丹大快速铁路有限责任公司副董事长、总经理牛占文接受
审查调查), July 24, 2024. Translation; CCP Central Commission for Discipline Inspec-
530
tion and People’s Republic of China National Supervisory Commission, Xu Cheng,
Former Deputy Director of the Finance Department of the Fire and Rescue Bureau
of the Ministry of Emergency Management, Is Subject to Disciplinary Review and
Supervision Investigation (应急管理部原消防救援局财务处副处长徐成接受纪律审查和监
察调查), July 23, 2024. Translation.
310. Laurie Chen, “China’s Xi Says Army Faces ‘Deep-Seated’ Problems in An-
ti-Corruption Drive,” Reuters, June 19, 2024; Xinhua, “(Authorized Release) National
People’s Congress Standing Committee Announcement (14th Session) No. 2” ((受权
发布)全国人民代表大会常务委员会公告(十四届)第二号), QQ, December 29, 2023. Trans-
lation; Bloomberg News, “China Ousts Nine Military Lawmakers as Defense Purge
Widens,” December 29, 2023.
Competition and Conflict, June 13, 2024, 15–18; Chen Yixin, “Fully Implement the
Overall National Security Outlook,” Qiushi, April 15, 2024, Translation by Center for
Strategic and International Studies; Gu Ting and Chen Zifei, “China Moves Ahead
with ‘Mass Policing’ Plan for Local Communities,” Radio Free Asia, November 14,
2023.
312. China’s Ministry of Public Security, The Ministry of Public Security Issued
the “Three-Year Action Plan for Strengthening the Work of Police Stations in the New
Era (2023–2025) (公安部印发《加强新时代公安派出所工作三年行动计划(2023–2025年)),
March 29, 2023. Translation.
313. China’s Ministry of Public Security, The Ministry of Public Security Issued
the “Three-Year Action Plan for Strengthening the Work of Police Stations in the New
Era (2023–2025) (公安部印发《加强新时代公安派出所工作三年行动计划(2023–2025年)
》), March 29, 2023. Translation.
314. Gu Ting and Chen Zifei, “China Moves Ahead with ‘Mass Policing’ Plan for
Local Communities,” Radio Free Asia, November 14, 2023.
315. Gu Ting and Chen Zifei, “China Moves Ahead with ‘Mass Policing’ Plan for
Local Communities,” Radio Free Asia, November 14, 2023.
316. Gu Ting, “China Recruits Thousands to Monitor Its Citizens’ Words and
Deeds,” Radio Free Asia, October 17, 2023; Shaping Subdistrict Office, Heshan City,
Jiangmen, “What Is a Grid? Who Is a Grid Worker? You Will Understand after Read-
ing This Article” (什么是网格?谁是网格员?看完这篇文章您就懂), July 14, 2022. Trans-
lation.
317. Gu Ting, “China Recruits Thousands to Monitor Its Citizens’ Words and
Deeds,” Radio Free Asia, October 17, 2023.
318. Jean Christopher Mittelstaedt, “The Grid Management System in Contempo-
rary China: Grass-Roots Governance in Social Surveillance and Service Provision,”
China Information 36:1 (March 2022): 11.
319. Jessica Batke, “The Police’s Strength Is Limited, but the People’s Strength Is
Boundless,” ChinaFile, June 17, 2024.
330. Patricia Thornton, “Grid Meets Web: How COVID-19 Extended the Par-
ty-State’s Social Control Capacity at the Grassroots,” China Leadership Monitor,
June 7, 2023.
531
331. Xuan Qin and Catherine Owen, “The CCP, Campaign Governance and
COVID-19: Evidence from Shanghai,” Journal of Chinese Political Science 28 (2023):
619–644; Zhao Litao, “How Does the Chinese Central Government’s COVID Control
Mechanism Work?” East Asian Institute National University of Singapore, July 8,
2022; Xinhua, “Xi Focus: Xi Vows to Win People’s War against Novel Coronavirus,”
February 11, 2020.
332. Jue Jiang, “A Question of Human Rights or Human Left?—The ‘People’s War
against COVID-19’ Under the ‘Gridded Management’ System in China,” Journal of
Contemporary China 31:136 (2021): 491-504; Jean Christopher Mittelstaedt, “The
Grid Management System in Contemporary China: Grass-Roots Governance in So-
cial Surveillance and Service Provision,” China Information 36:1 (March 2022): 11.
333. Sabrina Habich-Sobiegalla and Franziska Plümmer “Topologies of Power in
China’s Grid-Style Social Management during the COVID-19 Pandemic,” Security
Dialogue 54:2 (2023): 192–210; Patricia Thornton, “Grid Meets Web: How COVID-19
Extended the Party-State’s Social Control Capacity at the Grassroots,” China Leader-
ship Monitor, June 7, 2023; Economist, “China’s Communist Party Worries about Its
Grassroots Weakness,” June 11, 2020.
June 7, 2023.
June 7, 2023.
June 7, 2023; Lauri Paltemaa, written testimony for the U.S.-China Economic and
Security Review Commission, Hearing on China’s Stockpiling and Mobilization Mea-
sures for Competition and Conflict, June 13, 2024, 8; Phoebe Zhang, “It Helped Chi-
na Enforce Zero-Covid. Now the Community ‘Grid’ Network Is Going ‘Professional,’ ”
South China Morning Post, April 11, 2024.
337. Phoebe Zhang, “It Helped China Enforce Zero-Covid. Now the Community
‘Grid’ Network Is Going ‘Professional,’ ” South China Morning Post, April 11, 2024;
Xinhua, “Opinions of the General Office of the CPC Central Committee and the Gen-
eral Office of the State Council on Strengthening the Construction of the Commu-
nity Worker Team” (中共中央办公厅国务院办公厅关于加强社区工作者队伍建设的意见),
April 10, 2024. Translation; Xinhua, “Vigorously Strengthen the Construction of the
Community Worker Team and Continuously Expand the Backbone of Urban Grass-
roots Governance - Relevant Officials from the Central Organization Department and
the Central Social Work Department Answered Reporters’ Questions on the ‘Opinions
of the General Office of the CPC Central Committee and the General Office of the
State Council on Strengthening the Construction of the Community Worker Team’ ”
(大力加强社区工作者队伍建设不断壮大城市基层治理骨干力量——中央组织部, 中央社
会工作部有关负责人就《中共中央办公厅国务院办公厅关于加强社区工作者队伍建设的意
见》答记者问), April 10, 2024. Translation.
338. Yutian An and Taisu Zhang, “Pandemic State-Building: Chinese Administra-
tive Expansion Since 2012,” Yale Law & Policy Review 42:2 (Spring 2024) Forthcom-
ing; Jean Christopher Mittelstaedt, “The Grid Management System in Contemporary
China: Grass-Roots Governance in Social Surveillance and Service Provision,” China
Information 36:1 (2022): 3-22.
June 7, 2023.
June 7, 2023.
June 7, 2023.
June 7, 2023.
343. Arran Hope, “Learning from National Security Education Day,” Jamestown
Foundation, April 26, 2024; Cheng Lin, “Comprehensive National Security Concept
from the Perspective of People’s Security” (从人民安全角度看总体国家安全观), Aisix-
iang, April 17, 2024. Translation.
344. National Security Law of the People’s Republic of China (China), 2015.
532
345. Arran Hope, “Learning from National Security Education Day,” Jamestown
Foundation, April 26, 2024; National Security Law of the People’s Republic of China
(China), 2015; National People’s Congress, National Security Law of the People’s Re-
public of China (中华人民共和国国家安全法), July 7, 2015. Translation.
346. Chen Yixin, “Fully Implement the Overall National Security Concept” (全面
贯彻总体国家安全观), Qiushi, April 15, 2024. Translation by Center for Strategic and
International Studies.
348. Sylvie Zhuang, “National Security Studies Are Going Mainstream in China.
Will It Breed a New Chinese Elite?” South China Morning Post, December 2, 2023.
349. Tang Shiqi, Yu Tiejun, and Qi Haotian, “Based in China, Facing the World:
Establishing a National Secuirty Discipline System with Chinese Characteristics” (
立足中国,面向世界: 建立具有中国特色的国家安全学学科体系), China Security Studies,
1 (2022): 83.
352. Sylvie Zhuang, “National Security Studies Are Going Mainstream in China.
Will It Breed a New Chinese Elite?” South China Morning Post, December 2, 2023.
354. Zhao Suisheng, “The Patriotic Education Campaign in Xi Jinping’s China: The
Emergence of a New Generation of Nationalists,” China Leadership Monitor, March
1, 2023, 2.
355. John Dotson, “CCP Ideological Indoctrination, Part 1: The PRC’s New ‘Patriot-
ic Education Law,’ ” Jamestown Foundation China Brief, December 15, 2023.
356. Sun Yu, “ ‘Xi Jinping Thought’ School Lessons Alarm Chinese Parents,” Fi-
nancial Times, August 27, 2021; China Ministry of Education, The CPC Ministry
of Education Party Committee Issued the Education System on Learning Publicize
and Implement the “Patriotic Education in the New Era” Notice on the Work Plan
for the Implementation of the Outline (中共教育部党组印发《教育系统关于学习宣传贯
彻落实〈新时代爱国主义教育实施纲要〉的工作方案》的通知), January 20, 2020. Trans-
lation; Mimi Lau, “Class Ideology: China’s Education Chiefs Order Schools to Roll
Out Patriotic Campaign on New Media,” South China Morning Post, February 10,
2016; China Ministry of Education, The CPC Ministry of Education Party Committee
Issued a Notice on Deepening the Implementation of Opinions on the Implementation
of Patriotism Education (中共教育部党组关于教育系统深入开展爱国主义教育的实施意
见), January 26, 2016. Translation.
357. John Dotson, “CCP Ideological Indoctrination, Part 1: The PRC’s New ‘Pa-
triotic Education Law,’ ” Jamestown Foundation, December 15, 2023; China Law
Translate, “Patriotic Education Law,” October 24, 2023; China Law Translate, “P.R.C.
Patriotic Education Law (Draft),” June 29, 2023; China’s National People’s Congress
Constitution and Law Committee, Explanation of the ‘Patriotic Education Law of the
People’s Republic of China (Draft)’ (关于《中华人民共和国爱国主义教育法(草案)》审议
结果的报告), June 26, 2023, Translation.
358. China Law Translate, “Patriotic Education Law,” October 24, 2023; China Law
Translate, “P.R.C. Patriotic Education Law (Draft),” June 29, 2023; China’s National
People’s Congress Constitution and Law Committee, Explanation of the ‘Patriotic Ed-
ucation Law of the People’s Republic of China (Draft)’ (关于《中华人民共和国爱国主义
教育法(草案)》审议结果的报告), June 26, 2023, Translation.
359. Chris Lau, “China Spy Agency’s Social Media Debut Calls for ‘All Members
of Society’ to Combat Espionage,” CNN, August 3, 2023; Ministry of State Security,
“Counter-Espionage Requires the Mobilization of the Entire Society!” (反间防谍需要
全社会动员!), WeChat. Translation; Nectar Gan, “China Offers $15,000 Cash—or a
‘Spiritual Reward’—for National Security Tip-Offs,” CNN, June 8, 2022; Jack Lau,
“Be Alert: China Enlists the Public in Push Back at US Spying Efforts,” South China
Morning Post, August 26, 2023.
360. Jack Lau, “Chinese Security Ministry Attacks ‘Selfish, Hegemonic and Disin-
genuous’ US Over Criticism of Anti-Spying Law,” South China Morning Post, August
14, 2023; William Zheng, “China Spy Agency Widens Remit as Well as Reach with
WeChat Social Media Account,” South China Morning Post, October 6, 2023.
533
361. Chris Lau, “China Spy Agency’s Social Media Debut Calls for ‘All Members of
Society’ to Combat Espionage,” CNN, August 2, 2023.
362. Bloomberg, “China Security Agency Touts Economy after Key Policy Meeting,”
December 15, 2023; Frank Chen, “China Hits Back at Economic War of Words as
‘Some People with Ulterior Motives’ Fabricate Threats,” South China Morning Post,
December 15, 2023.
363. Liz Lee, “China, in Comic Strip, Warns of ‘Overseas’ Threats to Its Rare
Earths,” Reuters, January 22, 2024.
364. Economist, “The Mind-Bending New Rules for Doing Business in China,”
April 3, 2024; William Zheng, “China Spy Agency Fingers Consultancies as Espionage
Threat,” Voice of America, March 31, 2024.
365. Yuanyue Dang, “China’s Spy Ministry Raises Alert Over Foreign NGO Theft
of ‘Environmental Data,’ ” South China Morning Post, May 13, 2024.
366. Jiangxi Provincial People’s Congress, Jiangxi Counter-Espionage Work Regu-
lations (江西省反间谍工作条例), May 30, 2024. Translation; Yuanyue Dang, “Spying in
China: Chongqing Megacity Ready with Expanded Anti-Espionage Law in Local Gov-
ernment ‘First,’ ” South China Morning Post, August 31, 2023; Standing Committee of
the Chongqing Municipal People’s Congress, Chongqing City Counter-Espionage Work
Regulations (重庆市反间谍工作条例), Chongqing Technology and Business University,
July 27, 2023. Translation.
367. Qian Lang, “China Slaps Travel Restrictions on Teachers, Banking Sector
Staff,” Radio Free Asia, July 19, 2024.
368. Suvendrini Kakuchi, “Scholar’s Jailing for Spying Set to Dampen Bilateral
Ties,” University World News, May 16, 2024; Chun Han Wong, “China Accuses News-
paper Editor of Espionage After Meeting with Diplomat,” Wall Street Journal, April
24, 2023.
369. Amy Hawkins, “China Holds Citizen on Spying Charges after She Did ‘Admin’
Work for US Company,” Guardian, February 15, 2024.
370. U.S. Department of State, Report to Congress on Tibet Negotiations, October
2023; Ministry of Foreign Affairs of the People’s Republic of China, Protocol Guide of
the Embassy in China (English version)(驻华使馆礼宾指南(英文版)), December 2020.
372. Dewey Sim, “China Making It ‘Very Difficult’ for EU to Deepen Ties: Am-
bassador Jorge Toledo,” South China Morning Post, July 7, 2024; Jonathan Cheng,
“In Rare Rebuke, U.S. Ambassador Accuses China of Undermining Diplomacy,” Wall
Street Journal, June 25, 2024.
373. Timothy Heath, written testimony for U.S.-China Economic and Security Re-
Competition and Conflict, June 13, 2024, 1, 4.
376. Devin Thorne, written testimony for U.S.-China Economic and Security Re-
Competition and Conflict, June 13, 2024.
377. International Institute for Strategic Studies, “Military Balance: Asia,” 2023,
235; Suyash Desai, “Expert Explains | Changing Pattern of Chinese Mobilisation:
National Defence Mobilisation Offices and Reserve Personnel Law,” Indian Express,
June 30, 2023; Thomas Corbett and Peter W. Singer, “China’s New Conscription Rules
Reveal Concerns,” Defense One, June 8, 2023; Kenneth W. Allen et al. “Personnel of
the People’s Liberation Army,” Bluepath Labs, (Prepared for the U.S.-China Economic
and Security Review Commission), November 3, 2022.
378. Lyle Goldstein and Nathan Waechter, “As Russia’s Military Stumbles in
Ukraine, Chinese Strategists Are Taking Notes,” Diplomat, February 14, 2023.
379. PLA Daily, “Russia Proposes New Plan for Military Reform” (俄罗斯提出军队
改革新计划), January 12, 2023. Translation.
380. Daniil Belovodyev, “Inside Russia’s Improvised System for Mobilizing Men for
the Ukraine War: An RFE/RL Investigation,” Radio Free Europe/Radio Liberty, May
15, 2024; Mikhail Fishman, “In His Mobilization Drive Putin Finally Faces Reality,”
Wilson Center, September 30, 2022.
381. Xinhua, “The State Council and the Central Military Commission Announced
the Implementation of the Newly Revised ‘Regulations on Conscription’ ” (国务院,中
央军委公布实施新修订的” 征兵工作条), April 12, 2023. Translation.
534
382. Thomas Corbett, “Understanding the PLA’s New Conscript Regulations,” Blue-
path Labs, June 5, 2023, 3–4; China’s State Council and Central Military Commis-
sion, Regulations on Conscription Work (征兵工作条例), April 12, 2023, Articles 4–5,
383. China’s State Council and Central Military Commission, Regulations on Con-
scription Work (征兵工作条例), April 12, 2023, Articles 31, 63–66. Translation.
384. China’s State Council and Central Military Commission, Regulations on Con-
scription Work (征兵工作条例), April 12 2023, Articles 31, 63–66. Translation.
385. U.S. Department of Defense, 2023 China Military Power Report, 2023, 183;
Thomas Corbett, “Understanding the PLA’s New Conscript Regulations,” Bluepath
Labs, June 5, 2023, 6; China’s State Council and Central Military Commission, Reg-
ulations on Conscription Work (征兵工作条例), April 12, 2023, Articles 29, 31, 63–66.
Translation; Kenneth W. Allen et al., “Personnel of the People’s Liberation Army,”
BluePath Labs (Prepared for the U.S.-China Economic and Security Review Commis-
sion), November 3, 2022, 3, 28–29.
386. Thomas Corbett, “Understanding the PLA’s New Conscript Regulations,” Blue-
path Labs, June 5, 2023, 6.
387. International Institute for Strategic Studies, “Military Balance: Asia” 124:1,
(2024), 254; Suyash Desai, “Changing Pattern of Chinese Mobilisation: National
Defence Mobilisation Offices and Reserve Personnel Law,” Indian Express, June 30,
2023; Law of the People’s Republic of China on Reserve Personnel (中华人民共和国预
备役人员法), December 12, 2022. Translation.
388. Law of the People’s Republic of China on Reserve Personnel (中华人民共和国
预备役人员法), December 12, 2022. Translation.
389. Law of the People’s Republic of China on Reserve Personnel (中华人民共和国
预备役人员法), December 12, 2022. Translation.
Competition and Conflict, June 13, 2024, 15–18; U.S. Department of Defense, Mil-
itary and Security Developments Involving the People’s Republic of China, 2023,
76–77.
Competition and Conflict, June 13, 2024, 15–16; Liu Guoshun et al., “The National
Defense Mobilization System Focuses on Its Mission and Tasks to Promote the Trans-
formation and Upgrading of the Capabilities and Quality of Militia Trainers” (国防
动员系统聚焦使命任务推进民兵教练员能力素质转型升级纪实), China Military Online,
April 10, 2024. Translation.
Competition and Conflict, June 13, 2024, 15–16; Liu Guoshun et al., “The National
Defense Mobilization System Focuses on Its Mission and Tasks to Promote the Trans-
formation and Upgrading of the Capabilities and Quality of Militia Trainers” (国
防动员系统聚焦使命任务推进民兵教练员能力素质转型升级纪实), China Military Online,
Competition and Conflict, June 13, 2024, 16–17; Wang Baolong, “Improving the Level
of Militia Combat Training,” China Military Online, March 30, 2022.
397. Jiang Tongshan, Zhang Hongqi, and Zhao Feng, “Focusing on Emerging Fields
and Solving Organizational Problems: A Report on the Establishment and Strength-
ening of Militia Professional Teams in Kaifeng Military Sub-District, Henan Prov-
ince” (聚焦新兴领域破解编建难题——河南省开封军分区编实建强民兵专业分队纪实),
China Military Online, March 27, 2024. Translation.
535
Competition and Conflict, June 13, 2024, 7; Yu-Ping Chang, “National Defense Mobi-
lization: Toward A Clear Division of Labor Between the PLA and Civilian Bureau-
cracies,” Jamestown Foundation, March 15, 2024; China National Defense News,
“Strengthening the National Defense Administrative Attributes of National Defense
Mobilization” (强化国防动员的国防行政属性), Beijing Municipal National Defense Mo-
bilization Office, July 7, 2023. Translation.
Competition and Conflict, June 13, 2024, 7; Tian Ye, Zhang Kai, and Qiao Zhenyou,
“National Defense Mobilization Commission Three Questions Clarify Responsibilities:
Who Am I, What Do I Do, How Do I Do It?” (国防动员委员会三问明责：我是谁,干什么,
怎么干), PLA Daily, June 27, 2018. Translation; Erin Richter and Benjamin Rosen,
“China’s National Defense Mobilization System: Foundation for Military Logistics,” in
PLA Logistics and Sustainment: PLA Conference 2022 (US Army War College Press,
2023), 49.
405. Tian Ye, Zhang Kai, and Qiao Zhenyou, “National Defense Mobilization Com-
mission Three Questions Clarify Responsibilities: Who Am I, What Do I Do, How Do
I Do It?” (国防动员委员会三问明责：我是谁,干什么,怎么干), PLA Daily, June 27, 2018.
Translation.
406. Tian Ye, Zhang Kai, and Qiao Zhenyou, “National Defense Mobilization Com-
mission Three Questions Clarify Responsibilities: Who Am I, What Do I Do, How Do
I Do It?” (国防动员委员会三问明责：我是谁,干什么,怎么干), PLA Daily, June 27, 2018.
Translation.
407. Yu-Ping Chang, “National Defense Mobilization: Toward a Clear Division of
Labor between the PLA and Civilian Bureaucracies,” Jamestown Foundation, March
15, 2024.
Competition and Conflict, June 13, 2024, 34; Yu-Ping Chang, “National Defense Mo-
bilization: Toward a Clear Division of Labor between the PLA and Civilian Bureau-
cracies,” Jamestown Foundation, March 15, 2024.
15, 2024.
Competition and Conflict, June 13, 2024, 9–10, 24; China National Defense News,
“Strengthening the National Defense Administrative Attributes of National Defense
Mobilization” (强化国防动员的国防行政属性), Beijing Municipal National Defense Mo-
bilization Office, July 7, 2023. Translation.
411. Hunan Civil Air Defense, “Loudi Municipality National Mobilization Of-
fice: Both Responsibilities and Strength and in Place” (娄底市国动办：职责和力量
双到位), VOC, March 15, 2023. Translation; Devin Thorne, written testimony for
U.S.-China Economic and Security Review Commission, Hearing on China’s Stock-
piling and Mobilization Measures for Competition and Conflict, June 13, 2024,
9–10, 24.
536
Competition and Conflict, June 13, 2024, 12; National People’s Congress, Law of the
People’s Republic of China on National Defense (2020 Revision), December 26, 2020,
Article 51; State Council of the People’s Republic of China, Constitution of the People’s
Republic of China, November 20, 2019; National Defense Transportation Law of the
People’s Republic of China (中华人民共和国国防交通法), 2017, Article 7; People’s Re-
public of China National Defense Mobilization Law (Chairman Order No. 25) (China)
(中华人民共和国国防动员法(主席令第二十五号)), 2010, Chapter 10. Translation.
537
15, 2024.
444. Chieh Chung, “PLA Logistics and Mobilization Capacity in a Taiwan Inva-
sion,” in Joel Wuthnow et al. (eds.), Crossing the Strait, 256.
Competition and Conflict, June 13, 2024, 18–19; John Culver, “How We Would Know
When China Is Preparing to Invade Taiwan,” Carnegie Endowment for International
Peace, October 3, 2022.
449. Ying Yu Lin, “What’s behind China’s ‘Action Guidelines on Military Opera-
tions Other Than War’?” Diplomat, August 24, 2022.
450. China Military Online, “PAP Troops Build Simple Bridge to Transfer Villag-
ers in Earthquake-Stricken Sichuan,” September 7, 2022; John Dotson, “The PLA Is
Mobilized for Flood Relief in Eastern China,” Jamestown Foundation, July 29, 2020;
Joel Wuthnow, “Responding to the Epidemic in Wuhan: Insights into Chinese Military
Logistics,” Jamestown Foundation, April 13, 2020.
451. Joel Wuthnow, “Responding to the Epidemic in Wuhan: Insights into Chinese
Military Logistics,” Jamestown Foundation, April 13, 2020.
452. Elsa Kania and Ian Burns Mccaslin, “People’s Warfare against Covid-19: Test-
ing China’s Military Medical and Defense Mobilization Capabilities,” Institute for the
Study of War, 2020.
455. Zhao Lei, “Massive PLA Airlift Sends Help to Wuhan,” China Daily, Febru-
ary 14, 2020; Joseph Trevithick, “China’s Y-20 Airlifters Make Crisis Debut Bringing
Medics and Cargo to Virus Plagued Wuhan,” Warzone, February 13, 2020.
538
457. Elsa Kania and Ian Burns McCaslin, “People’s Warfare against Covid-19: Test-
ing China’s Military Medical and Defense Mobilization Capabilities,” Institute for the
Study of War, 2020, 14–15.
459. China Military Online, “Military Members Continue to Fight Floods on Front
Line,” April 24, 2024; John Dotson, “The PLA Is Mobilized for Flood Relief in Eastern
China,” Jamestown Foundation, July 29, 2020.
460. Xinhua, “Xi Focus: Xi Instructs Army to Complete Follow-Up Flood Control
Work,” August 20, 2020; Xinhua, “The People’s Liberation Army and the Armed Police
Force Have Deployed a Total of 725,000 Personnel to Participate in 3,749 Emergen-
cy Rescue Operations” (解放军和武警部队累计出动72.5万人次参加3749次抢险救援行动),
July 30, 2020. Translation.
461. China Military Online, “Military Members Continue to Fight Floods on Front
Line,” April 24, 2024.
462. Katsuji Nakazawa, “Analysis: Balance of Power between Xi’s Top Two Aides Is
Tipping,” Nikkei Asia, January 25, 2024.
463. Xinhua, “The CCP Central Committee, State Council, and Central Military
Commission Publish ‘Opinions on Strengthening and Improving National Defense
Education in the New Era’ ” (中共中央国务院中央军委印发《关于加强和改进新时代全
民国防教育工作的意见》), September 1, 2022. Translation.
464. Law of the People’s Republic of China on National Defense Education.
465. John S. Van Oudenaren, “Party Pushes National Defense Education for All,”
Jamestown Foundation, February 13, 2023; Orna Naftali, “Youth Military Training in
China: Learning to ‘Love the Army,’ ” Journal of Youth Studies, October 7, 2020; Yang
Lei, Yu Yu, and Shi Chunmin, “Open Up a New Era of National Defense Education
with Innovative Spirit, Reform Thinking and Pragmatic Measures” (以创新精神，改
革思维和务实举措开创新时代全民国防教育新局面), China National Defense News, Feb-
ruary 22, 2019. Translation.
466. Amber Wang, “China Ramps Up Military Education for Younger Ages to Help
Sow ‘Seeds’ of Patriotism,” South China Morning Post, July 16, 2024.
467. Xinhua, “An Additional 2,431 New Primary and Secondary National Defense
Education Demonstration Schools” (中小学国防教育示范学校新增2431 所), July 12,
2024. Translation.
468. Xinhua, “Opening Up a New Work Situation for National Defense Education
for All in the New Era——The Head of the Central Propaganda Department An-
swered Reporters’ Questions on ‘Opinions on Strengthening and Improving New Era
National Defense Education Work for All” (开创新时代全民国防教育工作新局面——中
央宣传部负责人就关于《加强和改进新时代全民国防教育工作的意见》答记者问), Septem-
469. National Defense Education Law of the People’s Republic of China (China)
2024; Xinhua, “The Head of the Legislative Affairs Commission of the Standing Com-
mittee of the National People’s Congress Answered Reporters’ Questions on the ‘Pa-
triotic Education Law of the People’s Republic of China” (全国人大常委会法工委负责人
就《中华人民共和国爱国主义教育法》答记者问), October 25, 2023. Translation.
2024; Xinhua, “The Head of the Legislative Affairs Commission of the Standing Com-
mittee of the National People’s Congress Answered Reporters’ Questions on the ‘Pa-
triotic Education Law of the People’s Republic of China’” (全国人大常委会法工委负责人
就《中华人民共和国爱国主义教育法》答记者问), October 25, 2023. Translation.
2024. NPC Observer, “National Defense Education Law of the People’s Republic of
China (Draft),” (中华人民共和国国防教育法(修订草案). Translation; Xinhua, “The Head
of the Legislative Affairs Commission of the Standing Committee of the National
People’s Congress Answered Reporters’ Questions on the ‘Patriotic Education Law of
the People’s Republic of China” (全国人大常委会法工委负责人就《中华人民共和国爱国
主义教育法》答记者问), October 25, 2023. Translation.
472. Xinhua, “Xi Jinping: Adhere to Civil Air Defense for the People and Create a
New Situation for the Cause of Civil Air Defense” (习近平:坚持人民防空为人民开创人
民防空事业新局面), May 13, 2016. Translation.
473. China’s Ministry of Emergency Management, National Emergency Manage-
ment System Plan During the 14th Five-Year Plan Period, 2022, 29, 35.
474. Katsuya Yamamoto, “The Revitalization of Renmin Fangkong (Civil Air De-
fense), China’s Civil Protection: A Barometer of Xi Jinping’s Resolve in Preparation
for Armed Conflict with the United States,” Sasakawa Peace Foundation, July 3,
2023; Association of Civil Air Defense of Jinan Municipality, Deputy Director Tang
Yujun of the National Civil Air Defense Office Inspected and Guided the Work of Civil
539
Air Defense in Jinan (国家人防办唐玉俊副主任调研指导济南市人民防空工作), June 19,
2022. Translation; Xinhua, “Using Anti-Corruption to Build a Strong ‘Underground
Great Wall’ for Civil Air Defense” (用反腐筑牢人民防空的 “地下长城”), April 21, 2021.
Translation.
475. Lauri Paltemaa, written testimony for the U.S.-China Economic and Security
476. Katsuya Yamamoto, “The Revitalization of Renmin Fangkong (Civil Air De-
fense), China’s Civil Protection: A Barometer of Xi Jinping’s Resolve in Preparation
for Armed Conflict with the United States,” Sasakawa Peace Foundation, July 3,
2023; Amber Wang, “Louder and Clearer: How Xiamen on the Taiwan Strait Front
Line Is Heeding the Call for Civil Defence,” South China Morning Post, May 16, 2023.
477. Devin Thorne, written testimony for the U.S.-China Economic and Security
482. Amber Wang, “Louder and Clearer: How Xiamen on the Taiwan Strait Front
Line Is Heeding the Call for Civil Defence,” South China Morning Post, May 16, 2023.
486. John Pomfret and Matt Pottinger, “Xi Jinping Says He Is Preparing China for
War,” Foreign Affairs, March 29, 2023.
487. John Pomfret and Matt Pottinger, “Xi Jinping Says He Is Preparing China for
War,” Foreign Affairs, March 29, 2023; Timothy Heath, “Is China Planning to Attack
Taiwan? A Careful Consideration of Available Evidence Says No,” War on the Rocks,
December 14, 2022.
489. Xi Jinping, “Full Text of Xi Jinping’s Speech at First Session of 14th NPC,”
China Daily, March 15, 2023.
490. Suyash Dashi, “RO-RO Ferries May Be China’s Route to Reunification,” East
Asia Forum, March 20, 2024; U.S. Army Training and Doctrine Command, Indicators
and Warning Tables, July 2023; John Doston, “The PLA Conducts Amphibious Train-
ing Drills with Civilian RO-RO Cargo Vessels,” Global Taiwan Institute, October 19,
2022; Lonnie D Henley, “Civilian Shipping and Maritime Militia: The Logistics Back-
bone of a Taiwan Invasion Militia: The Logistics Backbone of a Taiwan Invasion,”
China Maritime Studies Institute, May 2022.
491. Lauri Paltemaa, oral testimony for U.S.-China Economic and Security Review
Commission, Hearing on China’s Stockpiling and Mobilization Measures for Compe-
tition and Conflict, June 13, 2024, 51.
493. Economist, “Could Economic Indicators Give an Early Warning of a War over
Taiwan?” July 27, 2023.
CHAPTER 8: CHINA’S EVOLVING COUNTER-
INTERVENTION CAPABILITIES AND THE ROLE
OF INDO-PACIFIC ALLIES
Abstract
Over the past two decades, China has invested heavily in capabil-
ities to counter military action by the United States and its allies
in the event of a conflict in the Indo-Pacific. As a result, U.S. forces
and bases in the region would face a significant threat from the
People’s Liberation Army (PLA) in any regional contingency involv-
ing treaty allies and/or security partners, and the outcome of any
such conflict is far from certain. In addition, U.S. allies Japan, the
Philippines, and Australia perceive China’s military buildup and
aggressive actions as a growing threat to their national security
and are deepening defense collaboration with the United States. As
the United States continues to enhance its capacity to respond to
Chinese aggression, it must navigate both potential differences with
allies about the parameters of cooperation during a conflict as well
as questions about how to best adapt its force posture, capabilities,
and defense industrial base.
Key Findings
• The PLA plans to counter military action by the United States
and potentially U.S. allies in the event of a regional conflict.
Since at least the early 2000s, China’s leadership has viewed
the U.S. military’s presence and alliance activities in the In-
do-Pacific as threatening, and it continues to express concern
about new developments that combine deepening allied coop-
eration with an expanded U.S. military footprint in the region.
• China’s assertion that it will militarily defend its disputed ter-
ritorial and maritime claims threatens U.S. allies and security
partners in the Indo-Pacific. Should China’s leadership decide to
use force to enforce its claims in the South or East China Seas
or with regard to Taiwan, this aggression could trigger U.S. de-
fense commitments.
• The PLA continues to improve the quality and quantity of mil-
itary capabilities needed to counter U.S. military action in the
event of a conflict, including a large arsenal of ballistic and
cruise missiles, air defense systems, advanced fighter jets, mar-
itime forces, and electronic warfare (EW) capabilities.
• The PLA has also developed a redundant and resilient architecture
for Command, Control, Communications, Computers, Intelligence,
Surveillance, and Reconnaissance (C4ISR) to protect its own sys-
tems from attack, and it increasingly has the capability to disrupt
or paralyze an adversary’s C4ISR system. China’s advancements
(540)
541
in counter-C4ISR capabilities such as directed energy weapons and

anti-satellite technologies may threaten the United States’ ability
to access its own C4ISR networks for reconnaissance, targeting,
and other functions in peacetime or wartime.
• Despite improvements to a broad suite of capabilities, the PLA
still faces challenges in logistics and sustainment. The PLA’s
maintenance system may struggle to quickly repair and resup-
ply its advanced platforms and weapons systems under harsh
battlefield conditions, impacting the PLA’s ability to project and
sustain combat power.
• Chinese military experts perceive that U.S. and allied militar-
ies are adapting to the PLA’s improved capabilities and force
posture. They observe that the United States and its allies
are strengthening their missile defense capabilities while also
working to improve their ability to strike China’s forces. They
also note that new operational concepts emphasizing geograph-
ic dispersion and joint integration across warfighting domains
could also contribute to U.S. and allied forces’ survivability.
• U.S. allies in the Indo-Pacific are adjusting their defense pol-
icies in response to Beijing’s aggressive military posture and
activities. Japanese leaders are concerned about a possible re-
gional conflict and therefore seek to enhance Japan’s military
capabilities and interoperability with the United States. The
current government of the Philippines views cooperation with
the United States and other partners as core elements of its
response to China’s military and gray zone threats in the South
China Sea and its own military modernization efforts. Australia
seeks to deepen security cooperation with the United States,
its chief defense partner, while re-posturing its own military
for the possibility of great power conflict. Nevertheless, allies’
interest in working with the United States to address threats
from the PLA does not necessarily imply a commitment to allow
U.S. military access to their bases during a conflict or guarantee
the participation of allied military forces.
Recommendations
• Congress direct the U.S. Department of Defense to produce
within 60 days a classified net assessment report on current
People’s Liberation Army (PLA) Command, Control, Communi-
cations, Computers Intelligence, Surveillance, and Reconnais-
sance (C4ISR) capabilities and PLA electronic warfare (EW) ca-
pabilities (including electronic attack and electronic protection
capabilities). The report should examine U.S. counter-C4ISR
and counter-EW capabilities, assess the resiliency of U.S. capa-
bilities, identify counter-C4ISR and counter-EW gaps, and pro-
vide a menu of procurement options to close the gaps. Not later
than 60 days after its completion, the U.S. secretary of defense
shall provide the report to the appropriate congressional com-
mittees and brief them on its findings.
542
• Congress direct the Office of the Director of National Intelli-

gence, in conjunction with the U.S. Departments of Defense,
Commerce, and the Treasury and other relevant agencies, to
conduct a comprehensive review of potential technological
chokepoints across the People’s Republic of China military in-
dustrial base and devise plans to apply controls, in conjunction
with allies, to slow China’s military development.
• Congress reinvigorate and recommit to space as an area of
strategic competition, including by conducting a review of the
commercial space industry to determine if there are regulatory
updates that would ensure that the U.S. commercial space in-
dustry is able to innovate as quickly as possible while maintain-
ing safety as a top priority.
Introduction
China continues to develop capabilities to resist future military
action by the United States in a conflict involving U.S. allies and
partners in the Indo-Pacific, such as a PLA invasion of Taiwan or
effort to control waters and disputed features in the South and East
China Seas.* 1 The PLA has invested heavily in air, maritime, mis-
sile, space, and EW capabilities to target and degrade U.S. forces
and bases in the Indo-Pacific region.2 As a result, the threat to the
United States and its allies is growing more acute.
“Anti-Access/Area Denial” and “Counter-Intervention”

This chapter uses a set of related terms to describe PLA capa-
bilities relevant to restricting the access and operations of foreign
military forces. “Anti-Access/Area Denial” (A2/AD) is a U.S. mili-
tary term referring to an opponent’s military operations that aim
to restrict military forces’ ability to enter into a theater of opera-
tions (anti-access) and to restrict military forces’ freedom of action
within an area of operations under the opponent’s direct control
(area denial).3 This chapter refers to military capabilities that
could contribute to such operations as “A2/AD capabilities.” These
capabilities include ballistic and cruise missiles, air defense sys-
tems, advanced bombers, maritime forces, and EW capabilities.4
“Counter-intervention” is an English term used to describe Chi-
na’s operational approach to employing military capabilities that
would enable it to deter and, if needed, defeat a foreign military’s
attempts to become involved in a conflict in areas adjacent to
China.5 Counter-intervention does not itself constitute a Chinese
strategy; rather, it is a component of PLA operational practice
with operational and strategic implications for the United States
and its allies.6 This chapter uses the term “counter-intervention
* China views resolving longstanding territorial and maritime claims in these areas as falling
within the scope of its stated national defense objective to defend China’s “sovereignty, security,
and development interests.” China’s 2019 defense white paper specifies that this includes safe-
guarding “national sovereignty, unity, territorial integrity and security”; deterring and resisting
“aggression”; opposing and containing “Taiwan independence”; and safeguarding China’s “mari-
time rights and interests.” It also includes other objectives related to political and social stabil-
ity, Tibet, sustainable development, space, electromagnetic, and cyber. China Aerospace Studies
Institute, In Their Own Words: China’s National Defense in the New Era, March 16, 2021, 6–7;
State Council Information Office of the People’s Republic of China, China’s National Defense in
the New Era, July 2019, 7.
543
“Anti-Access/Area Denial” and “Counter-Intervention”—

Continued
scenario” to refer to a situation in which the PLA seeks to resist
and defeat a foreign military’s involvement in a conflict in the
Indo-Pacific, including military action by the United States or its
allies in response to a PLA invasion of Taiwan. It uses the term
“counter-intervention capabilities” to refer to A2/AD capabilities
used in a counter-intervention scenario.
This chapter evaluates China’s counter-intervention capabilities

as well as U.S. and allied efforts to address the regional security
challenges they pose. The chapter begins with an assessment of
China’s perceptions of U.S. and allied military actions in the In-
do-Pacific and its investment in capabilities that disrupt U.S. and
allied abilities to defend against, target, and strike Chinese assets
in conflict. It then examines the value of U.S. alliances in countering
China’s counter-intervention and surveys the approaches and per-
spectives of three U.S. allies in the region: Japan, the Philippines,
and Australia. It concludes by discussing implications for the United
States. The chapter draws on the Commission’s March 2024 hearing
on “China’s Evolving Counter Intervention Capabilities and Impli-
cations for the United States and Indo-Pacific Allies and Partners,”
consultations with experts, open source research and analysis, and
the Commission’s June 2024 fact-finding mission to Taiwan, Japan,
and U.S. Indo-Pacific Command.
China’s Approach to Countering U.S. and Allied
Military Actions in the Indo-Pacific
China’s leadership views the U.S. military’s presence, activities,
and alliance commitments in the Indo-Pacific region as hostile, lead-
ing the PLA to focus significant efforts on planning and training for
the possibility of U.S. military involvement in a regional conflict.
This perceived need to deter and contest U.S. military activity in-
forms its operational planning, its intense observation of U.S. and
allied defense cooperation, and its investment in a suite of capabili-
ties designed to restrict enemy forces’ operations in the Indo-Pacific
region.
China’s Leadership Views U.S. Indo-Pacific Military Activities
and Alliances as Hostile
China’s defense leadership has long viewed the U.S. military pres-
ence and alliances in the Indo-Pacific region as a threat to China’s
security interests. Every Chinese national defense white paper *
since 2000 has referenced U.S. military presence and deployments
as well as U.S. alliance activities in the Indo-Pacific among the
chief challenges in China’s security environment.† 7 In 2000, the
* China’s defense white papers are policy documents published every few years that outline the
country’s security objectives and military activities at a high level. Dennis J. Blasko, The Chinese
Army Today: Tradition and Transformation for the 21st Century, Second Edition, Routledge, 2012,
xv–xvi.
† China’s 2000, 2004, 2006, 2008, 2010, 2015, and 2019 white papers mention the United States
by name with regard to these activities. The corresponding statement in the 2002 and 2013 white
544
defense white paper listed “negative developments in the security

of the Asia-Pacific region,” including “the United States . . . further
strengthening its military presence and bilateral military alliances
in the region.” 8 Nearly two decades later, China’s 2019 white paper
delivered a similar message, stating, “The U.S. is strengthening its
Asia-Pacific military alliances and reinforcing military deployment
and intervention, adding complexity to regional security.” 9 With re-
gard to military presence, the series of nine white papers over this
period demonstrates an enduring concern about the United States
increasing, adjusting, and reinforcing its military deployments in
the region.10 With regard to alliances, the white papers reiterate
perceived threats from the United States strengthening, consolidat-
ing, and enhancing its regional alliance relationships generally, and
on several occasions they draw specific attention to alliance coor-
dination between the United States and Japan, South Korea, and
later, Australia.11
Influential experts within China’s strategic policy community
voiced similar concerns during the same two-decade period. In 2011,
a professor from China’s leading military academy, National De-
fense University, published a book entitled “On Maritime Strategic
Access,” which argues that China faced strategic maritime encircle-
ment by the United States and its allies in the Pacific.12 The author
claims that during the Cold War, the United States had “used the
offensive system of the large number of military bases and island
chains” in the Pacific to “build a ‘crescent-shaped maritime encircle-
ment’ ” of China and the Soviet Union, “besieging” them and seeking
to control their maritime strategic access to the Pacific.13 The book
then claimed that since the end of the Cold War, the United States
has sought to seal off China’s maritime access to the Indian and Pa-
cific Oceans through a ring of military bases along an “island chain
blockade line,” pointing out deployments in Japan, South Korea,
Guam, Hawaii, and the Western Pacific in particular.* 14 In 2011,
a PLA expert writing for the journal of an influential research or-
ganization affiliated with China’s Ministry of State Security (MSS)
argued that the United States was deliberately exaggerating the
threat of China’s A2/AD capabilities to justify investing in advanced
weaponry, shifting military deployments to the Pacific, and increas-
ing its “containment” of China.15 The author argued that the United
States sought to use its Pacific military presence to “interfere in
issues concerning China’s core interests,” namely China’s claims to
Taiwan, in the South China Sea, and in the East China Sea.16 An
papers reference the United States in oblique statements about “certain” or “some” countries. Chi-
na Aerospace Studies Institute, In Their Own Words: 2019 China’s National Defense in the New
Era, March 16, 2021; State Council Information Office of the People’s Republic of China, China’s
Military Strategy, May 2015; Information Office of the State Council of the People’s Republic of
China, The Diversified Employment of China’s Armed Forces, April 16, 2013; Information Office
of the State Council of the People’s Republic of China, China’s National Defense in 2010, March
31, 2011; Information Office of the State Council of the People’s Republic of China, China’s Na-
tional Defense in 2008, January 20, 2009; Information Office of the State Council of the People’s
Republic of China, China’s National Defense in 2006, December 2006; Information Office of the
State Council of the People’s Republic of China, China’s National Defense in 2004, December
2004; Information Office of the State Council of the People’s Republic of China, China’s National
Defense in 2002, December 2002; Information Office of the State Council of the People’s Republic
of China, China’s National Defense in 2000, October 2000.
* Regarding Japan and South Korea, the text claims that the United States had formed its
military alliances with these states specifically “to suppress the PRC’s strategic space along the
maritime direction.” China Aerospace Studies Institute, In Their Own Words: On Maritime Stra-
tegic Access, April 2024, 236.
545
article in the same journal in 2016 describes the U.S. military’s for-
ward deployment to the region as a key enabler of undesirable U.S.
“coercion” in the East and South China Seas.17
Characterizations of U.S. “Deterrence” in Chinese Sources

Although official and unofficial Chinese sources occasionally
describe U.S. policy as “deterrence” and acknowledge that the
United States seeks to “deter” certain Chinese military actions,
they generally do so while dismissing U.S. actions as hostile or
destabilizing. Some scholarly sources explore what they describe
as U.S. “deterrence” policy at length; for example, two articles in
China’s Journal of International Security Studies in 2022 detail
what the authors call a U.S. strategy of “deterrence by denial”
against China and the associated trends in U.S. military devel-
opment.* 18 The authors variously acknowledge that the United
States seeks to prevent China from launching a military attack in
the Western Pacific against Taiwan, U.S. forces, or U.S. allies, or
from forcibly resolving disputes in the South China Sea, but they
still dismiss U.S. commitments to regional stability and conclude
that the United States sought to “contain” China and pursue its
security at China’s expense.† 19 Official statements from China’s
Ministry of Foreign Affairs and Ministry of National Defense also
occasionally mention U.S. “deterrence” ‡ as part of their effort to
delegitimize U.S. actions. Some accuse the United States of using
“deterrence” as a façade to conceal aggressive intentions, while
others simply claim that trying to “deter” China is an aggressive
act in itself.20 China’s Ministry of Foreign Affairs also expresses
the perspective that U.S. efforts to deter China through nucle-
ar weapons deployments, nuclear sharing, alliance commitments
to allies, and activities in cyberspace are motivated by aggres-
sion.§ 21 Finally, Chinese officials have stated that China cannot
* A state practicing “deterrence” seeks to persuade an opponent to refrain from undertaking a

specific action. Deterrence relies on credible threats that create fear in the mind of the opponent
that if it undertakes the unwanted action it either will be unable to achieve its objective—which
is known as deterrence by denial—or will suffer unacceptable retaliation for doing so—which is
known as deterrence by punishment. For more on deterrence and its application to the Taiwan
Strait, see U.S.-China Economic and Security Review Commission, Chapter 4, “A Dangerous Pe-
riod for Cross Strait Deterrence: Chinese Military Capabilities and Decision-Making for a War
over Taiwan,” in 2021 Annual Report to Congress, November 2021, 390–392.
† This negative view of U.S. intentions also informs assessments by both authors that U.S.
deterrence of China may not succeed. One author describes a security dilemma in which China
will “strive to break out of” what he calls “military intimidation” by the United States and its
allies and claims that this will “inevitably” lead to the failure of U.S. deterrence. The other author
draws on the concept in deterrence theory that successful deterrence requires coupling coercive
threats with “reassurance” that the threat will not be carried out if the deterred party refrains
from taking the unwanted action. The author argues that, for both the United States and China,
“coercive threats” have begun to overwhelm “reassurances,” leaving deterrence unbalanced and
potentially ineffective. Chen Xi and Ge Tengfei, “An Analysis of the United States’ Deterrence
by Denial Strategy against China” (美国对华拒止性威慑战略论析), International Security Studies,
September 16, 2022, 24. CSIS Interpret Translation; Zuo Xiying, “Adjustments in the United
States’ Conventional Deterrence Strategy against China” (美国对华常规威慑战略的调整), Interna-
tional Security Studies, September 16, 2022, 18. CSIS Interpret Translation.
‡ Many other official descriptions of U.S. and allied actions by these institutions never acknowl-
edge that they are intended to deter China from military action, instead simply describing them
as belligerent, provocative, and aimed at undermining China’s security. China’s Ministry of For-
eign Affairs, Foreign Ministry Spokesperson Lin Jian’s Regular Press Conference on July 11, 2024,
July 11, 2024; China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Mao Ning’s
Regular Press Conference on May 27, 2024, May 27, 2024.
§ On multiple occasions in 2024, China’s Ministry of Foreign Affairs adopted this angle in
an apparent attempt to delegitimize U.S. policy on North Korea. In one statement, a ministry
546
Characterizations of U.S. “Deterrence” in Chinese

Sources—Continued
or will not be deterred from undertaking what they regard as
appropriate actions toward Taiwan or in the South China Sea,
implying that the United States intends to dissuade them from
undertaking a particular course of action.22
China Perceives Challenges to Its Counter-Intervention from

the United States and Its Allies
China’s leadership likely perceives intensified threats from recent
enhancements to U.S. military capabilities, concepts, and alliance
relationships. Since China began fielding A2/AD capabilities in
the early 2000s, China’s official media as well as PLA- and gov-
ernment-affiliated academic journals have continuously noted U.S.
military efforts to counter the PLA’s counter-intervention through
its own advances and through deepening relations with allies.23 Al-
though it is challenging to assess China’s overall level of confidence
in its current counter-intervention capabilities through disparate
open source reporting, analysis of China’s past observations reveals
several areas in which continued U.S. efforts could challenge PLA
objectives. According to testimony by Maryanne Kivlehan-Wise, di-
rector of the China studies program at the Center for Naval Anal-
yses, China’s media and academic journals express concern about
both ongoing U.S. efforts to increase the quality and quantity of its
military capabilities in the region and U.S. actions to strengthen
alliances and security partnerships.24 She assesses that the most
concerning developments to Beijing are those that couple an im-
provement in an alliance relationship with changes to the U.S. mil-
itary footprint in the region.25
China’s government, military, and academic sources point to sev-
eral trends in U.S. military development with the potential to un-
dermine China’s counter-intervention capabilities. Evolution in U.S.
strike and missile defense capabilities coupled with new operational
concepts have improved the capacity of the U.S. military to strike
China’s forces while making it more difficult for China to strike U.S.
forces in return.26 Many Chinese government and academic sources
have observed increased cooperation between the United States and
its Indo-Pacific allies against China’s military capabilities and por-
trayed such cooperation as detrimental to China’s interests.
• Long-range strike capabilities increase U.S. reach: China’s state
media and articles from PLA- and government-affiliated aca-
demic journals show enduring concern over U.S. development of
long-range strike capabilities, which can weaken China’s count-
er-intervention by allowing U.S. forces to attack more effectively
from a distance. The 2011 analysis from the journal affiliated
with the MSS notes efforts in 2010 to transform the U.S. ter-
spokesperson claimed the United States was heightening tensions in the region by “resorting to
military deterrence” against North Korea, and in another they insisted the United States must
“desist from acts of deterrence” against the country in order to avoid escalation. China’s Ministry
of Foreign Affairs, Foreign Ministry Spokesperson Mao Ning’s Regular Press Conference on June
3, 2024, June 3, 2024; China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Wang
Wenbin’s Regular Press Conference on April 3, 2024, April 3, 2024.
547
ritory of Guam—which at the time was outside of China’s con-

firmed ballistic missile range—into a hub for long-range strikes
as a key avenue for responding to China’s A2/AD capabilities.27
In 2012, China’s state media suggested that Guam-based U.S.
Air Force bombers paired with stealth fighters may be able to
carry out long-range strikes on China.28 Articles in the journal
of the PLA Naval University of Engineering in 2020 discuss
the continued value of Guam’s long-range bomber force as well
as U.S. long-range missile capabilities which could be used for
countering China.* 29
• Missile defenses make striking U.S. assets more difficult: Chi-
nese sources have tracked the U.S. military’s development and
deployment of missile defense systems as a key indicator of its
capacity to counter China’s counter-intervention capabilities.
In 2007, China’s state media claimed that deploying missile
defense systems near key military facilities in the region was
among the first recommendations U.S. military experts put for-
ward to counter China’s emerging A2/AD capabilities.30 Chinese
academic journals have since noted the priority successive U.S.
administrations placed on improving missile defense in North-
east Asia and the Western Pacific, especially as China’s missile
capabilities have expanded to reach locations such as Guam that
had previously been out of range.31 Some analysts assess that
China’s development of hypersonic weapons is motivated by the
increasing difficulty of breaking through U.S. missile defense
capabilities.32 One journal article from 2022 even warns that if
the United States employs directed-energy weapons technology
for missile interception in the future, the resulting increase in
cost-effectiveness of missile defense would represent “a qualita-
tive leap in its deterrence by denial capability against China.” 33
• Indo-Pacific missile deployments increase U.S. and allied strike
capabilities: China’s media, government representatives, and
other experts have reacted strongly over U.S. and allied efforts
to increase missile deployments in the Indo-Pacific region, in-
cluding but not limited to the sale of U.S. Tomahawk cruise mis-
siles to Japan in 2023, ongoing discussion of deploying inter-
mediate-range ballistic missiles (IRBMs) to Japan’s Southwest
Islands, and U.S. deployment of a Typhon Mid-Range Capability
missile system † in the Philippines in April 2024.34 The vocifer-
ous objection of China’s Ministry of National Defense spokesper-
son to the Philippines deployment suggests China’s leadership
perceives the system as a serious security risk.‡ 35 According to
* The journal also emphasizes the value of U.S. investments in space-based information systems
as necessary support for long-range missile strikes. Shi Zhangsong, Gong Wenbin, and Wu Zhong-
hong, “Status and Development of Long-Range Precision Strike Operations Technology Based
on Space-Based Information” (基于天基信息的海上远程精确打击技术现状及发展), Journal of Naval
University of Engineering (Comprehensive Edition) 17:3 (September 2020): 27. Translation.
† The U.S. Army Typhon Mid-Range Capability missile system launches Tomahawk cruise mis-
siles and standard SM-6 multi-domain missiles and is intended for targets at ranges between 500
kilometers (km) and 2,776 km (310 miles [mi] and 1725 mi). From its location in Northern Luzon,
the system could reportedly cover the entire Luzon Strait, PLA bases in the South China Sea,
and even China’s mainland coastline. Aaron-Matthew Lariosa, “U.S. Army Deploys New Missile
Launcher to the Philippines,” Naval News, April 15, 2024; Ashley Roque, “Army’s New Typhon
Strike Weapon Headed to Indo-Pacific in 2024,” Breaking Defense, November 18, 2023.
‡ The Ministry of National Defense Spokesperson stated that this action had “put the entire re-
gion under U.S. fire, brought a huge risk of war to the region,” and “gravely impacted the regional
548
an article in the Beijing-based Journal of International Security

Studies in 2022, the introduction of intermediate-range missiles
in the first island chain not only strengthens U.S. deterrence but
also complicates China’s strategic calculations and could even
undermine its advantages by forcing investment in expensive
defense measures to protect targets within China.36 China’s
government representatives have warned the United States
that China will take “resolute countermeasures” in response to
such deployments but have not specified what those measures
would be.37 Ms. Kivlehan-Wise notes that Chinese experts view
missile deployments in the region both as significant military
capacity improvements and as indicators of stronger security
partnerships between the United States and its allies.38
• New operational concepts could make U.S. forces more surviv-
able: Chinese observers and military media have taken a strong
interest in new operational concepts developed by U.S. military
services, such as Expeditionary Advanced Base Operations
(EABO) for the U.S. Marine Corps, Agile Combat Employment
(ACE) for the U.S. Air Force, Distributed Maritime Operations
(DMO) for the U.S. Navy and Marine Corps, and Multi-Domain
Operations (MDO) for the U.S. Army.39 Ms. Kivlehan-Wise tes-
tified that common themes in China’s media coverage of these
U.S. concepts include that they were developed solely to counter
China’s military, especially within the first island chain, and
that they could improve U.S. military stealth, strike, and surviv-
ability.40 For example, a 2023 article from China’s Ministry of
National Defense newspaper re-circulated by the People’s Daily
notes that these various service concepts derive from an effort
to increase the U.S. military’s “distributed lethality,” which em-
phasizes the use of flexible and dispersed attack formations to
avoid destruction from enemy strikes.41 China’s military and
state media have also taken note when U.S. forces practice
these concepts in cooperation with security partners in the re-
gion.* 42 In 2022, one military analyst writing in the Ministry of
National Defense newspaper even argued that the U.S. military
has an overall advantage in the development of operational con-
cepts that could provide it an edge over the PLA.43 Neverthe-
less, Ms. Kivlehan-Wise testified that China’s media has also as-
sessed that the PLA’s long-range missile capabilities still have
the potential to counter these new operational concepts, making
them insufficient for the task of countering China’s counter-in-
tervention capabilities.44 Some coverage has also argued that
limitations in U.S. network technology, firepower effectiveness,
security structure,” requiring China to exercise “a high degree of vigilance.” China’s Ministry of
National Defense, Transcript of May 2024 Ministry of National Defense Regular Press Conference
(2024年5月国防部例行记者会文字实录), May 30, 2024. Translation.
* The above-mentioned article from China’s Ministry of National Defense newspaper, for ex-
ample, describes exercises in which military forces from Australia, Canada, France, Japan, the
Philippines, and other countries carried out related exercises with U.S. forces. It makes note of
foreign media coverage stating that the new operational concepts and their associated tactics
had been shared with U.S. allies, and it warns that “in the future, the United States will draw
support from its global military alliance system to make ‘distributed lethality’ more covert and
threatening.” China National Defense News, “U.S. Military Steps Up New Combat Concepts in
Exercises” (美军加紧新型作战概念演练), People’s Daily, November 8, 2023. Translation.
549
and real-world practice of the concepts present reasons to doubt

their effectiveness in practice.45
• Increased force and network integration could support U.S. op-
erations: China has also observed evolving efforts at increasing
the integration of U.S. military operations. In 2014, an article
in the People’s Daily expressed alarm at the then multi-service
initiative, “Air-Sea Battle,” which aimed to develop cross-domain
approaches for countering China’s A2/AD capabilities through
both inter-service cooperation and greater networked connectiv-
ity.46 In 2016, Party media describing a separate U.S. military
initiative to counter China’s A2/AD capabilities—known as the
“Third Offset Strategy”—pointed out the importance of building
a multi-domain “global surveillance-strike network” to the suc-
cess of the proposed U.S. approach.47 In 2024, China’s military
academic media has explored the U.S. Department of Defense
(DOD) strategic warfighting concept of Joint All-Domain Com-
mand and Control (JADC2), noting the potential advantages of
this effort to leverage network technology and integrate com-
mand and control across traditional and emerging combat do-
mains, as well as the associated technical and organizational
challenges it still poses.48
• Greater U.S.-allied cooperation could complicate China’s mili-
tary environment: China has also paid attention to the military
implications of recent efforts to deepen cooperation between the
United States and individual allies and partners. For example,
since 2022, Chinese news media and academic journals have
described complete, planned, and prospective U.S. and Japanese
military deployments and exercises around Japan’s southwest-
ern islands as measures that strengthen the allies’ military
position vis-à-vis China because they increased the range, con-
centration, and resilience of U.S. offensive capabilities.* 49 Af-
ter the expansion of the Enhanced Defense Cooperation Agree-
ment (EDCA) between the United States and the Philippines
in 2023,† Chinese commentators argued that the United States
intends to use the new EDCA sites to improve its position for
contingencies related to Taiwan or the Spratlys and that the
agreement strengthens the United States’ ability to control
the Bashi Channel between the Philippines and Taiwan.50 The
Trilateral Security Partnership between the United States, the
UK, and Australia (AUKUS) is also a topic of great concern to
Chinese observers.51 Ms. Kivlehan-Wise assesses that AUKUS
* According to testimony from Ms. Kivlehan-Wise, Chinese subject matter experts believe these
changes improve the ability of the United States and Japan to track PLA air and naval vessels,
deny the PLA access to the Pacific Ocean through key straits, and destroy PLA platforms and
infrastructure at sea and on the Chinese Mainland. Maryanne Kivlehan-Wise, written testimony
for U.S.-China Economic and Security Review Commission, Hearing on China’s Evolving Count-
er Intervention Capabilities and Implications for the United States and Indo-Pacific Allies and
Partners, March 21, 2024, 6.
† EDCA, originally signed in 2014 between the United States and the Philippines, allows the
U.S. armed forces a rotational presence at certain military bases in the Philippines. In February
2023, the two countries announced the designation of four additional Philippine bases as EDCA
sites, in addition to the five existing sites. Gregory B. Poling, “The U.S.-Philippine Alliance’s Very
Busy Month,” Center for Strategic and International Studies, April 12, 2023; U.S Department of
Defense, Philippines, U.S. Announce Locations of Four New EDCA Sites, April 3, 2023; Karen
Lema, “Philippines Reveals Locations of 4 New Strategic Sites for U.S. Military Pact,” Reuters,
April 3, 2023.
550
has sharply increased China’s concern about U.S. Indo-Pacific

alliances and security partnerships because of its surprise an-
nouncement, the substantial military benefits it grants to the
members, and a perception in Beijing that Australia had chosen
to side with the United States against China.* 52 (For more on
expanding cooperation between the United States and these al-
lies and partners, see “U.S.-Allied Efforts to Address Challenges
from China’s Military” below.)
• U.S. undersea warfare capabilities: The PLA has monitored
developments in U.S. submarine and other undersea capabili-
ties because of the likelihood such capabilities will be used to
thwart an invasion or disrupt a blockade of Taiwan.53 China
has invested in both submarine and anti-submarine warfare
(ASW) capabilities to erode U.S. longstanding advantages in the
undersea domain.54 While the PLA appears to have made some
progress in ASW capabilities, notably through the introduction
of many airborne and seaborne ASW platforms as well an ex-
panded hydrophone network, foreign and Chinese experts still
assess that China “lags behind” the United States in its abilities
to detect and destroy enemy submarines as well as to protect its
own submarines from enemy detection.55 Some Chinese sources
assert that the PLA may be able to narrow this gap by integrat-
ing supercavitation technology into its torpedoes, which enables
a torpedo to wrap itself in an air bubble underwater to reduce
drag and increase its speed.† 56 Since 2022, some media sources
have claimed that Chinese scientists are developing a hybrid
anti-ship weapon that travels first through the air as a hyper-
sonic missile before diving and maneuvering below the water as
a supercavitating torpedo, allowing it to potentially challenge
* China’s Ministry of Foreign Affairs has criticized the partnership as “a clear attempt at coun-
tering China” and sought to undermine its legitimacy through public statements. This represents
a shift from prior years, in which Australia was viewed as more reluctant to participate actively
in frameworks that could be perceived as countering China or choosing sides between China and
the United States. Xia Liping, “Xia Liping: The U.S. Indo-Pacific Strategy from the Dual Perspec-
tives of Geopolitics and Geoeconomics” (夏立平:地缘政治与地缘经济双重视角下的美国“印太战略”),
American Studies 2 (2015). Translation; China’s Ministry of Foreign Affairs, Foreign Ministry
Spokesperson Wang Wenbin’s Remarks on AUKUS Nuclear Submarine Cooperation on March 17,
2023, March 17, 2023; China’s Ministry of Foreign Affairs, Commentary VII on AUKUS: Fire Can-
not Be Wrapped Up in Paper; Whoever Plays with Fire Will Perish by It, October 6, 2022; China’s
Ministry of Foreign Affairs, Reality Check: Falsehoods in US Perceptions of China, June 19, 2022.
† Chinese state and military newspapers have observed other countries’ application of super-
cavitation technology on torpedoes since at least 2015, noting the technology’s development by the
Soviet Union and its adoption by Russia, the United States, Germany, and Norway. More recent
research on the technology’s application to anti-submarine warfare was conducted by researchers
affiliated with the state-owned defense corporation China North Industries Defense Corporation
in a journal sponsored by a state-owned shipbuilding company. These sources have noted advan-
tages of supercavitating torpedoes in speed, flexible firing orientation, large kinetic energy, and
cost effectiveness. Later sources list range as an advantage, in contrast to earlier sources that
claimed supercavitating torpedoes could not yet match the range of regular torpedoes. Earlier
sources also noted difficulties applying guidance technologies in light of the munitions’ great
speed and warned that supercavitating torpedoes could be easily detected by nature of their
bubble trails. Qi Xiaobin et al., “Application of Supercavitation Technology in Anti-Submarine
Warfare” (超空泡技术在反潜作战中的应用设想), Digital Ocean and Underwater Warfare 5:2 (April
2022): 109, 112–114. Translation; Li Xiang and Huang Kang, “Supercavitating Weapons: Building
Their Own Path Underwater” (超空泡兵器:自己造路水下行), China Military Online, April 3, 2020.
Translation; Military News, “Revealing the Secrets of Supercavitating Torpedoes: Underwater
Speed as Fast as High-Speed Train and Faster than a Helicopter” (揭秘超空泡鱼雷:水下速度如高
铁比直升机机快), Xinhua, October 20, 2015. Translation; Norinco Group, “Northwest Institute of
Mechanical & Electrical Engineering” (西北机电工程研究所). Translation. https://web.archive.org/
web/20240806145540/http://xbjd.norincogroup.com.cn/; China National Knowledge Infrastruc-
ture, “Digital Ocean & Underwater Warfare” (数字海洋与水下攻防). Translation.
551
existing ship defense systems by traveling farther and faster

than a traditional torpedo.57
• New developments in U.S. uncrewed underwater vehicles
(UUVs) enhance its capabilities to identify, monitor, and track
PLA submarines: Both China and the United States are in-
vesting in developing new undersea drones that could play a
decisive role in future military conflicts, with uses that in-
clude intelligence, surveillance, and reconnaissance (ISR).58
In February and March 2024, the U.S. Defense Advanced Re-
search Projects Agency (DARPA) conducted full-scale testing
of the “Manta Ray” prototype UUV, an autonomous and pay-
load-capable large-scale UUV that mimics the shape and mo-
tion of a manta ray and achieves the energy efficiency needed
for long-duration missions.59 China’s military, defense indus-
try, and state-run media closely followed DARPA’s Manta
Ray project, publishing reports detailing its development and
capabilities.60 China’s state-run media has highlighted the
Manta Ray project’s underwater survivability and made note
of its potential capability to use AI, big data, and new naviga-
tion technologies to “identify, monitor, and track submarines
and seabed resources of other countries in disputed waters
and key waterways” globally.61 China is also developing its
own mantra ray-inspired UUVs. At the China Military Smart
Technology Expo held in Beijing in May 2024, the Boya Gon-
gdao Robot Technology Company displayed its own domes-
tically developed manta ray UUV along with other models
of biomimetic autonomous submersibles.62 One team of re-
searchers at China’s Northwestern Polytechnical University
has already developed six models of manta ray UUVs that
could reportedly conduct tasks ranging from monitoring coral
reefs to carrying heavy payloads on long-duration missions
with integrated reconnaissance and strike capabilities.63
Chinese Commentators Observe U.S. Military Capabilities

in the Middle East
Several commentaries in China’s Party-state news media
view the defense by the United States, Israel, and other part-
ners against Iranian missile strikes on Israel’s territory in
April 2024 as a successful test of U.S. missile defense technolo-
gy and alliance coordination. The commentators agree that the
large number of attacking weapons successfully intercepted
showcased the power of the multilayered missile defense sys-
tem deployed by the United States and Israel.64 They also note
the important role the U.S. destroyers played in shooting down
medium-range ballistic missiles, the contributions of U.S. and
UK forces in intercepting drones, and the likely importance
of intelligence sharing between the United States, Israel, and
other Gulf states before and during the attacks.65 (For more on
China’s position on conflicts in the Middle East, see Chapter 5,
“China and the Middle East.”)
552
PLA Anticipates U.S. Intervention

Evidence suggests the PLA plans for military action by the United
States in the event of a conflict in the Indo-Pacific. In 2014, General
Secretary of the Chinese Communist Party Xi Jinping directed the
PLA to “make strategy planning and preparations for dealing with
a powerful enemy’s military intervention,” using a term frequently
applied in PLA writings to refer to the United States.66 The 2020
edition of the strategic-level PLA textbook Science of Military Strat-
egy * makes repeated reference to external military intervention,
emphasizing the gravity of potential military intervention carried
out by powerful enemies, at a large scale, or at a high intensity.† 67
In one section, the text highlights external military intervention as
a “strategic risk” that could result in the PLA facing two or even
many enemies at one time.68 In other sections, it variously describes
military intervention as an action the PLA must deter, as an im-
portant factor in the timing for beginning and ending a war, and
as a critical variable influencing war control and escalation.69 The
2006 operational-level PLA textbook Science of Campaigns ‡ similar-
ly frames the “military intervention of a powerful enemy” as a key
variable that PLA forces must anticipate, plan for, and—if neces-
sary—adjust to in the course of executing any military campaign.70
In addition to this general description, the text includes “resist[ing]
the military intervention of a powerful enemy” in the list of basic
missions for a conventional missile assault campaign, and it pro-
vides additional guidance on handling opposition in the context of
an offensive campaign against island reefs.71
China’s Military Objectives Implicate U.S. Defense

Commitments in the Indo-Pacific
Several of China’s stated military objectives threaten the inter-
ests of U.S. allies and security partners in the Indo-Pacific, includ-
ing those to whom the United States has a treaty defense com-
mitment. China’s 2019 defense white paper includes among the
country’s national defense aims safeguarding “national sovereign-
ty, unity, territorial integrity and security”; deterring and resist-
ing “aggression”; opposing and containing “Taiwan independence”;
and safeguarding China’s “maritime rights and interests.” 72 This
same document claims the Senkaku Islands in the East China
Sea and all features in the South China Sea as inalienable parts
of China’s territory while explicitly reserving the option to use
* Science of Military Strategy is a core military textbook for senior PLA officers on how wars
should be planned and conducted at the strategic level. Joel Wuthnow, “What I Learned from the
PLA’s Latest Strategy Textbook,” Jamestown Foundation, May 25, 2021.
† Although no specific countries are referenced by name, these descriptions most likely charac-
terize the way the PLA considers intervention from the United States. In most of these instances,
the text either characterizes the intervening party as a “strong” or “powerful” enemy or enemies
or as a “great” or “major” power or powers, or it characterizes the intervention as “large-scale”
or “high-intensity.” China Aerospace Studies Institute, In Their Own Words: Science of Military
Strategy 2020, January 2022, 44, 46, 140, 192, 198, 257, 259.
‡ Science of Campaigns is a military textbook released by China’s National Defense University
in 2006. According to the China Aerospace Studies Institute, it is studied by almost all PLA
officers in senior academies. The textbook designs a “campaign” as “the operational activities com-
posed of a series of battles conducted under a unified command by a large formation to achieve
partial . . . or overall . . . goals of a war.” China Aerospace Studies Institute, In Their Own Words:
PLA’s Science of Campaigns, 2006, [v], 19.
553
China’s Military Objectives Implicate U.S. Defense

Commitments in the Indo-Pacific—Continued
force if necessary to unify Taiwan with the Mainland.* 73 China
maintains an interpretation of its “maritime rights” that is con-
trary to well-established international law and includes privileg-
es to which it is not entitled, and it has repeatedly demonstrated
a willingness to advance its claims and interests in these areas
through aggressive and dangerous behavior.74 A conflict in the
Senkaku Islands or in the South China Sea could trigger defense
commitments under the United States’ treaties with Japan † and
the Philippines.‡ 75 The United States also has a stated interest
in peace across the Taiwan Strait and an expectation that issues
will be resolved without the use of force.76 Since at least the
1990s, Chinese military planners have acknowledged the need to
base military planning for a war against Taiwan on the assump-
tion of U.S. involvement, and they have worried that the PLA
could be defeated if it does not rectify its various technological
and manpower-related deficiencies.§ 77
China’s Military Capabilities for “Counter-Intervention”

China has developed military capabilities designed to undermine
the U.S. military’s ability to become involved in a conflict between
China and its neighbors.78 China’s plan to counter U.S. military
intervention requires the capacity to find U.S. forces, thwart their
operations, hamper their ability to rely on satellites and other net-
worked systems, and destroy forward-based assets as well as assets
at long distances.79 Among the most important capabilities for these
* Other governments in the Indo-Pacific hold competing sovereignty claims in the region. For
instance, Japan, Taiwan, and China claim the Senkakus. China asserts sovereignty over the is-
land of Taiwan, a claim disputed by the government in Taipei. Taiwan, the Philippines, Malaysia,
Vietnam, Brunei, and Indonesia also claim territory in the South China Sea. Ben Dolven et al.,
“China Primer: South China Sea Disputes,” Congressional Research Service IF10607, August 21,
2023; Taiwan’s Ministry of Foreign Affairs, MOFA Condemns False Claim Regarding Taiwan’s
Sovereignty in Joint Statement Issued by China and Russia, February 5, 2022; Mark E. Manyin,
“The Senkakus (Diaoyu/Diaoyutai) Dispute: U.S. Treaty Obligations,” Congressional Research Ser-
vice R42761, March 1, 2021.
† In their security treaty, the United States and Japan commit to act in response to “an armed
attack on either Party in the territories under administration of Japan,” which includes the Jap-
anese-administered Senkaku Islands. David Vergun, “Austin Says U.S. Committed to Defending
Japan, Including Senkaku Islands,” DOD News, October 4, 2023; Reuters, “Obama Says Disputed
Islands within Scope of US-Japan Security Treaty,” April 22, 2014; Japan’s Ministry of Foreign
Affairs, Japan-U.S. Security Treaty, January 19, 1960, Article V.
‡ In their mutual defense treaty, the United States and the Philippines commit to act to meet
common dangers in the event of an armed attack against either party in the Pacific, which, as
clarified in the countries’ 2023 Bilateral Defense Guidelines, includes an attack on either state’s
public vessels, aircraft, or armed forces (including coast guards) anywhere in the South China
Sea. U.S. Department of Defense, FACT SHEET: U.S.-Philippines Bilateral Defense Guidelines,
May 3, 2023; U.S. Department of State, U.S. Collective Defense Arrangements; Avalon Project at
the Yale Law School, “Mutual Defense Treaty Between the United States and the Republic of the
Philippines; August 30, 1951.”
§ In response to previous acts of Chinese aggression or military coercion against Taiwan during
the so-called “First Taiwan Strait Crisis” (1954–1955), the “Second Taiwan Strait Crisis” (1958),
and the “Third Taiwan Strait Crisis” (1995–1996), the United States successfully leveraged cred-
ible military threats to deter a Chinese invasion or to deter escalating use of force. Kristen
Gunness and Phillip C. Saunders, “Averting Escalation and Avoiding War: Lessons from the
1995–1996 Taiwan Strait Crisis,” National Defense University Press, China Strategic Perspectives
17 (December 2022): 37; U.S.-China Economic and Security Review Commission, 2021 Annual
Report to Congress, November 2021, 391.
554
missions are the PLA’s C4ISR * networks, EW assets, and offensive

missile forces, each of which it has significantly improved over the
past two decades. At the same time, however, the PLA continues to
contend with issues sustaining and maintaining its warfighters in
combat.
Achieving Information Dominance in Conflict Involving

the United States
China views “information dominance” as a key effort to control
the battlespace and gain operational advantage in warfare.80 In-
formation dominance is defined by the PLA as the ability to es-
tablish control of information flows in a particular space and time
by collecting and managing information and employing informa-
tion more precisely than the adversary.81 Chinese military strate-
gists believe information dominance is a prerequisite to achieving
air and maritime dominance and is critical to the PLA’s combat
success in any regional conflict.82 The PLA pursues information
dominance by conducting informationized warfare, which utilizes
information systems, data gathering and fusion, and command
automation tools to enable joint operations and gain superiority
in the information domain in combat.83 Chinese military writings
describe modern warfare as involving “systems confrontation” or
“systems destruction warfare,” meaning a conflict is fought be-
tween adversarial operational systems.† 84 The PLA views “sys-
tems confrontation” as the means to paralyze the functions of
an adversary’s combat and operational systems in the air, sea,
land, space, cyber, and electromagnetic domains using kinetic and
non-kinetic attacks.85 Anticipating such attacks in turn, the PLA
would also prioritize the defense of its own C4ISR systems against
enemy disruptions and preserve its access to battlespace data.86
Command, Control, Communications, Computers, Intelligence,

Surveillance, and Reconnaissance (C4ISR)
The PLA is working to build a robust C4ISR infrastructure to
quickly find U.S. military forces and achieve battlefield information
dominance in the event of kinetic conflict.87 C4ISR enables militar-
ies to access—and to deny enemies’ access to—battlespace informa-
tion, including locating, tracking, and targeting enemy assets.88 The
PLA has studied the United States’ reliance on C4ISR systems in
* C4ISR is an acronym that refers to a collection of individual systems. Other variations of
“C4ISR” may include additional systems such as adding “cyber” or “targeting” (C5ISR-T). In
China’s Science of Military Strategy 2020, it describes the battlefield information network as
a “C4ISRK” system (Command, Control, Communications, Computer, Intelligence, Surveillance,
Reconnaissance, Kill) and refers to C4ISRK as a system the U.S. military relies on to synchronize
combat commands at all levels. J. Michael Dahm, written testimony for U.S.-China Economic and
Security Review Commission, Hearing on China’s Evolving Counter Intervention Capabilities and
Implications for the United States and Indo-Pacific Allies and Partners, March 21, 2024, 4; China
Aerospace Studies Institute, In Their Own Words: Science of Military Strategy 2020, January
2022, 349.
† According to Jeffrey Engstrom, senior political scientist at the RAND Corporation, the PLA’s
theory of victory in modern warfare is no longer centered on the annihilation of enemy forces.
Instead, it is now based on system destruction warfare, in which victory may be achieved by
the ability to “disrupt, paralyze, or destroy the operational capability of the enemy’s operational
system.” Jeffrey Engstrom, “Systems Confrontation and System Destruction Warfare: How the
Chinese People’s Liberation Army Seeks to Wage Modern Warfare,” RAND Corporation, February
1, 2018, iii.
555
recent wars and observed how the U.S. military uses these systems
to conduct reconnaissance, provide early warning, and enable the
real-time synchronization of combat commands at all levels.89 Rec-
ognizing that its own C4ISR was an area of substantial weakness,
the PLA began modernizing, upgrading, and expanding its commu-
nications infrastructure in the 1990s to support future command
and control capabilities.90 According to J. Michael Dahm, senior resi-
dent fellow for aerospace and China studies at the Mitchell Institute
for Aerospace Studies, decades of investment have resulted in the
PLA developing a robust, redundant, and resilient C4ISR system.91
Mr. Dahm further suggests that China’s C4ISR architecture could
provide military advantages to the PLA by establishing localized
information, air, and maritime dominance in key areas out to the
second island chain and by enabling strikes on U.S. bases and de-
ployed forces in the Indo-Pacific region.92 The PLA is also looking
to leverage artificial intelligence (AI) capabilities to accelerate its
processing of imagery, signals, and other ISR data across the land,
air, sea, and space domains.93 (For more on the PLA’s use of AI to
enhance its ISR capabilities, see Chapter 3, “U.S.-China Competition
in Emerging Technologies.”)
China’s C4ISR consists of a suite of interconnected systems to
support PLA warfighter decision-making and targeting capabilities
across varied domains.94 These include:
• Terrestrial (ground-based) C4ISR: China’s terrestrial net-
work is the core architecture of the PLA’s broader C4ISR
system.95 The PLA’s National Defense Communications Net-
work, upgraded in the mid-1990s to high-speed fiber-optic ca-
ble, serves as the PLA’s primary communication network.96
The network connects the PLA command centers to units in
the field with reliable communications 97 According to Mr.
Dahm, compared to the space-based communications capabil-
ities, the “hard-wired” connectivity of the National Defense
Communications Network could provide the PLA with more
secure communications that would be difficult for an attack-
er to disrupt or destroy.* 98 China has also constructed sky-
wave over-the-horizon (OTH) radar systems to increase the
PLA’s ability to locate targets such as ships and aircraft up to
1,864 miles (3000km) from China’s coastline.† 99 OTH radars
are reported to have been deployed along China’s coast since
at least 2010.100 In addition, radar detected on Chinese-oc-
cupied features in the Spratlys—including Subi Reef, Fiery
Cross Reef, Cuarteron Reef, and Mischief Reef—are probably
over-the-horizon; they would play a crucial role in enabling
the PLA to detect and track U.S. and allied forces between
the first and second island chains.101
• Air C4ISR: The PLA has increased the number of special mis-
sion aircraft and uncrewed aerial vehicles (UAVs) that have ex-
* China’s use of buried fiber-optic cables may be more secure from remote signals intelligence
and less susceptible against electromagnetic and radiofrequency weapons and jamming. Carlo
Kopp, “Advances in PLA C4ISR Capabilities,” Jamestown Foundation, February 18, 2010.
† According to the U.S. Army Training and Doctrine Command, China’s OTH radar is used to
detect low-altitude penetrating bombers and has early warning ability against intercontinental
ballistic missiles and other long-range platforms. U.S. Army TRADOC, Type SLR-66 Chinese Over-
The-Horizon (OTH) Radar.
556
tended the PLA’s line of sight and improved its airborne early
warning and control (AEW&C) and signals intelligence (SIGINT)
capabilities.* 102 The PLA Air Force and PLA Navy together are
estimated to operate 52 AEW&C aircraft, including the KJ-200,
KJ-500, and Y-8J.103 Mr. Dahm points to commercial satellite
imagery revealing new special mission aircraft that have ap-
peared at PLA airfields, including the KJ-500 AEW&C aircraft,
KQ-200 anti-submarine warfare/maritime patrol aircraft, and
Y-9JB signals and electronic intelligence aircraft.104 These spe-
cial mission aircraft provide C4ISR support to PLA Air Force
and PLA Navy operations and have been flying beyond the first
island chain and operating from China’s artificial features in
the South China Sea.105 For example, in January 2024, the KJ-
500 early warning aircraft likely tested the performance of its
radar and sensors to support J-15 carrier-based fighter jets and
J-11B land-based fighter jets to track targets and support their
long-range air-to-air fires during a live-fire exercise over the
South China Sea.106 In March 2022, then U.S. Pacific Air Force
Commander Kenneth Wilsbach reportedly noted the KJ-500’s
important role in supporting the PLA’s fifth-generation J-20
fighter and the need for U.S. forces to interrupt the kill chain
for long-range air-to-air missiles.107
• Maritime C4ISR: The PLA has developed several platforms to
conduct C4ISR in the maritime domain. These platforms include
surface combatant ships that are equipped with radars, sensors,
and sonars, such as the new Type 055 Renhai guided-missile de-
stroyer.108 Mr. Dahm notes that PLA Navy warships operating
in areas beyond the first island chain to the South China Sea,
the Gulf of Aden, and Southwest Asia conduct long-range mar-
itime ISR that could provide indications and warning of U.S. or
allied movements.109 The PLA Navy also has a variety of plat-
forms to track enemy submarines, such as the Z-20 shipborne
ASW helicopter, KQ-200 ASW/maritime patrol aircraft, and sur-
face combatant ships equipped with variable-depth sonars and
towed array sonar systems.110
• Space-based C4ISR: The PLA has improved its space-based
C4ISR capabilities by increasing its numbers of on-orbit sat-
ellites that provide remote sensing,† signals and electronic in-
telligence, and communications capabilities.111 Between 2020
and 2024, the PLA doubled its ISR satellites in geostationary
orbit; between 2018 and 2024, it tripled its ISR satellites in low
Earth orbit.‡ 112 The PLA is estimated to have 92 ISR satel-
lites and 81 electronic intelligence/SIGINT satellites in orbit.113
* These special mission aircraft can also conduct electronic attack (jamming) capabilities. J.
Michael Dahm, written testimony for U.S.-China Economic and Security Review Commission,
Hearing on China’s Evolving Counter Intervention Capabilities and Implications for the United
States and Indo-Pacific Allies and Partners, March 21, 2024, 27.
† Remote-sensing capabilities of these satellites include electro-optic, hyperspectral, infrared imag-
ing, and synthetic aperture radar. J. Michael Dahm, written testimony for U.S.-China Economic and
Implications for the United States and Indo-Pacific Allies and Partners, March 21, 2024, 27.
‡ To illustrate China’s urgency to develop this capability, 76 percent of China’s 213 low Earth
orbit satellites have been launched since 2021. J. Michael Dahm, written testimony for U.S.-China
Economic and Security Review Commission, Hearing on China’s Evolving Counter Intervention
Capabilities and Implications for the United States and Indo-Pacific Allies and Partners, March
21, 2024, 27.
557
General Stephen Whiting, commander of U.S. Space Command,

stated in written testimony for the U.S. Senate Armed Services
Committee in February 2024 that China’s advances in its space
capabilities increase its ability to monitor, track, and target
U.S. and allied forces both on the ground and on orbit.114 Mr.
Dahm notes that China is reportedly one of the only countries
with electro-optic imaging satellites in geostationary orbit that
can provide “persistent imagery coverage across most of the In-
do-Pacific to detect U.S. and allied ships,” though these images
are likely to be low in resolution due to the satellites’ distance
from the Earth and atmospheric conditions.115 Other Chinese
satellites launched into geostationary orbit, such as the Ludi
Tance-4 01 (Land Exploration-4 01) synthetic aperture radar
(SAR), can reportedly collect 20-meter-resolution images in all
weather conditions, allowing China to more effectively detect
and track U.S. ships at sea.116
The PLA’s Counter-C4ISR Efforts

The PLA could use its advances in directed energy weapons,
anti-satellite capabilities, and other counterspace technologies to
threaten the United States’ C4ISR networks and use of the space
domain in peacetime or in a counter-intervention scenario.117
There is some public evidence that the PLA views researching
and developing such counter-C4ISR capabilities as an important
way to respond to the emergence of commercial satellite providers
and their contracting relationships with DOD.* For example, in
May 2022, PLA researchers from the Beijing Institute of Tracking
and Telecommunications—affiliated with the now disbanded PLA
Strategic Support Force—called for the development of anti-sat-
ellite capabilities such as microwave technology that can jam
communications to disrupt the functions and operating systems
of satellite constellations like SpaceX’s Starlink.† 118 Following a
December 2022 announcement that SpaceX would be partnering
with DOD to provide technology and launch capability—called
Starshield—to support national security efforts, PLA research-
ers assessed that Starshield satellites could make it difficult for
PLA military operations to elude U.S. monitoring.119 According
to a Reuters review of almost 100 articles in more than 20 Chi-
* Examples of counter-C4ISR capabilities include the use of camouflage, denial, attack, or de-
ception activities that could negatively impact the United States and allied forces’ ability to sense
and target PLA forces. For instance, actions may also include electronic warfare, cyber attacks,
and other physical or nonphysical destruction or disruption of adversary networks, ISR platforms,
and command nodes. One article published in the PLA Daily by the Political Work Department
of the PLA’s Northern Theater Command likened adversary ships, naval platforms, and combat
aircraft whose access to C4ISR networks had been disrupted to “headless flies.” J. Michael Dahm,
Evolving Counter Intervention Capabilities and Implications for the United States and Indo-Pa-
cific Allies and Partners, March 21, 2024, 4, 17; Wang Ning, “Seizing Information Control Is Key
to Taking the Initiative on the Battlefield” (夺取制信息权是掌握战场主动权的关键), China Military
Online, November 2, 2016. Translation.
† The PLA has also been paying close attention to the effective use of constellation satellite
networks in warfare, such as Starlink, which have been used to secure the communications of
Ukraine’s military amid attacks by Russia. PLA researchers have reportedly noted how Star-
link services could support U.S. military operations and provide ISR capabilities around Taiwan.
Kyodo News, “China Wary of SpaceX’s Starlink Service during Taiwan Contingency,” ABS-CBN
News, May 26, 2024; Eduardo Baptista and Greg Torode, “Insight: Studying Ukraine War, China’s
Military Minds Fret over U.S. Missiles, Starlink,” Reuters, March 7, 2023.
558
The PLA’s Counter-C4ISR Efforts—Continued

nese defense journals, in one of the articles PLA researchers
expressed urgency for China to develop its own similar satellite
network while developing other capabilities to shoot down or dis-
able Starlink satellite systems.120 This concern has accelerated
China’s development of its own constellation satellite network as
well as capabilities to attack or deny U.S. space programs.121 In
a counter-intervention scenario, the PLA would likely engage in
“counter-C4ISR” to attack critical nodes of the United States’ own
C4ISR systems, such as satellites, in order to thwart a potential
U.S. and allied military advance.122
Electronic Warfare
The PLA has developed substantial EW capabilities to detect, tar-
get, and disrupt U.S., allied, and partner forces operating in the
Indo-Pacific.123 In the event of a Taiwan contingency, the PLA could
expect the United States to field unmanned submarines, unmanned
surface ships, aerial drones, next-generation aircraft and ships
equipped with advanced sensors, radars, and precision-guided mu-
nitions to target China’s invasion force.124 In preparation for such a
contingency, experts assess that China’s developed EW capabilities
would present a significant challenge to U.S. forces by disrupting
the data links and communications U.S. and allied forces need to
operate during conflict.125 In October 2023, a senior U.S. defense
official indicated the PLA anticipates needing to be better prepared
to operate in a complex electromagnetic environment and continues
to try to improve its EW capabilities.126 In his testimony to the
Commission, Mr. Dahm argued that the PLA has invested in EW
capabilities that exceed those of the Russian military and even po-
tentially those of the U.S. military.127
The PLA’s EW capabilities include offensive and defensive capa-
bilities that disrupt an enemy’s equipment or protect PLA weapons
systems from enemy attack.128 In addition, the PLA considers how
EW can be employed as a deception strategy by concealing real sig-
nals and injecting false information to mislead adversary operators
and decision-makers.129
• Electronic attack (EA) capabilities: The PLA uses electromagnet-
ic or directed energy to disrupt an adversary’s electronic infor-
mation systems, or it uses anti-radiation missiles, high-energy
lasers, and electromagnetic pulse weapons to directly damage
their equipment.130 These EA capabilities mostly correspond to
ground-based and road-mobile electronic countermeasures bri-
gades.* 131 The PLA Air Force, PLA Navy, and PLA Rocket Force
each operate electronic countermeasures brigades that provide
both electronic support (e.g., intelligence) and EA capabilities
* An example of ground-based jamming equipment was reported in April 2018, when China
installed the equipment on Mischief Reef in the Spratlys. Michael R. Gordon and Jeremy Page,
“China Installed Military Jamming Equipment on Spratly Islands, U.S. Says,” Wall Street Jour-
nal, April 9, 2018.
559
to the theater commands.* 132 Other capabilities include PLA

Air Force EA aircraft such as the new Y-9G that conducts com-
munications jamming. The PLA Air Force currently fields three
Y-9G variants and two Y-9XZ variants.† 133 The PLA Air Force
also fields at least 12 J-16D PLA radar-jamming EW aircraft
with sensors that can determine the position of radar-transmit-
ting devices used to both jam and target adversary radars.134
In January 2022, two J-16D aircraft were spotted, reportedly for
the first time, conducting an exercise alongside 11 other PLA
aircraft that entered Taiwan’s Air Defense Identification Zone,
demonstrating the PLA’s intent to conduct EW in a Taiwan con-
tingency.135 The PLA has also developed anti-radiation weapons
designed to destroy radar or communications targets, such as
the PLA Air Force YJ-91 anti-radiation missile (ARM) or sever-
al new ARMs like the TL-30 (known as the AKF088C) that can
reportedly fly and loiter in search for targeted enemy electronic
signals.136 China has sought to improve its ARMs by produc-
ing a seeker on the missile that could cover multiple frequency
bands and could prioritize targets that are uploaded to the on-
board computer from the ground or by pilots while in flight.137
The PLA has also developed counterspace EA capabilities, such
as experimental on-orbit jamming systems and road-mobile sat-
ellite jamming facilities and brigades that can potentially con-
duct non-kinetic attacks on U.S. and allied satellites as a first
move in a counter-intervention operation.138
• Electronic protection (EP) capabilities: China anticipates re-
ciprocal electronic jamming attacks as well as kinetic attacks
against its own C4ISR, and it has taken measures to protect its
systems. The PLA conducts trainings and exercises to prepare
units, such as radar brigades, for an attack or to protect against
enemy satellites conducting reconnaissance.139 EP activities can
also involve strategies like “frequency hopping,” where a radar
or communications system jumps across a preset array of fre-
quencies to make it difficult for enemies to detect and jam.‡ 140
The PLA has also built redundancy into its systems, protecting
against adversarial actions by developing a joint datalink sys-
tem that covers a broad range of the frequency spectrum.141 Mr.
Dahm notes that these datalink systems § are likely resistant
to adversarial intercepts and jamming.142 In effect, the PLA’s
* The previous PLA Strategic Support Force operated ground-based electronic countermeasure
brigades that likely focused on the air defense of Beijing. In April 2024, China disbanded the
Strategic Support Force and created three new military forces: the Military Aerospace Force,
the Cyberspace Force, and the Information Support Force. J. Michael Dahm, written testimony
for U.S.-China Economic and Security Review Commission, Hearing on China’s Evolving Count-
er Intervention Capabilities and Implications for the United States and Indo-Pacific Allies and
Partners, March 21, 2024, 33. For more on the PLA Strategic Support Force reorganization, see
Chapter 2, “U.S.-China Security and Foreign Affairs (Year in Review).”
† It is estimated that the PLA Air Force has four electronic warfare regiments, which consist
of about 31 electronic warfare aircrafts including the J-16D Flanker, Y-8CB, Y-8DZ, Y-8G, Y-8XZ,
Y-9G, and Y-9XZ. International Institute for Strategic Studies, “Military Balance 2024, Chapter
Five: Asia,” February 12, 2024, 260.
‡ Other operational forms of electronic protection to avoid detection include turning off radars
and not operating radars in view of enemy satellite collection. J. Michael Dahm, Senior Resident
Fellow, Mitchell Institute for Aerospace Studies, interview with Commission staff, May 28, 2024.
§ The PLA’s Joint Information Distribution System is similar to the U.S. Link-16 or Joint Tac-
tical Information Distribution System data link. The system is developed as a frequency-hopping
datalink and described by Chinese sources as being capable of connecting army, navy, air force,
and satellite communication networks and integrating these service-level tactical data links into
560
broad range of coverage over the frequency spectrum * increas-

es the challenge for an adversary to jam or destroy enough of
the PLA’s electronic systems to significantly disrupt its ability
to access battlespace-related information.143 The PLA has also
looked to utilize emerging technologies to enhance its electron-
ic protection capabilities to counter U.S. electronic attacks.144
For instance, as reported in the South China Morning Post, a
Chinese academic journal titled Radar and Electronic Count-
er Measure examines how AI could help the PLA Navy’s radar
counter the U.S. Navy’s EA-18G Growler’s electromagnetic jam-
ming.145
The PLA’s investments in a diversity of EW capabilities has like-
ly improved its ability to operate in a complex electromagnetic en-
vironment.146 It continues to emphasize combat training in such
an environment; in January 2024, a naval brigade of the Southern
Theater Command simulated targeting and countering enemy air-
craft anti-jamming methods.147 Mr. Dahm notes it is unclear based
on open source research how the PLA’s EA capabilities may fare
against advanced and hardened U.S. military systems equipped
with electronic protection capabilities.148 Comparing the United
States’ and China’s EW systems, it is likely that the U.S. Navy EW
aircraft, the EA-18G Growler, is qualitatively better than any jam-
mer, such as the Y-9G, in the PLA inventory.149 That said, Mr. Dahm
assesses that the diversity found in PLA air-to-air weapons, naval
radars, surface-to-air missile radars, and early warning radars poses
significant challenges for the U.S. military to effectively disrupt all
of the PLA systems.150
China’s Offensive Missile Capabilities
China’s continued expansion of its missile force is a critical com-
ponent of its A2/AD capabilities that could threaten U.S. and al-
lied bases, logistics and port facilities, and other key infrastructure
in the Indo-Pacific.151 Over time, China has increased the number,
range, precision, and types of missiles in its arsenal, particularly for
medium- and long-range missiles.152 In 2015, at the start of China’s
major military modernization reforms, DOD estimated that the PLA
had fielded 200–300 medium-range ballistic missiles (with a range
of approximately 1,500 kilometers (km) (930 miles [mi]) with 100–
125 launchers; as of 2023, the PLA had reportedly deployed 1,000
medium-range ballistic missiles and 300 launchers.153 Similarly, in
2018, DOD published for the first time its estimate that the PLA
had deployed 16–30 intermediate-range ballistic missile (IRBMs),
with a range of approximately 3,000–4,000 km (1,900–2,500 mi)
with 16–30 launchers; as of 2023, DOD assessed that the PLA had
500 IRBMs and 250 launchers.154 The large quantity of longer-range
IRBMs also enables the PLA to extend the distance and frequency
a single joint network. J. Michel Dahm, “Inter-Island Communications,” Johns Hopkins Applied
Physics Laboratory, July, 2020, 10–11.
* The PLA’s coverage over the frequency spectrum includes ground-based radars employed for
ISR ranging from high-frequency (HF) skywave OTH to very-high-frequency (VHF); ultra-high
frequency (UHF); and L-, S-, C-, and X-band radars. J. Michael Dahm, written testimony for
U.S.-China Economic and Security Review Commission, Hearing on China’s Evolving Counter
Intervention Capabilities and Implications for the United States and Indo-Pacific Allies and Part-
ners, March 21, 2024, 34; J. Michael Dahm, “South China Sea Military Capability Series: Air and
Surface Radar,” Johns Hopkins Applied Physics Laboratory, 2020, 2–21.
561
of its strikes out to the Philippine Sea and beyond, increasing the
risks to U.S. and allied forces operating within the second island
chain.155 The PLA has also improved the precision of its missiles,
as illustrated in recent exercises targeting moving maritime assets
and ground-based assets.* 156 In addition, the PLA has diversified
the types of missiles in its arsenal and now has a variety of bal-
listic and cruise missiles that can strike land-, air-, and sea-based
targets.† 157 The PLA has also invested in the development of hyper-
sonic technology and is known to have outfitted the medium-range
DF-17 with a hypersonic glide vehicle.158 The maneuverability of
the hypersonic glide vehicle could allow the missile to evade U.S.
air and missile defenses.159 Thomas Shugart, adjunct senior fellow
at the Center for a New American Security, also assesses that the
PLA’s greater quantity of anti-ship ballistic missiles will enable it to
strike not only high-value targets like large and medium-size ships
(such as U.S. aircraft carriers) but also smaller groups or warships
(such as logistics ships).160
Competency of China’s missile forces is difficult to determine. Some
Chinese military analysts project confidence that its missile force is
formidable enough to counter changes in the U.S. force posture in
the region. Ms. Kivlehan-Wise highlights writings by a retired PLA
officer that claim China’s long-range missiles and warfighting capa-
bilities in the air domain would render any U.S. attempts to create
an “outpost on the first island chain . . . impossible.” 161 Even so, re-
cent corruption charges and the rare admission of shortcomings in
the political oversight ‡ of training conducted by the PLA’s Rocket
Force units—reported in 2023—suggests a potential deficiency in
the force’s combat readiness.162 (For more on corruption investiga-
tion within the PLA Rocket Force and the Equipment Development
Department, see Chapter 2, “U.S.-China Security and Foreign Af-
fairs (Year in Review).”)
* For example, in May 2023, the PLA conducted a joint exercise about 740 km northwest of
Guam involving the PLA Rocket Force and the PLA Navy’s Shandong aircraft carrier group that
reportedly illustrated its capacity to target moving surface ships and naval bases beyond the first
island chain. In 2020, the PLA also conducted a live-fire exercise where it launched DF-21 and
DF-26 ballistic missiles and successfully hit a moving ship in the South China Sea. International
Institute for Strategic Studies, “Military Balance 2024, Chapter Five: Asia,” February 12, 2024,
220; U.S. Department of Defense, Annual Report to Congress: Military and Security Developments
Involving the People’s Republic of China 2023, October 19, 2023, 67; Minnie Chan, “China Says
PLA Rocket Force Joined Shandong Carrier Group in Drills near US Base in Western Pacif-
ic,” South China Morning Post, May 10, 2023; Kristin Huang, “China’s ‘Aircraft-Carrier Killer’
Missiles Successfully Hit Target Ship in South China Sea, PLA Insider Reveals,” South China
Morning Post, November 14, 2020.
† China has developed robust anti-ship ballistic missiles (ASBMs) with an estimate of over 140
DF-26s and approximately 30 DF-21Ds. It has also developed air-launched land attack cruise
missiles (LACMs) such as the CJ-20, air-launched antiship cruise missiles (ASCMs) such as the
YJ-12 and the YJ-18, and sea-launched land attack cruise missiles and sea-launched antiship
cruise missiles that can target U.S. and allied military forces on fixed bases in the Indo-Pacific as
well as on moving air and maritime assets operating within the region. International Institute
for Strategic Studies, “Military Balance 2024, Chapter Five: Asia” February 12, 2024, 254; U.S.
Department of Defense, Annual Report to Congress: Military and Security Developments Involving
the People’s Republic of China 2023, October 19, 2023, 66–67; Jordan Wilson, “China’s Expanding
Ability to Conduct Conventional Missile Strikes on Guam,” U.S.-China Economic and Security
Review Commission, May 10, 2016, 8–11.
‡ A September 2023 PLA Daily article details the importance of bolstering unit-level political
commissar work to oversee the implementation of reforms and training by PLA Rocket Force
units. Reuters, “China’s Military Rocket Force Uncovers ‘Shortcomings,’ PLA Daily Reports,” Sep-
tember 15, 2023; Yang Shaotong and Yang Lun, “The Party Committee of a Certain Rocket Force
Conducted an In-Depth Investigation and Study to Solve Problems in the Development of the
Army” (火箭军某部党委深入调查研究解决部队发展难题), PLA Daily, September 15, 2023. Transla-
tion.
562
China’s Logistics and Maintenance Sustainment Capabilities

Improve, but Challenges Remain
The PLA views logistics support functions as a key requirement
for winning wars and has sought to transform its decentralized logis-
tics system to a more centralized hub-and-spoke system that better
enables joint operations.163 In order to sustain the PLA’s offensive
campaigns in a Taiwan scenario (such as blockades, joint firepower
strike, and island landing operations), the PLA would require ex-
tensive logistics support to transport material and oil supplies, con-
duct infrastructure protection, and enable the maintenance of war
material reserves.164 The PLA has spent more than two decades
adjusting its approach to logistics to respond to contingencies more
quickly and efficiently and with greater capacity.165 These measures
include the following:
• Under the 2016 military reforms initiated by General Secretary
Xi, the PLA created the Joint Logistics Support Force with the
intent to improve the management of its logistics and equip-
ment support system across the theater commands.166
• The PLA has continued to conduct exercises and training fo-
cused on improving its joint logistics capability across theater
commands.* 167 These exercises and training appear to focus on
preparing for situations in which PLA logistics are targeted in
a conflict.168 For instance, in August 2023, the Eastern Theater
Command Air Force conducted runway repair drills and train-
ing to improve its ability to recover following enemy strikes.169
• The PLA has conducted airfield renovations, expanded taxi-
ways, developed new shelters for aircraft, and updated fuel and
munitions storage.† 170
• For the PLA Navy, the service has been developing replenish-
ment platforms such as auxiliary replenishment oilers and has
been practicing the transfer of missile systems while underway
at sea.171 For example, the PLA Navy’s Zhanlan far seas train-
ing exercise in 2020 focused on combat support to sustain lim-
ited offensive strikes at sea and featured the first known case
of the PLA Navy training on transferring ordnance while un-
derway outside the first island chain, including replenishment
of torpedoes using a helicopter.172
• The PLA is also investing in new technologies such as AI,
autonomous vehicles, big data, cloud computing, data mining
technology, Internet of Things, 5G mobile communications, and
* Kevin McCauley, an independent analyst, assessed in 2022 that extensive logistics exercises
and training to ensure the PLA’s successful execution of complex and difficult logistics support
plans for a large-scale joint landing operation had not appeared to have taken place thus far.
Kevin McCauley, “Logistics Support for a Cross-Strait Invasion,” U.S. Naval War College, China
Maritime Studies Institute, China Maritime Report No. 22, July 2022, 1.
† According to Eli Tirk, research analyst at the China Aerospace Studies Institute, these up-
dates of hardened storage facilities and the expansion of munition storage occurred at airfields
within the Eastern Theater Command that could improve the PLA’s combat abilities in a Taiwan
contingency. Mr. Tirk also assesses that in a contingency involving a large-scale PLA air combat
operation conducting a blockade of Taiwan, the airfields within and around 600 miles of Taiwan
in the Eastern Theater Command and Southern Theater Command would allow the PLA to op-
erate over and around Taiwan for longer periods of time while enabling aircraft on longer-range
sorties conducting counter-intervention operations to refuel and rearm. Eli Tirk, “PLA Capability
to Sustain Air Combat Operations,” U.S. Army War College, February 2023, 147.
563
other automatic identification technologies to enhance precision

logistics that could improve decision-making for PLA command-
ers.173
Despite efforts to improve its logistics capabilities, however, the
PLA continues to face a range of challenges that could limit its ef-
fectiveness in combat.
• The continuous reorganization of the PLA’s logistics forces has
led to internal frictions, complex coordination issues, and diffi-
cult command issues that hold implications for response time
and efficiency of wartime logistics support.174
• The PLA may lack sufficient logistics capabilities required to
successfully support a large-scale amphibious landing on Tai-
wan, and countering a foreign military response would add
additional strain on the PLA’s logistics assets.175 According to
Kevin McCauley, an independent analyst, the PLA’s All Army
Logistics Academic Research Center’s writings reflect concerns
that a U.S. military response could disrupt the PLA’s logistics
operations through missile strikes or information attacks.176
• The PLA also faces maintenance challenges. In written testimo-
ny to the Commission, Cristina Garafola, policy researcher at
the RAND Corporation, argued that shortcomings in the PLA’s
maintenance management system * could present key challeng-
es to China’s logistics performance during high-end combat.177
Ms. Garafola similarly noted that the PLA’s rapid force mod-
ernization combined with its lack of recent combat experience
means its maintenance systems could struggle to conduct bat-
tlefield repair of high-technology weapons and equipment.† 178
For example, she identified maintenance challenges that could
result in degraded performance for advanced platforms such as
the J-20 fighter jet and the maritime and naval assets on fea-
tures in the South China Sea.179 A second element is insufficient
training for the personnel within the PLA’s logistics system who
are tasked with maintaining important weapons platforms and
other equipment.180 Ms. Garafola also identified low morale
and ad hoc practices across the services as key vulnerabilities
that could compromise the PLA’s ability to maintain its growing
suite of weapons systems under battlefield conditions.‡ 181 In
a high-intensity conflict, any limitations in PLA maintainers’
ability to service increasingly advanced maritime and air assets
could have operational effects on PLA war-fighting performance,
* The PLA’s maintenance management system is a component of the logistics and sustainment
activities but separate from the Joint Logistics Support Force command structure. Cristina Ga-
rafola, written testimony for U.S.-China Economic and Security Review Commission, Hearing on
China’s Evolving Counter Intervention Capabilities and Implications for the United States and
Indo-Pacific Allies and Partners, March 21, 2024, 1, 9.
† The 2020 Science of Military Strategy highlights that the task of equipment maintenance
has become more “onerous” and cites the potential for higher failure rates in new weapons and
equipment not tested under combat conditions. China Aerospace Studies Institute, In Their Own
Words: Science of Military Strategy 2020, January 2022, 443.
‡ For example, a PLA Daily article reveals the lack of an institutionalized approach for highly
skilled maintainers to pass on their knowledge to the unit prior to retirement. Cristina Gara-
fola, written testimony for U.S.-China Economic and Security Review Commission, Hearing on
China’s Evolving Counter-Intervention Capabilities and Implications for the United States and
Indo-Pacific Allies and Partners, March 21, 2024, 7; Jia Baohua, Yang Lei, and Xiang Shuangxi,
“Compiling an ‘Encyclopedia’ for Equipment Maintenance” (为装备维修编制‘百科全书'), PLA Daily,
564
such as low platform availability rates, reduced sortie genera-

tion, or degraded platform performance.182
• The PLA may also face shortages of supplies close to the loca-
tion of a potential conflict. PLA experts assess that its war ma-
terial reserves, including the stockpiling of oil, equipment parts,
and munitions, need to be strengthened along its frontline tacti-
cal areas, such as China’s coastline across from Taiwan.183 Com-
pounding this potential shortage of supplies near the vicinity
of the conflict are uncertainties about the PLA’s capability to
respond quickly and move large quantities of supplies through-
out the country.* (For more on China’s stockpiling efforts, see
Chapter 7, “China’s New Measures for Control, Mobilization,
and Resilience.”)
U.S.-Allied Efforts to Address Challenges from
China’s Military
U.S. alliances represent a critical part of the United States’ ap-
proach to pursuing security and advancing stability in the Indo-Pa-
cific region, including responding to threats from China’s counter-in-
tervention capabilities. Christopher Johnstone, senior adviser and
Japan Chair at the Center for Strategic and International Studies,
argued in his testimony before the Commission that U.S. alliances
in the Indo-Pacific represent a “foundational strength for the United
States” both for the access they provide and for the capabilities they
bring to the table.184 Allies’ provision of basing, rotational, or other
access enables a routine U.S. military presence and ensures that
the United States is able to respond quickly to a crisis.185 Alliances
can potentially reinforce deterrence by complicating Beijing’s deci-
sion-making, since they increase the likelihood that a conflict will
involve more military actors than the United States.186
There are prospects for increased allied cooperation in the face
of China’s counter-intervention capabilities. In addition to the com-
mon values and strategic interests underlying these alliance com-
mitments, the United States and its Indo-Pacific allies increasingly
share similar concerns about the implications of China’s military
capabilities and objectives.187 There nevertheless remain differences
in the specific activities each country might be willing to participate
in or to support, driven by differences in political will and the capa-
bilities of their militaries.
U.S. Defense Industrial Base Challenges

A robust and resilient U.S. defense industrial base is crucial
for the sustainment of U.S. strategic competition in peacetime
and surge capacity in wartime. The U.S. defense industrial base
faces acute challenges brought by an evolving strategic environ-
* There have been few recent events by which to judge the PLA’s current capacity for rapid
mobilization. However, some observers pointed to this as an area of challenge during the 2008
Sichuan earthquake and the PLA’s response to the outbreak of COVID-19 in 2022. Elsa Kania
and Ian Burns McCaslin, “People’s Warfare against COVID-19: Testing China’s Military Medi-
cal and Defense Mobilization Capabilities,” Institute for the Study of War, December 2020, 25;
Joel Wuthnow, “Responding to the Epidemic in Wuhan: Insights into Chinese Military Logistics,”
Jamestown Foundation, April 13, 2020; Jake Hooker, “Quake Revealed Deficiencies of China’s
Military,” New York Times, July 2, 2008.
565
U.S. Defense Industrial Base Challenges—Continued

ment that has placed strain on U.S. policies and investments, a
limited workforce, and inadequate domestic production.188 Some
problems currently facing the defense industrial base include a
high reliance on a small number of contractors for critical de-
fense capabilities; supply chain difficulties; challenges identify-
ing, recruiting, and retaining talent; and complex and protracted
procurement procedures.189 These issues within the U.S. defense
industrial base contribute to challenges and delays in supplying
not only the U.S. military but also U.S. allies and partners.190
One area of particular concern is the U.S. capacity to keep up
with surging demand for munitions in a conflict scenario.191 For
instance, high consumption rates and dwindling stockpiles would
compound existing limitations on production capacity caused by
previous low demand signals for munitions.192 In April 2023, the
Wall Street Journal reported that plans to increase production of
key munitions, such as mortar shells, artillery rounds, and Tom-
ahawk missiles, have been marred by a shortage of chips, ma-
chinery, and skilled workers.193 U.S. experts have also found that
the U.S. military is not buying enough munitions, threatening the
ability to meet the requirements of future conflicts and making it
more difficult to sustain production lines.194 Mackenzie Eaglen,
senior fellow at the American Enterprise Institute, assessed that
the U.S. Navy likely has an inadequate supply of Tomahawk Land
Attack Missiles, as lackluster procurement does not offset cur-
rent expenditure rates.* 195 In testimony before the Commission,
witnesses suggested that increased cooperation with allies such
as Japan and Australia may offer one pathway for ameliorating
capacity shortfalls in shipbuilding and maintenance or munitions
production; however, operationalizing such cooperation would still
require substantial investment in joint capabilities.196 In a step
to enhance cooperation with allies in addressing defense indus-
trial base vulnerabilities, the United States announced that it is
launching the Partnership for Indo-Pacific Industrial Resilience
with 12 of its allies and partners in the Indo-Pacific and Europe,
including Taiwan, in order to fast-track production of weapons
systems.197 (For more on U.S.-Taiwan defense cooperation, see
Chapter 9, “Taiwan.”)
Indo-Pacific Allies’ Geography Is a Major Asset for the U.S.

Military
Geographic access from Indo-Pacific alliances is an important ele-
ment of U.S. military posture † in the Indo-Pacific region. According
* As an example, the U.S. Navy stated it expended more than 80 Tomahawks on the opening
day alone to strike targets within Yemen. Ms. Eaglen points out that in 2023, the entire Tom-
ahawk purchase of 55 missiles accounted for 68 percent of the precision munitions fired at the
Houthis in one day, a rate of expenditure that is unsustainable. Mackenzie Eaglen, “Why Is the
U.S. Navy Running Out of Tomahawk Cruise Missiles?” American Enterprise Institute, February
13, 2024.
† Military posture refers to the positioning and organization of military forces and facilities and
may also refer to international military agreements. Luke A. Nicastro and Ilana Krill, “FY2024
NDAA: U.S. Military Posture in the Indo-Pacific,” Congressional Research Service IN12273, Oc-
tober 30, 2023, 1.
566
to DOD’s 2022 National Defense Strategy,* a focus for U.S. military

force posture is “the access and warfighting requirements that en-
able [U.S.] efforts to deter PRC [People’s Republic of China] and
Russian aggression, and to prevail in conflict if deterrence fails.” 198
According to then Commander of U.S. Indo-Pacific Command Admi-
ral John C. Aquilino in April 2023, implementing the objectives of
the 2022 National Defense Strategy requires the U.S. military to
maintain a “persistent, lethal, and integrated” joint force west of
the International Date Line.199 The majority of U.S. defense sites
west of the International Date Line are located in host countries,
including some that are operated by DOD (such as in Japan and
South Korea), and others that are used by DOD but owned and
operated by the host country (such as in the Philippines, Australia,
and Singapore) (see Figure 1).200 U.S. Army, Navy, Marine Corps,
and Air Force installations at these sites support a range of actions
and capabilities, including missile detection and defense, logistics
support, training, and exercises.201
Figure 1: Select U.S. Military Installations and Defense Sites in the
Indo-Pacific
US INDOPACOM area of responsibility
Land Bodies of Water
Select U.S. Military Installations and Defense Sites

H aw :
abouaii to Taiwan
Enduring U.S. presence t 5,000 miles
Rotational/episodic U.S. presence
SOUTH
Int’l Date Line
KOREA
CHINA
JAPAN
OKINAWA
TAIWAN HAWAII
NORTHERN
MARIANA
ISLANDS MARSHALL
PHILIPPINES GUAM ISLANDS
FED. STATES OF
SINGAPORE PALAU MICRONESIA KIRIBATI Equator
PAPUA NAURU
TIMOR- NEW SOLOMON
LESTE GUINEA ISLANDS SAMOA
VANUATU
FIJI FRENCH
NEW
Int’l Date Line
POLYNESIA
CALEDONIA
AUSTRALIA
NEW ZEALAND
0 2,500 Miles
Source: Adapted from Caitlin Campbell, Cameron M. Keys, and Luke A. Nicastro, “U.S. Indo-Pa-
cific Command (INDOPACOM),” U.S. Congressional Research Service CRS IF 12604, March 5,
2024, 2.
Japan’s geography and permanent basing of U.S. forces make it an

extremely important ally for a China contingency. Its strategic loca-
tion on the first island chain means that one of the PLA’s shortest
passages into the Pacific brings it between Japan’s Southwest Is-
lands and Taiwan.202 Japan plays a critical role in U.S. force posture
* The 2022 National Defense Strategy lays out how the U.S. military plans to address threats
to vital U.S. national security interests. It directs DOD to “act urgently to sustain and strengthen
U.S. deterrence” with China as the pacing challenge. U.S. Department of Defense, 2022 National
Defense Strategy of the United States of America, 2022, 111.
567
through the permanent basing of U.S. military personnel.* More U.S.

service members are permanently stationed in Japan than in any
other foreign country,† with this forward deployment serving the
strategic goal of protecting regional security and increasing deter-
rence against China.203 In his testimony before the Commission, Mr.
Johnstone described the alliance with Japan as “the foundation of
[U.S.] power projection in the region” because of the critical U.S. mil-
itary capabilities stationed there.204 The country hosts U.S. Army,
Navy, Marine Corps, and Air Force installations, with installations
on the Japanese island Okinawa (in the southwest) providing close
access to Taiwan and the South China Sea.205 Japan is also the loca-
tion of the forward-deployed Ronald Reagan carrier strike group.206
The Philippines’ geography and rotational hosting of U.S. forces
grants potential access to both the South China Sea and the Tai-
wan Strait. Gregory Poling, senior fellow and director of the South-
east Asia program and Asia Maritime Transparency Initiative at
the Center for Strategic and International Studies, argued in 2023
that “there is no contingency in the South China Sea that does not
require access to the Philippines.” ‡ 207 Its position in the first island
chain also means that one of the PLA’s shortest passages into the
Pacific is through the Luzon Strait, which lies between Taiwan and
the Philippines.208 U.S. armed forces have a rotational presence at
nine bases in the Philippines, governed by the Visiting Forces Agree-
ment (VFA) of 1999 § and the EDCA agreement.209 EDCA allows the
United States to fund infrastructure upgrades, preposition military
equipment, and rotate forces through select Philippine military bas-
es for the benefit of both countries.210 The 2023 EDCA expansion
included one new site near the Spratlys that could facilitate U.S. as-
sistance to the Philippines in the South China Sea and three facing
north toward Taiwan that could facilitate U.S. military operations
in the event of a Taiwan contingency.¶ 211 Edcel Ibarra, assistant
professor at the University of the Philippines Diliman, stated in his
testimony for the Commission that if allowed by the Philippine gov-
* The Status of Forces Agreement (1960) delineates the legal status of U.S. service personnel in
Japan and the facilities and areas granted to the United States to use. U.S. Department of State,
Bureau of Political-Military Affairs, U.S. Security Cooperation with Japan, January 20, 2021.
† As of 2024, there were 85 U.S. military facilities, and as of 2023, there were approximately
62,802 U.S. military personnel. As of 2021, thousands of DOD civilians and family members lived
in Japan. Lindsay Maizland and Nathanael Cheng, “The U.S.-Japan Security Alliance,” Council
on Foreign Relations, May 3, 2024; U.S. Department of State, Bureau of Political-Military Affairs,
U.S. Security Cooperation with Japan, January 20, 2021.
‡ Mr. Poling also assesses that U.S. military access from the Philippines and rotational access
of key U.S. capabilities at EDCA sites could offer one of very few feasible avenues for contending
with China’s military bases in the South China Sea. Gregory Poling, “The Conventional Wisdom
on China’s Island Bases Is Dangerously Wrong,” War on the Rocks, January 10, 2020.
§ The Visiting Forces Agreement (VFA) (1999) establishes the legal basis for the presence of U.S.
Armed Forces personnel visiting the Philippines. In February 2020, then Philippine President
Rodrigo Duterte announced the cancelation of the VFA, but after several subsequent announce-
ments suspending this cancelation and a meeting between President Duterte and U.S. Secretary
of Defense Lloyd Austin, the agreement was fully restored in July 2021. Andrea Chloe-Wong,
“Duterte’s Back-Down on US Forces in Philippines,” Interpreter, August 24, 2021; U.S. Depart-
ment of Defense, Philippines President Restores Visiting Forces Agreement with U.S., July 30,
2021; Idrees Ali and Karen Lema, “Philippines’ Duterte Fully Restores Key U.S. Troop Pact,”
Reuters, July 20, 2021.
¶ Original EDCA sites included Antonio Bautista Air Base in Palawan, Basa Air Base in Pam-
panga, Fort Magsaysay in Nueva Ecija, Benito Ebuen Air Base in Cebu, and Lumbia Air Base in
Mindanao. The new sites identified in 2023 are Naval Base Camilo Osias in Sta Ana and Lal-lo
Airport, both in Cagayan Province; Camp Melchor Dela Cruz in Gamu, Isabela Province; and the
island of Balabac off of Palawan. Gregory B. Poling, “The U.S.-Philippine Alliance’s Very Busy
Month,” Center for Strategic and International Studies, April 12, 2023; Karen Lema, “Philippines
Reveals Locations of 4 New Strategic Sites for U.S. Military Pact,” Reuters, April 3, 2023.
568
ernment or if mutual defense obligations are triggered, the alliance

provides a strategic location for forward deployment of U.S. military
forces and for military logistics.212
Australia’s geography and rotational hosting of U.S. forces provide
additional benefits for the U.S. military in countering the PLA in the
Indo-Pacific.* Its location provides military access to both the Pacific
and Indian Oceans, close enough to China to influence the military
environment in places like the South China Sea but outside the first
and second island chains, where China’s counter-intervention capa-
bilities are strongest.213 Bec Shrimpton, director of defense strategy
and national security at the Australian Strategic Policy Institute,
argued in her testimony for the Commission that Australia’s large
size and distance from China make it less vulnerable as a potential
forward location for U.S. forces than positions in other allied states
or Guam.214 She also assessed that “in a crisis or early stages of a
conflict, Australia would be seen as sensible location to disperse/
repair/sustain [U.S.] forward-deployed forces, and as an obvious hub
from which to flow in supplies, reinforcements and long-range strike
assets.” 215 Australian bases host U.S. military forces on a rotational
basis, including navy, air force, and marine corps elements for train-
ing and exercises.216
U.S. Security Partnerships with the Freely Associated

States
The United States has strong security partnerships with Pa-
lau, the Marshall Islands, and the Federated States of Microne-
sia that confer benefits in terms of geography and military ac-
cess. These three Pacific Island countries, collectively known as
the Freely Associated States (FAS), maintain a close relationship
with the United States through Compacts of Free Association
(COFA) agreements.217 The FAS are located in a strategic region
of the Pacific near U.S. territories of Guam and the Northern
Mariana Islands and close to other important security partners
such as Australia and Papua New Guinea.218 The agreements
these states have established with the United States include
defense-related provisions that grant the U.S. military unilater-
al defense access to an area of the Pacific Ocean broader than
the continental United States.219 The agreements also allow the
United States to deny military access to third countries such as
China.220 Experts assess that the access afforded by these agree-
ments forms a critical part of the current U.S. defense posture in
the Pacific.221 According to Kathryn Paik, senior fellow and Aus-
tralia chair at the Center for Strategic and International Studies
and a previous director for Southeast Asia and the Pacific on the
National Security Council, “Every contingency you can imagine
* The Agreement Concerning the Status of United States Forces in Australia (SOFA) (1963) lays
out the legal status of U.S. Armed Forces personnel in Australia. Australian bases host U.S. mil-
itary forces on a rotational basis, including rotational navy, air force, and marine corps elements
for training and exercises, U.S. Air Force bombers, and the rotational U.S. Marine Air Ground
Task Force Marine Rotational Force-Darwin. Bec Shrimpton, written testimony for U.S.-China
21, 2024, 7–8; U.S. Department of State, Bureau of Political-Military Affairs, U.S. Security Coop-
eration with Australia, September 14, 2021.
569
U.S. Security Partnerships with the Freely Associated

States—Continued
in the Pacific—Korea, Taiwan—everything, depends on [those] as-
sumptions of defense access.” 222 These countries also host some
U.S. Army installations used for missile defense activities.223
Chinese sources recognize the strategic value of these security
partnerships for the United States. Some Chinese state media
reporting on the renewal of the COFA agreements has empha-
sized the strategic and military significance of these agreements
for the United States, and China’s Ministry of National Defense
spokesperson criticized the renewal as the United States trying
to turn the region into a “boxing ring.” 224 A 2023 article describes
these Pacific Island states as “marine and aerial channels for the
[United States] to deploy troops” in the Western Pacific, makes
note of U.S. military deployments on their territories, highlights
their potential service as “logistics replenishment bases,” and
speculates that they will function as alternatives to the U.S. base
in Guam.225 Another article claims the United States seeks to
“build these three countries into its forward bases against Chi-
na.” 226 These articles ignore the agency and sovereign choices of
the FAS in continuing their relationships with the United States,
grossly mischaracterizing the United States as “binding” them
into its service and using “coercion” to “tie them to its anti-China
chariot.” 227
Japan’s Perspectives on Addressing Threats from China’s

Military
China’s aggressive military actions in the region, coupled with the
rapid buildup of the PLA’s offensive military capability, present a
growing security threat to Japan.228 In Japan’s 2022 National Secu-
rity Strategy, China is described as the “greatest strategic challenge”
to peace and security, a departure from its 2013 National Security
Strategy that referred to China’s “external stance and military ac-
tivities” as an “issue of concern.” 229 Tokyo’s concern of advances in
missile-related technologies in its surroundings has motivated re-
cent efforts to upgrade its defense capabilities, especially its coun-
terstrike capabilities, and to deepen defense cooperation with the
United States and other partners.230 Japan is likely to determine
that supporting U.S. efforts in a conflict is in its interests, although
the degree and type of support are not yet determined.
Japan Perceives Imminent Threats from China’s Military,
Including over Taiwan
Japan’s policymakers are highly concerned that China’s security
objectives vis-à-vis Taiwan present a threat to their country, accord-
ing to official reports and research conducted during the Commis-
sion’s June 2024 fact-finding trip to Tokyo.231 Due to its proximity
to China, Japan would be at the forefront of any military conflict
within the first island chain, particularly a war over Taiwan.232
Three high-level policy documents from Japan’s Ministry of Defense
in 2021 and 2022 highlight China’s “intensifying” military activities
570
in the sea and air around Taiwan among Tokyo’s chief security con-
cerns in the Indo-Pacific, with one of the 2022 documents describing
stability around Taiwan as something “critical for Japan’s securi-
ty [which] must be closely monitored with a sense of urgency.” 233
Ministry of Defense policy documents and nongovernment experts
have also frequently referenced China’s military response to then
U.S. Speaker of the House Nancy Pelosi’s visit to Taiwan in August
2022—during which the PLA conducted live-fire exercises and five
ballistic missiles fell into Japan’s exclusive economic zone (EEZ)—
as a particularly salient indicator of this threat.234 In his written
testimony to the Commission, Tetsuo Kotani, professor at Meikai
University and senior fellow at the Japan Institute of Internation-
al Affairs, argued that China’s bellicose military response to then
Speaker Pelosi’s visit demonstrated a “real possibility that Japan
would be directly involved in a Taiwan contingency.” 235
Tokyo is similarly concerned about China’s aggressive mili-
tary presence elsewhere in the region. In 2019, a Ministry of De-
fense-produced white paper, “Defense of Japan,” noted that the PLA
Navy and Air Force had “expanded and intensified their activities
in the surrounding sea areas and airspace of Japan,” seeking to de-
sensitize its neighbors to increased PLA presence in the region.236
Furthermore, its 2022 National Defense Strategy notes China “in-
tensifying its activities across the entire region surrounding Japan,”
including the East China Sea, Sea of Japan, western Pacific Ocean,
South China Sea, and into the second island chain.237 The Min-
istry also released detailed documentation highlighting the PLA’s
expanding activities in the maritime and air domains in the Sea
of Japan, around its main island, its southwestern islands, and the
Japanese-administered Senkaku Islands.238 Japan’s Self-Defense
Force has also frequently referenced its need to contend with an
increase in joint Chinese and Russian military activities operating
near its territory.* 239
Finally, Japan perceives China’s ongoing military modernization
as a threat because it enables China’s aggressive military posture.
Tokyo’s 2022 National Defense Strategy highlighted advancements
in China’s military modernization that have improved China’s A2/
AD military capabilities in the surrounding area, directly threaten-
ing Japan.240 For example, the Strategy pointed out that China now
possesses larger numbers of modern naval and air assets and has
built a large arsenal of intermediate- and medium-range missiles,
anti-ship ballistic missiles, long-range land-attack cruise missiles,
and hypersonic glide vehicles, all of which could strike Japan.† 241
* Japan has witnessed the PLA and Russian Navy conduct joint exercises circumnavigating its
archipelago and operating near its territory. Japan has also scrambled its Air Self-Defense Force
fighters in response to China and Russia’s joint bomber flights that have occurred seven times
since July 2019 over the Sea of Japan and the East China Sea. Japan’s Ministry of Defense,
China’s Activities in East China Sea, Pacific Ocean, and Sea of Japan, March 2024, 2; Tetsuo
Kotani, written testimony for U.S.-China Economic and Security Review Commission, Hearing
on China’s Evolving Counter Intervention Capabilities and Implications for the United States
and Indo-Pacific Allies and Partners, March 21, 2024, 2; Dzirhan Mahadzir, “Joint Russia-China
Military Flights Prompt Japanese, South Korea Fighter Scrambles,” USNI News, December 14,
2023; Tsuruta Jun, “Chinese and Russian Warships Step Up Activity in Straits around Japan,”
Diplomat, August 15, 2023; Brad Lendon, “Why Russian and Chinese Warships Teaming Up to
Circle Japan Is a Big Deal,” CNN, October 25, 2021.
† The PLA has conducted training exercises demonstrating the capability to target Japanese
and U.S. military bases, aircrafts, and ports in a conflict. For example, commercial satellite im-
ages dating back to 2013 appear to show the PLA Rocket Force using ship targets similar in
571
In 2023, the “Defense of Japan” white paper pointed with particular

concern to China’s growing number of nuclear warheads, construc-
tion of a second indigenous aircraft carrier, and development of a
wide variety of UAVs.242 When referencing expanding PLA capabil-
ities, the Ministry of Defenses’ policy documents clearly articulate
that this military buildup provides the backing for the aggressive
activities threatening Japan.243 Regarding nuclear weapons specifi-
cally, a salient concern in Tokyo is that China’s rapid and nontrans-
parent nuclear modernization could undermine the U.S. ability to
protect Japan under its nuclear umbrella.* 244
Japan Seeks to Defend against China’s Military Threats
Japan has updated its defense policy to upgrade its defense ca-
pabilities, develop counterstrike capacity, and integrate its capabili-
ties across domains.245 In December 2023, Tokyo raised its defense
budget to a record-high $56 billion (7.9 trillion yen), with a plan to
increase its defense budget to 2 percent of its gross domestic prod-
uct (GDP) by 2027.246 However, the weakening of the Japanese yen
may undermine Japan’s plans to invest in its military buildup.† 247
Mr. Kotani’s testimony to the Commission pointed to Russia’s in-
vasion of Ukraine and China’s intensifying military activities as
factors that drove popular support for dramatic changes to Japan’s
defense policy.248 Tokyo’s higher defense budget would enable the
upgrade of its indigenous standoff missiles as a denial capability; se-
cure sufficient munitions and fuel; and accelerate the procurement
of additional Type-12 cruise missiles and Tomahawks,‡ as well as
the development of hypersonic guided missiles.249 According to the
2022 National Security Strategy, developing counterstrike capabil-
ities means that in the event of a missile attack by an opponent,
Japan would have the capability to mount an effective counterstrike
to prevent further attacks.§ 250
size to the U.S. Arleigh Burke-class destroyer and a mock port that closely resembled the U.S.
naval base in Yokosuka, Japan. Tetsuo Kotani, written testimony for U.S.-China Economic and
Implications for the United States and Indo-Pacific Allies and Partners, March 21, 2024, 4; Nikkei
Asia, “Satellite Photos Suggest China Training to Attack Japan’s Aircraft,” May 20, 2022; Thomas
Shugart, “Has China Been Practicing Preemptive Missile Strikes against U.S. Bases?” War on the
Rocks, February 6, 2017.
* Specifically, as Mr. Kotani explained in his testimony, Japan fears that if China’s rapid nuclear
buildup results in China reaching nuclear parity with the United States, China may become em-
boldened to initiate a conventional war against its neighbors without fearing a nuclear war with
the United States. Tetsuo Kotani, oral testimony for U.S.-China Economic and Security Review
Commission, Hearing on China’s Evolving Counter Intervention Capabilities and Implications
for the United States and Indo-Pacific Allies and Partners, March 21, 2024, 194; Tetsuo Kotani,
Evolving Counter Intervention Capabilities and Implications for the United States and Indo-Pa-
cific Allies and Partners, March 21, 2024, 2.
† The weakened yen has eroded Japan’s government’s purchasing power, which, according to
Satoshi Morimoto, a former Japanese defense minister, could result in the value of the defense
budget being reduced by 30 percent over the next five years. In analysis published by the New
York Times, due to the weak yen to the dollar, the cost of equipment has increased, including
for the U.S.-made Tomahawk missile, helicopters, submarines, and tanks. River Akira Davis and
Hisako Ueno, “The Yen Is Plunging. So Is Japan’s Defense Budget,” New York Times, July 8, 2024.
‡ Tomahawk cruise missiles on ships in 2025 would be the first time Japan would possess long-
range strike capabilities. Christopher B. Johnstone, written testimony for U.S.-China Economic
and Security Review Commission, Hearing on China’s Evolving Counter Intervention Capabilities
and Implications for the United States and Indo-Pacific Allies and Partners, March 21, 2024, 2.
§ As Mr. Johnstone noted in his testimony, once Japan brings online its counter-strike capabil-
ities, “Beijing will confront for the first time the prospect of a Japan that can shoot back, on its
own and at long range,” which would raise China’s risk calculus and bolster deterrence against
aggression. Christopher B. Johnstone, written testimony for U.S.-China Economic and Security
572
Japan has also made efforts to bolster its defense capabilities by

expanding its military bases along its southwestern islands, as close
as 68 miles from Taiwan.251 Masafumi Iida, a leading China analyst
at the National Institute of Defense Studies in Tokyo, argues that
Japan must enhance the presence and capabilities of the Self-De-
fense Forces in the southwest islands to deal with “possible con-
tingencies involving Taiwan and other areas.” 252 Japan has opened
bases that can accommodate land-to-ship and land-to-air missile
units on Miyako in 2019 and Ishigaki in 2023, and in March 2024 it
deployed a Ground Self-Defense Force unit based on Yonaguni that
conducts EW, including intercepting adversary communications and
jamming radar.253 The expanded bases on its southwestern islands
could complicate Chinese decision-making in the event of a conflict
over Taiwan, potentially offering U.S. forces access to operate from
these bases.254 In addition, Japan is reportedly upgrading civilian
air hubs and seaports for dual-use capability across the southwest
islands, as well as ports in the north, to address concerns of a short-
age of facilities that could be used in possible contingencies.255
A key element of Japan’s evolving defense policies is deepening
defense cooperation with the United States and other like-minded
countries in the Indo-Pacific. The United States and Japan have
agreed to expand U.S. presence, improve interoperability, cooperate
on enhancing missile defense capabilities, explore opportunities to
conduct maintenance and repair of U.S. naval ships at commercial
shipyards in Japan,* and deepen defense science and technology co-
operation.256 In 2024, the two countries’ announced new efforts to
increase coordination on military command and control, which will
enhance interoperability between the two militaries both in peace-
time and in a crisis.257 On July 28, 2024, both sides convened the
Security Consultative Committee (also known as the 2+2) and an-
nounced that the United States intends to reconstitute U.S. Forces
Japan (USFJ) as a joint force headquarters reporting to the com-
mander of U.S. Indo-Pacific Command and serve as the counter-
part to the Japan Self-Defense Forces Joint Operations Command
(JJOC).258 In a phased approach, the USFJ will assume primary
responsibility for coordinating security activities in and around Ja-
Review Commission, Hearing on China’s Evolving Counter Intervention Capabilities and Implica-
tions for the United States and Indo-Pacific Allies and Partners, March 21, 2024, 2.
* The U.S. Navy seeks to improve ship construction and repair yards and place major shipbuild-
ing programs back on schedule by looking to partners and allies in the Indo-Pacific. U.S. Ambas-
sador to Japan Ralph Emmanuel said that U.S. shipyards are “on average 4,000 days behind on
repair and maintenance.” Currently, in the case of multiyear repairs, the Japan-based U.S. naval
ships are redeployed to a home port to the United States and a replacement vessel is subsequent-
ly forward deployed to Japan. Forward-deployed U.S. naval ships are currently serviced on site at
U.S. naval bases in Yokosuka and Sasebo using contract Japanese workers. As of August 9, 2024,
the Senate and House versions for the fiscal year (FY) 2025 National Defense Authorization Act
(NDAA) both included provisions related to the overhaul, repair, and maintenance of deployed
U.S. naval vessels in shipyards outside of the United States or Guam. The Senate FY 2025 NDAA
includes a provision for the secretary of the navy to conduct a pilot program to perform main-
tenance and repair on forward-deployed naval force ships in foreign shipyards during scheduled
maintenance and repair exercises. United States Senate Committee on Armed Services, National
Defense Authorization Act for Fiscal Year 2025 Report, July 2024, 170; Servicemember Quality of
Life Improvement and National Defense Authorization Act for Fiscal Year 2025, H.R. 8070, intro-
duced June 13, 2024, 722; Alex Wilson, “US, Japan Plan Joint Ship and Aircraft Repair, Missile
Production and Logistics,” Stars and Stripes, June 11, 2024; Megan Eckstein, “US Navy Secretary
Points to Foreign Shipyards’ Practices to Fix Delays,” Defense News, April 9, 2024; Justin Katz,
“SECNAV Says 45-Day Shipbuilding Review Will Be Followed by Another Review,” Breaking De-
fense, April 9, 2024; Ken Moriyasu, “U.S. Turns to Private Japan Shipyards for Faster Warships
Repairs,” Nikkei Asia, May 24, 2023.
573
pan in accordance with the U.S.-Japan Treaty of Mutual Coopera-

tion and Security.259 The United States increased its presence in
Japan by establishing the Marine Littoral Regiment in Okinawa
in 2022 with ISR and missile capabilities to cooperate with Japan’s
anti-ship and air defense units in Japan’s southwestern islands.260
The two countries’ have also agreed to jointly develop a hypersonic
missile interceptor, further enhancing allied missile defense capa-
bilities.261 In addition to strengthening bilateral defense ties with
the United States, Japan has expanded cooperation with Australia,
the Philippines, the UK, and the Republic of Korea.* 262 Finally, it
has increased trilateral cooperation with the United States and the
Philippines † and with the United States and Australia.‡ 263
Japan Likely to Support U.S. Military Action in a Conflict
In light of Japan’s high level of perceived threat from the PLA
and close defense cooperation with the United States, its policy-
makers would likely determine some level of cooperation with the
United States to be in the country’s interest in a conflict—including
a conflict over Taiwan. As detailed above, Tokyo’s defense policy doc-
uments clearly show that PLA aggression against Taiwan threatens
Japan’s immediate security.§ 264
Nevertheless, Japan is not guaranteed to grant the degree of ac-
cess to its military facilities that the United States might prefer,
and it may decide not to involve its own military forces at all. Un-
der the Japan-U.S. Security Treaty, Article 6 provides U.S. forces
the use of “facilities and areas in Japan” for the “maintenance of
international peace and security in the Far East,” which some ana-
lysts assess could be interpreted to include a conflict over Taiwan.265
However, the United States’ use of facilities and areas in Japan as
bases for military combat—other than that conducted in response to
an armed attack—would require “prior consultation” ¶ before access
* Japan has signed reciprocal access agreements with both Australia and the UK in 2023. On
July 8, 2024, Japan and the Philippines signed a reciprocal access agreement with the Philippines
that would be used to support future bilateral and multilateral military exercises and training,
including humanitarian assistance and disaster relief operations. Japan’s Ministry of Foreign
Affairs, Signing of the Japan-Philippines Reciprocal Access Agreement, July 8, 2024; Sebastian
Strangio, “Philippines, Japan Sign Reciprocal Access Agreement Amid China Tensions,” Diplomat,
July 9, 2024; Takahashi Kosuke, “Japan, Philippines Agree to Intensify Defense Cooperation,”
Diplomat, November 3, 2023; Mari Yamaguchi, “Japan and Australia Agree to Further Step Up
Defense Cooperation under 2-Month-Old Security Pact,” AP News, October 19, 2023; Jim Gara-
mone, “Japan, South Korea, U.S. Strengthen Trilateral Cooperation,” DOD News, August 18, 2023;
Japan’s Ministry of Foreign Affairs, Signing of Japan-UK Reciprocal Access Agreement, January
11, 2023.
† Japan, the Philippines, and the United States have also agreed to strengthen trilateral co-
operation by conducting joint exercises between their respective coast guards and expanding
maritime training activity. White House, Joint Vision Statement from the Leaders of Japan, the
Philippines, and the United States, April 11, 2024.
‡ In February 2024, the United States and Japan invited Australia to join their historically bi-
lateral Exercise Keen Edge for the first time to test the combined readiness of all three countries
and demonstrate interoperability in response to security challenges in the region. Australia’s
Ministry of Defense, Australia Joins Japan-United States Exercise for First Time, February 2,
2024.
§ In recent years, even Japan’s joint statements with international counterparts have also
grown more vocal about the importance of stability in the Taiwan Strait, suggesting a desire to
leverage international partnerships against the growing risk. U.S. Mission Japan, Joint Statement
of the Security Consultative Committee (2+2), January 11, 2023; David Sacks, “Reconsidering
Japan’s Role in the Taiwan Strait, Georgetown Journal of International Affairs, February 7, 2022;
U.S. Department of Defense, Joint Statement of the U.S.-Japan Security Consultative Committee
(“2+2”), January 6, 2022.
¶ The United States and Japan clarified the implementation of the Treaty of Mutual Cooper-
ation and Security between Japan and the United States in the 1960 Exchanges of Notes that
under Article 6, any “major changes in the deployment into Japan of United States armed forces,
574
is approved, allowing opportunity to voice concerns about risks.266

In observing Tokyo’s policy shift since 2010, Mr. Johnstone testi-
fied he is no longer concerned about “first-order questions” such as
whether the U.S. military would be permitted to operate from its
military bases in Japan in a conflict scenario.267 Uncertainties nev-
ertheless remain about whether public opinion would support fur-
ther U.S. military access to all of Japan’s military bases or civilian
ports and airports.268 Mr. Johnstone also cautioned that he remains
uncertain on “second-order question[s]” such as the degree of mili-
tary support Tokyo would provide.269 Any use of force, whether in
self-defense in response to a direct attack on Japanese territory or
in collective self-defense in response to an attack on a third party,
must be approved by the Diet.270 The Japanese Diet was divided on
the 2015 security legislation establishing Japan’s right to collective
self-defense, and a more recent opinion poll from 2022 suggests ap-
proving the use of military force even in noncombat roles could be a
politically unpopular decision.* 271
If China were to strike Japanese territory, including U.S. bases,
experts assess this would increase the likelihood of Tokyo granting
the U.S. military permission to conduct combat operations from its
bases.272 Such strikes would also constitute what the Japanese gov-
ernment terms an “armed attack situation,” which provides justifica-
tion for the potential use of military force by Japan.273 At an event
in 2021, Japan’s then Deputy Prime Minister Taro Aso commented
that “if a major problem took place in Taiwan, it would not be too
much to say that it could relate to a survival-threatening situation,”
invoking a term for a situation that could justify use of military
force in defense of a third party, although Japan’s government did
not confirm the comment reflected official policy.274
The Philippines’ Perspectives on Addressing Threats from
China’s Military
The current government of the Philippines views China’s aggres-
sive military activities in the South China Sea as a serious threat
to its military and economic security, and it is concerned about the
impact a conflict between China and the United States would have
on regional stability. The Philippines seeks to improve its own ca-
pacity to defend its maritime interests against China’s aggression
through military modernization and deepening security partner-
ships throughout the region.
The Philippines Views China’s Military as a Present and
Potential Future Threat
A chief concern for the current government of the Philippines un-
der President Ferdinand Marcos Jr. is China’s aggressive military
major changes in their equipment, and the use of facilities and areas in Japan as bases for mil-
itary combat operations to be undertaken from Japan other than those conducted under Article
V of the said Treaty, shall be the subjects of prior consultation with the Government of Japan.”
Japan’s Ministry of Foreign Affairs, Treaty of Mutual Cooperation and Security Between Japan
and the United States of America, 1960.
* One public opinion poll from 2022 found that only 22.5 percent of Japanese respondents
supported Japan’s forces fighting with the United States against the PLA in a Taiwan conflict,
while 74.2 percent opposed it. Further, only 44.8 percent supported Japan’s forces performing
noncombat supportive roles, with 51.1 percent opposing such action. Zhuoran Li, “No, Japan Will
Not Defend Taiwan,” Diplomat, March 18, 2024.
575
presence and activities in the South China Sea.* The 2023 Phil-
ippine National Security Policy notes that other South China Sea
claimants’ “methods of asserting their positions” pose a “strategic
challenge.” 275 As Mr. Ibarra emphasized in his testimony for the
Commission, the Philippines faces acute threats from China in this
area.276 One element of this threat is the presence of PLA military
installations on South China Sea features in the Philippines’ imme-
diate vicinity, with the closest located only about 140 miles from its
fifth-largest island, Palawan.277 Mr. Ibarra assesses that these in-
stallations could “give China [an] early advantage against the Phil-
ippines in the event of war.” 278 A second element of the threat is
aggressive “gray zone” activities from China’s military and paramil-
itary forces in the South China Sea, which have included blocking,
swarming, ramming, and even sinking Philippine vessels as well as
targeting them with water cannons, laser weapons, and naval gun
rangefinders.279 These aggressive actions present both a physical
threat to Philippine forces and assets and a severe challenge to eco-
nomic security, preventing the country from exploring or exploiting
many of the natural resources within its own EEZ.280 (For more
on China’s aggressive actions in the South China Sea against the
Philippines, see Chapter 2, “U.S.-China Security and Foreign Affairs
(Year in Review).”)
In addition, the Philippine government and public are concerned
about the implications of a military conflict involving China for its
own security interests and the lives of its citizens. Its National Se-
curity Policy voices concern over “heightened rivalries among the
major powers,” noting that the resulting tense geopolitical landscape
means regional flashpoints could potentially serve as “tinderboxes
for conflict.” 281 Philippine policymakers are also concerned about
conflict in the Taiwan Strait, especially the severe impact on eco-
nomic stability, threat to the welfare of Filipinos in Taiwan, and
potential influx of refugees to the country that would result.282 Poll-
* The degree of importance that the Philippines’ previous president Roderigo Duterte placed
on asserting Philippine rights vis-à-vis China in the South China Sea was not consistent over
the course of his time in office. Overall, then President Duterte pursued a relatively conciliatory
approach to China in hopes of benefiting from China’s promises of economic cooperation. His ad-
ministration is described as having downplayed China’s aggressive behavior in the South China
Sea and at first largely ignoring the decisive tribunal ruling in 2016 that struck down many of
China’s maritime claims in favor of the Philippines. China’s embassy and some media sources
have even alleged that the Duterte Administration brokered an informal deal or “gentleman’s
agreement” with China to avoid confrontation over Second Thomas Shoal—a low-tide feature
within the Philippines EEZ that China seeks to control. (For more on Second Thomas Shoal and
China’s recent aggression in this area, see Chapter 2, “U.S.-China Security and Foreign Affairs
(Year in Review).”) Descriptions of the alleged deal suggest China may have offered the Philip-
pines limited fishing rights and potentially other economic benefits in exchange for agreeing to
restrict deliveries of supplies to the grounded Philippine warship on the shoal. Other analysts
and observers note, however, that continued escalation of China’s aggression in the South China
Sea led then President Duterte to harden his stance in 2020 and to begin insisting that the 2016
tribunal ruling be respected. In his final state of the nation speech in July 2021, he changed his
stance and again downplayed the significance of the ruling. Christopher Bodeen, “China Publiciz-
es for the First Time What It Claims Is a 2016 Agreement with Philippines,” AP News, May 3,
2024; Mong Palatino, “Ex-Phililppine President Rodrigo Duterte’s ‘Gentleman’s Agreement’ with
China under Scrutiny,” Diplomat, April 5, 2024; Edcel Ibarra, written testimony for U.S.-China
21, 2024, 7; Derek Grossman, “Duterte’s Dalliance with China Is Over,” Foreign Policy, November
2, 2021; Yuichi Shiga and Kenji Kawase, “Duterte Stresses Soft Approach Toward China in Last
Policy Speech,” Nikkei Asia, July 27, 2021; Joshua Kurlantzick, “Duterte’s Ingratiating Approach
to China Has Been a Bust,” Council on Foreign Relations, June 16, 2021; Sabastian Strangio, “In
UN Speech, Duterte Stiffens Philippines’ Stance on the South China Sea,” Diplomat, September
23, 2020.
576
ing by the Eurasia Group Foundation released in 2023 reports that

a majority of Filipinos fear geopolitical confrontation between the
United States and China could lead to a deterioration of Philippine
national security.283
The Philippines Invests in Security Partnerships and Its Own
Capabilities
Although the previous Duterte government temporarily sought
to downgrade the Philippines’ security cooperation with the United
States as part of its conciliatory policy toward China,* the current
government is deepening its security partnership with the United
States as a key avenue for addressing the challenges from China’s
military. The 2023 expansion of EDCA, which allows the U.S. mil-
itary a rotational presence at certain Philippine bases, represents
a continued commitment to defense cooperation with the United
States relating to Manila’s security interests.284 The two countries
also continue efforts to upgrade infrastructure † at EDCA locations,
some of which play an important role in facilitating joint action in
the South China Sea.285 The allies also conduct an annual military
exercise, Balikatan, which aims to increase interoperability and has
increased in complexity over the past several years.‡ 286 Balikatan
2023 was the largest iteration of the exercise to date, with more
than 17,600 members of the two countries’ militaries participating,
almost double the number from 2022.287 The exercise focused on
improving capabilities in the areas of maritime security, amphibious
operations, live-fire training, aviation operations, and cyber defense,
among others.288 The 2024 exercise took place in areas facing Tai-
wan and the South China Sea, and it was the first to occur outside
the Philippines’ territorial waters in its EEZ.289 The exercise includ-
ed activities on maritime security, sensing, and targeting; air and
missile defense; dynamic missile strikes; cyber defense; and infor-
mation operations.290 The United States and the Philippines have
conducted joint patrols in the waters near Taiwan in the South Chi-
na Sea.291 They have also increased the cooperation between their
* In February 2020, then President Duterte announced the cancelation of the U.S.-Philippines
Visiting Forces Agreement (VFA), which in 1999 established the legal basis for the presence of
U.S. Armed Forces personnel visiting the Philippines. After several subsequent announcements
suspending this cancelation and a meeting between then President Duterte and U.S. Secretary of
Defense Lloyd Austin, the agreement was fully restored in July 2021. Andrea Chloe-Wong, “Dute-
rte’s Back-Down on US Forces in Philippines,” Interpreter, August 24, 2021; U.S. Department of
Defense, Philippines President Restores Visiting Forces Agreement with U.S., July 30, 2021; Idrees
Ali and Karen Lema, “Philippines’ Duterte Fully Restores Key U.S. Troop Pact,” Reuters, July
20, 2021.
† The EDCA agreement allows the United States to fund modernization and upgrades of the
military infrastructure at these bases, including improvements to runways and airfields, new
or improved storage facilities for fuel and ammunition, additional aircraft hangars and staging
areas, new command and control infrastructure, and new training facilities. Jen Judson, “US
Troops Put New Philippine Military Sites to Test in Balikatan Drill,” Defense News, May 12,
2024; Asia Maritime Transparency Initiative, “More than Meets the Eye: Philippine Upgrades
at EDCA Sites,” Center for Strategic and International Studies, October 12, 2023; David Vergun,
“New EDCA Sites Named in the Philippines,” DOD News, April 3, 2023.
‡ Although primarily a U.S.-Philippines exercise, Balikatan has also included certain other
states as participants and observers. In 2024, the exercise included participants from Australia
and France alongside the United States and the Philippines and observers from Brunei, Canada,
France, Germany, India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea, Thai-
land, the UK, and Vietnam. In 2023, Australia participated while Brunei, Canada, France, India,
Indonesia, Japan, Malaysia, Singapore, South Korea, Thailand, the UK, and Vietnam observed.
Maria T. Reyes, “Balikatan 2024 Builds Philippine-U.S. Interoperability, Multilateral Partner-
ships,” Indo-Pacific Defense Forum, May 5, 2024; Philippines Department of National Defense,
Biggest Balikatan Exercises End; Galvez, Aquilino Meet, May 3, 2023.
577
coast guards through training and conducted the first-ever trilateral

at-sea coast guard exercise with Japan.292 Finally, the United States
and the Philippines are working to facilitate military intelligence
sharing, although efforts to conclude the requisite agreement re-
main in progress.* 293
The Philippines continues to pursue investments in its own mil-
itary capabilities, especially in the maritime and air domains. In
addition to enhanced cooperation with the United States, Mr. Ibar-
ra testified that although its planned modernization efforts cannot
build up the Philippine military forces to a degree that it could
counter threats from China alone, they do represent significant ef-
forts toward a “minimum credible defense posture.” † 294 In February
2024, Philippines President Marcos approved a defense spending
plan of approximately $35 billion over the next decade, representing
the third stage of a three-stage military modernization effort begun
under former President Benigno Aquino III in late 2012 after China
seized Scarborough Shoal.‡ 295 This third stage, known as Horizon
3, is aimed especially at bolstering the Philippine military’s naval,
aerial, and surveillance capabilities, including intended purchases
of fighter aircraft, warships, submarines, and missiles.296 In March
2024, the Marcos Administration adopted a new Comprehensive Ar-
chipelagic Defense Concept as a conceptual guide for military mod-
ernization efforts.§ 297 The concept places particular emphasis on
land, maritime, and air capabilities and seeks to solidify a shift to-
ward prioritizing improvements in the military’s capacity to defend
itself from external threats, a departure from the previous, more
narrow focus on internal security challenges.298
* The United States and the Philippines are working toward the conclusion of a General Secu-
rity of Military Information Agreement (GSOMIA), which would facilitate military intelligence
sharing by ensuring the protection of classified information in both countries. The agreement,
which the two parties currently hope to conclude by the end of 2024, has been under discussion
since at least 2021. U.S. Embassy in the Philippines, Joint Statement on the Philippines-United
States Bilateral Strategic Dialogue, April 25, 2024; U.S. Department of Defense, FACT SHEET:
U.S.-Philippines 2+2 Ministerial Dialogue, April 11, 2023; U.S. Department of State, Joint Vision
for a 21st Century United States-Philippines Partnership, November 16, 2021.
† The Philippine Department of National Defense defines a “credible defense posture”—the goal
of Philippine military modernization—as the “establishment of an effective presence inside the
Philippines and its exclusive economic zone or EEZ with exhibited competence to defend the
country and protect its national interests if and when the need arises.” According to the Office of
the President of the Philippines in 2023, “A minimum credible defense posture means attaining a
particular degree of military capability or enough defense capacity to make any aggressor think
twice before engaging in hostile action.” Some government sources have identified the “minimum
credible defense posture” as an intermediary step toward the Philippines’ ultimate defense goals.
Office of the President of the Philippines, AFP Cites Importance of PH’s Strong Naval Capability
amid Current WPS Situation, September 9, 2023; Senate of the Philippines, Photo Release, Au-
gust 30, 2023. https://legacy.senate.gov.ph/photo_release/2023/0830_ 20.asp; Philippines Depart-
ment of National Defense, Defense Chronicle, 6:1 (2022): 6–7.
‡ The first stage—known as Horizon 1 (2013–2017), under former President Aquino III—divided
funding among the army, navy, air force, and joint staff, acquiring assets including helicopters
and training, transporter, and fighter aircraft. The second stage—Horizon 2 (2018–2023), un-
der former President Duterte—tripled funding for the navy and increased funding for the air
force six-fold. Assets acquired in this time period included anti-submarine helicopters, warships,
cruise missiles, and amphibious armored vehicles. Edcel Ibarra, written testimony for U.S.-China
21, 2024, 7.
§ In 2021, the Philippine Marine Corps released a new operating concept called Archipelagic
Coastal Defense (ACD), which aims to enhance sea control capabilities as a means of safeguard-
ing the nation’s territorial integrity. Some observers have noted similarities between this ser-
vice-level concept and the newly announced national-level Comprehensive Archipelagic Defense
Concept, suggesting that the former may have played a role in influencing the latter. Rej Cortez
Torrecammpo, “A Paradigm Shift in the Philippines’ Defense Strategy,” Diplomat, April 3, 2024;
Rej Cortez Torrecampo, “Philippine Marines’ New Operating Concept Highlights Their Growing
National Security Role,” Diplomat, May 6, 2021.
578
The Philippines has prioritized forging and deepening securi-

ty partnerships with other countries. These efforts have potential
second-order benefits for U.S. security interests by strengthening
the Manila’s baseline capabilities and increasing its interoperabili-
ty with other allies.299 For example, the Philippines and Australia
have taken recent steps to build on the foundation of their Visiting
Forces Agreement * with the signing of a new Mutual Logistics Sup-
port Arrangement in 2022 and the initiation of joint patrols † in the
South China Sea in 2023.300 In 2023, Japan and the Philippines
agreed to begin negotiations on a Reciprocal Access Agreement that
would facilitate the deployment of forces and equipment in each
other’s territories for defense cooperation, ultimately concluding the
agreement in July 2024 amid China’s heightened aggression in the
South China Sea.‡ 301 The Philippines has pursued expanded de-
fense cooperation with a host of other partners inside and outside
the region, including Canada, the EU, France, Germany, India, and
the UK, covering a range of efforts related to military moderniza-
tion, information sharing, joint exercises and training, and—in the
case of Canada and France—exploring the possibility of future vis-
iting forces agreements.302
Details of Philippine Policy in a Conflict with China Remain
Undetermined
Compared to the Japanese government, decisions by the Philip-
pine government to involve its own forces or facilitate the operations
of U.S. forces in a conflict with China are even more uncertain and
will depend on a number of factors. The differing stances taken by
Philippine governments in the past on security cooperation with the
United States provide one reason for caution. Mr. Johnstone addi-
tionally warns that even if the Philippine government were to ul-
timately allow the U.S. military to use bases on its territory, this
decision may not be made on a timeline that facilitates U.S. action
in a crisis.303 Potential factors in the Philippine leadership’s deci-
sion of whether or how to become militarily involved or grant U.S.
military access to its bases during a conflict with China would likely
include the following:
• China’s actions: One set of potential factors has to do with the
Philippine government’s assessment of China’s actions during
or after the conflict. For example, many experts agree that if
China were to directly attack Philippine territory, the Philip-
pines would be more likely to support the United States mili-
tary thereafter, including potentially providing base access.304
* Australia is currently the only country other than the United States to maintain a Visiting
Forces Agreements with the Philippines. Aaron-Matthew Lariosa, “Australia, Philippines Commit
to Strategic Partnership, Pledge Joint Patrols,” USNI News, September 11, 2023; Australian Em-
bassy in the Philippines, Australia-Philippines Defense Cooperation.
† Australia is also only the second state, aside from the United States, to conduct joint patrols
with the Philippines. Australian Associated Press, “Australia and Philippines Begin Joint Patrols
in South China Sea as Regional Tensions Rise,” Guardian, November 25, 2023; Aaron-Matthew
Lariosa, “Australia, Philippines Commit to Strategic Partnership, Pledge Joint Patrols,” USNI
News, September 11, 2023.
‡ Japan has also provided significant security assistance to the Philippines in the form of a
contract for an air surveillance system and an approximately $4 million (600 million yen) grant
for securing coastal radars, strengthening the Philippines’ maritime domain awareness and im-
proving its capacity to respond to China’s aggressive actions in the South China Sea. Mikhail
Flores and Karen Lema, “Japan, Philippines Agree to Hold Talks on Reciprocal Troops Pact,
579
However, absent a direct attack by China, Philippine leaders’

perception that involvement or association with U.S. military
activities could cause China to strike Philippine territory could
decrease the likelihood and scope of the Philippine govern-
ment’s support for U.S. efforts.* 305 The Philippine government
may also consider the risk of potential economic retaliation by
China.306
• U.S. actions and requests: A second set of potential factors has
to do with U.S. actions and the Philippine government’s assess-
ment of U.S. actions or likely actions during the conflict. A de-
tailed 2023 RAND Corporation study on factors likely to influ-
ence host nation decisions about whether to grant the United
States military access during conflict emphasizes that an im-
portant factor would likely be Philippine leaders’ assessment of
whether the United States will defend Philippine territory in
a conflict.307 Mr. Johnstone argues that “continuing to demon-
strate U.S. commitment in areas that are vital to Philippines
security,” especially the South China Sea, will likely be key to
obtaining the access the United States desires at EDCA sites.308
Separately, the RAND Corporation study assesses that the type
of access the United States requested could also play a role,
with the Philippine government being more likely to approve
requests for “nonkinetic or lower-end capabilities, such as ISR,
overflight, and logistics” compared to “higher-end kinetic capa-
bilities,” such as long-range strikes or direct combat operations
from Philippine soil.309
• Public opinion: Like the governments of other democratic allies,
the Philippine government would need to consider public opinion
as part of a decision on military actions in a conflict with Chi-
na.310 Elements of public opinion that could work in the United
States’ favor include a continued hardening of public sentiment
against China as a result of the country’s relentless pressure
in the South China Sea; support from many Filipinos for closer
relations with the United States; and a widespread desire to see
the Philippine government defend the country’s maritime rights
more seriously.311 Nevertheless, the leverage the United States
has to push for additional benefits under the EDCA agreement,
for example, are likely limited. Mr. Ibarra warns that EDCA is
already viewed domestically as a serious concession to the Unit-
ed States due to its similarities to a basing agreement and be-
cause of perceptions that the recent expansions in the north are
more focused on U.S. security concerns that those of the Philip-
pines.312 Additionally, EDCA is an executive action that likely
does not enjoy universal political support among the Philippine
legislature,† making it potentially vulnerable to reconsideration
* A 2023 RAND study indicated that this judgment could be informed in part by whether China
has attacked other U.S. allies granting access. Bryan Frederick et al., “Improving Conflict-Phase
Access: Identifying U.S. Policy Levers,” RAND Corporation, 2023, 82.
† The EDCA agreement was challenged in the Philippine Supreme Court, with the opposition
arguing that the agreement constituted a treaty subject to the approval of the Philippine Senate.
In 2016, the Supreme Court upheld the constitutionality of EDCA as an executive action not re-
quiring Senate approval. PressOnePH, “FACT-CHECK: EDCA Is Not Unconstitutional,” April 24,
2024; Renato Cruz de Castro, “Philippine Supreme Court Approves EDCA: Unlocking the Door for
the Return of U.S. Strategic Footprint in Southeast Asia,” Center for Strategic and International
580
by future administrations.313 Other potential limits to public

support for further security cooperation could come from local
governments and business leaders who believe angering China
runs counter to their economic interests.314
Regarding a conflict over Taiwan, the Philippine government is
open to cooperation in principle but has likely not determined in
advance what course of action would most serve its interests. The
2023 Philippines National Security Policy states that “any military
conflict in the Taiwan Strait would inevitably affect the Philippines”
in light of its geographic proximity and the presence of over 150,000
Filipinos in Taiwan; however, it does not lay out any particular in-
dicators of how the government would respond in a conflict scenar-
io.315 In a 2023 interview, President Marcos stated that “when we
look at the situation in the area, especially the tensions in the Tai-
wan Strait, we can see that just by our geographical location, should
there in fact be a conflict in that area . . . it’s very hard to imagine a
scenario where the Philippines will not somehow get involved.” 316
As to whether that involvement would involve a military response,
he replied that this would depend on the circumstances and what
was best for the Philippines.317 Similarly, Philippine Ambassador to
the United States Jose Manuel G. Romualdez has reportedly stated
that Manila would allow the U.S. military to use its bases in the
event of a Taiwan conflict only “if it is important for us, for our
security.” 318 Some experts have assessed that for a country like the
Philippines with a significant number of its citizens in Taiwan, a
large-scale attack such as an amphibious invasion directly threat-
ening those citizens may be more likely to incentivize supporting
actions than a more limited attack such as military action against
one of Taiwan’s offshore islands.319
Australia’s Perspectives on Addressing Threats from China’s
Military
Australia is increasingly focused on countering threats from Chi-
na’s military, especially the PLA’s A2/AD capabilities, due to their
perceived potential to restrict its forces’ activity in their immediate
region while pushing U.S. forces out of the region. Australian policy-
makers are pursuing military reforms alongside deepening defense
cooperation with the United States, the UK, and other partners.
Australia’s government would likely view providing some kind of
support to the United States in the event of a conflict with China
as being in line with its interests; however, this support may not
include direct military participation.
Australia Views China’s Military Capabilities as a Threat
Expert assessments and defense policy documents from Austra-
lia evince serious concern about China’s A2/AD capabilities. For ex-
ample, the Australian government’s 2023 Defense Strategic Review
noted an increasing need to defend not only against the remote
possibility of invasion but also against the more immediate threats
from regional countries’ ability to project power across greater rang-
es and threaten it without an invasion.320 One element of this per-
Studies Asia Maritime Transparency Initiative, February 1, 2016; Rappler, “SC Rules: PH-US
Military Deal Constitutional,” January 12, 2016.
581
ceived threat is the PLA’s ability to hit Australia’s northern base

infrastructure with missile attacks from air-launched, sea-launched,
and ground-launched land-attack cruise missiles and IRBMs.321 A
second element is that these capabilities restrict the Australian mil-
itary’s ability to defend the country’s sea lines of communication.322
A third element is a concern that China’s A2/AD capabilities and
gray zone efforts are designed to push the United States out of the
region, cutting Australia off from its most important defense part-
ner and ally.323
Australian defense officials and analysts view the possibility of
a Chinese forward base in the South Pacific as a development that
would increase the risks from China’s forces. Concern about a poten-
tial Chinese military presence in the Pacific Island states surfaced
clearly among Australia’s think tank community and from political
leaders in 2018 amid reports of Chinese military cooperation with
Vanuatu and investments in Papua New Guinea; it has continued
as China’s engagements in the region have grown and escalated
with the conclusion of a security deal between China and the Sol-
omon Islands in 2022.324 Australia’s Deputy Prime Minister and
Minister for Defense Richard Marles stated in an interview with
the Center for Strategic and International Studies in 2022 that a
Chinese base in the Pacific would “completely change the national
security landscape for Australia.” 325 In her testimony, Ms. Shrimp-
ton explained that a PLA presence in the southwest Pacific would
dramatically enhance the range of China’s A2/AD capabilities and
thus “fundamentally challenge and change Australia’s requirements
for [its military] force.” 326 Specifically, a PLA presence in the second
island chain could require Australia to dedicate more resources to
defending its east coast from air and missile threats, “tying down
Australian forces” to the potential detriment of operations within
the first island chain.327
Australia Reorients Its Military and Supports Deepening
Alliance Cooperation
Australia is in the midst of a major effort to jumpstart and
reorient its domestic defense apparatus to be better suited to ad-
dress threats from China’s military. Significant progress has been
made in a short time at articulating a new approach, although
the degree of follow-through on resourcing and implementation
remains to be seen. In 2020, the Australian Department of De-
fence released a Defence Strategic Update that emphasized Aus-
tralia’s need for “more potent capabilities to hold adversary forces
and infrastructure at risk further from Australia,” among other
items.* 328 In 2023, the department released a Defense Strategic
Review arguing that Australia needed to replace its traditional
defense concept focused on low-intensity regional conflicts with
an integrated national defense concept focused on great power
conflict.329 To match this conceptual shift, the document advo-
cated for the transformation of Australia’s military from a “bal-
anced force” designed to perform in a wide range of low-level,
* Other priorities identified included strengthened regional partnerships, a more durable sup-
ply chain, and improved capacity to respond to gray zone and cyber threats. Australian Govern-
ment Department of Defence, 2020 Defence Strategic Update, 2020, 33.
582
regional, and global missions into a “focused force” designed to

prioritize meeting Canberra’s most significant military risk: great
power conflict.330 The review additionally recommended that Aus-
tralia adopt a strategy of deterrence by denial and build up its
own capacity to threaten adversarial forces.331 Finally, it called
for Australia’s joint force to become more integrated across the
five domains of maritime, land, air, space, and cyber.332 In 2024,
the Australian government codified this set of recommendations
into its first National Defense Strategy.333 The National Defense
Strategy also reinforces the review’s attention to six specific ar-
eas, highlighted as immediate priorities in both documents: (1)
advancing Australia’s conventionally armed, nuclear-powered
submarine capability; (2) enhancing Australia’s long-range strike
capabilities and production of munitions; (3) strengthening Aus-
tralia’s northern bases; (4) improving growth and retention of a
highly skilled workforce; (5) boosting innovation; and (6) priori-
tizing partnerships in the Indo-Pacific.334 The strategy was ac-
companied by a substantial funding boost * as well as an overall
implementation plan called the 2024 Integrated Investment Pro-
gram allocating funding toward various efforts in the maritime,
land, air, space, and cyber domains.335
Australia is deepening cooperation with the United States in
the framework of the alliance.† The U.S. and Australian militaries
work to improve interoperability and demonstrate the strength of
the alliance to third parties through cooperative efforts known as
Force Posture Initiatives, which have recently expanded.‡ 336 Ex-
panded force posture cooperation aims to increase Australia’s role
in hosting forward-deployed U.S. forces and to further prepare
Australian forces to support “high-end” military operations in the
* The National Security Strategy announces additional defense funding of about $3.8 billion
(5.7 billion Australian dollars [AUD]) in the four years between 2024 and 2028 and about
$33.5 billion (50.3 billion AUD) over the decade between 2024 and 2034 over and above the
previous trajectory for the period. This yields a total amount of about $219.9 billion (AUD 330
billion) over that period. Australian Government Department of Defence, National Defense
Strategy, 2024, 8; Australian Government Department of Defence, National Defense Strategy
Overview, 2024.
† Australia and Japan have also recently signed a set of consequential security agreements
that can facilitate deepening defense cooperation between them in the future. In 2022, Aus-
tralia and Japan signed an update to their 2007 Joint Declaration on Security, with the new
version more clearly alluding to China’s challenges to regional security and containing language
that closely echoes that of the ANZUS security treaty between Australia, New Zealand, and
the United States, although it remains nonbinding. August 2023 saw the entry into force of the
Japan-Australia 2022 Reciprocal Access Agreement, which will likely result in increased joint
training and exercises between the two countries. The agreement strengthens the legal frame-
work and establishes regular procedures for cooperative military activities, including relaxing
immigration control for military personnel and simplifying procedures for transporting weapons
and ammunition. The first application of the agreement later in 2023 saw Japan deploy two F-35
aircraft to Australia—the first-ever overseas deployment of F-35s by Japan—in an exercise that
is likely to pave the way for greater interoperability in the future. Shingo Nagata, “Security Co-
operation Steps Up with Japanese F-35 Access to Australia,” Australian Strategic Policy Institute,
March 6, 2024; Prime Minister’s Office of Japan, Japan-Australia Joint Declaration on Security
Cooperation, October 22, 2023; Ryo Nakamura and Rurika Imahash, “U.S. Cements ‘Game Chang-
ing’ Defense Ties with Australia, Japan,” Nikkei Asia, August 16, 2023; Australian Government,
Australia and Japan Deepen Defense Ties, August 14, 2023; David Walton and Daisuke Akimoto,
“What’s New in Australia and Japan’s Updated Joint Declaration of Security Cooperation?” Dip-
lomat, October 25, 2022; Japan’s Ministry of Foreign Affairs, Japan-Australia Reciprocal Access
Agreement, January 6, 2022; Australian Government Department of Foreign Affairs and Trade,
Australia-Japan Joint Declaration of Security Cooperation.
‡ Preexisting force posture initiatives included the U.S. Marine Rotational Force Darwin; En-
hanced Air, Land, and Maritime Cooperation initiatives; Combined Logistics Sustainment and
Maintenance Enterprise; and Enhanced Space Cooperation initiative. Australian Government,
Defense, United States Force Posture Initiatives.
583
Indo-Pacific region.337 In 2022, the United States and Australia

committed to expanding force posture activities by “identifying
priority locations in Australia to support enhanced U.S. force pos-
ture and exploring enabling logistics such as prepositioning of
stores, munitions, and fuel.” 338 Upgrades to key Australian bases
Darwin and Tindal are also underway, with the two countries
collaborating on infrastructure improvements to support bomber
aircraft.339 Another avenue for cooperation is Exercise Talisman
Sabre,* a biennial, joint military exercise designed to improve
operability and combat readiness and to train military forces
from the two countries to plan and conduct combined task force
operations.340 The exercise has recently included a considerable
emphasis on complex joint logistics.341
If fully implemented, the trilateral AUKUS partnership be-
tween Australia, the UK, and the United States has the poten-
tial to improve Australia’s ability to counter China’s A2/AD ca-
pabilities. The AUKUS framework comprises two main lines of
effort: Pillar One, which supports Australia’s acquisition of nucle-
ar-powered submarines,† and Pillar Two, which involves enhanc-
ing joint capabilities and interoperability with a focus on cyber
capabilities, AI, quantum technologies, and undersea capabili-
ties.342 Australia’s government argues that the Pillar One acqui-
sition of conventionally armed nuclear-powered submarines will
enhance Australia’s capacity to both deter coercion and project
its own military power.343 Regarding power projection, Australia
is particularly focused on defending its maritime approaches and
protecting its sea lines of communication, both of which it has
identified as being under threat.344 Key advantages of the nucle-
ar-powered submarine in these areas include its superior stealth,
speed, and range, which Australia assesses would both strength-
en deterrence and improve its ISR capabilities.345 On Pillar Two,
the AUKUS partnership represents potential new avenues for the
three countries to counter challenges from China through defense
technology sharing.346 In her testimony for the Commission, Ms.
Shrimpton described AUKUS as the most important defense pol-
icy choice Australia has made in decades, emphasizing that the
two pillars are mutually reinforcing.347 In contrast, Mr. John-
stone describes the partnership as symbolically useful but too
narrow in scope to have a meaningful contribution to near-term
deterrence.348
* The name of the exercise is spelled “Talisman Sabre” in years when Australia leads and “Tal-
isman Saber” in years when the United States leads. Joseph Clark, “Talisman Sabre 23 Reflects
U.S., Allies’ Commitment to Indo-Pacific,” DOD News, July 31, 2023.
† Australia’s pathway to a conventionally armed nuclear submarine capability under AUKUS
is planned as a phased approach. The three countries will work together to jointly produce the
AUKUS submarines for delivery to the UK by the late 2030s and to Australia by the early 2040s.
In the interim, while the new submarines are in development, the partners plan to work together
to bolster deterrence and to develop Australia’s capacity to operate the coming vessels safely.
Planned steps identified in 2023 included: embedding Australian personnel within the U.S. and
UK navies beginning in 2023, increasing the frequency of visits by U.S. and UK nuclear-powered
submarines to Australia in 2023 and 2026, respectively, establishing a rotational presence of U.S.
and UK nuclear-powered submarines in Australia as early as 2027, and allowing Australia to
procure several Virginia-class nuclear-powered submarines from the United States beginning in
the early 2030s before Australia’s diesel-electric submarines are set to begin retiring. Common-
wealth of Australia, The AUKUS Nuclear-Powered Submarine Pathway: A Partnership for the
Future, 2023, 4, 7–8, 19–20, 28.
584
Australia Committed to Close Cooperation, Participation

Parameters in a Conflict Remain Uncertain
Australia’s government would likely view providing some kind of
support to the United States in the event of a conflict with Chi-
na as being in line with its interests. The Australian Department
of Defence describes the country’s alliance with the United States
as “central to Australia’s strategic and security arrangements,” and
Australia’s new National Defense Strategy calls it “fundamental to
Australia’s national security.” 349 Australia has decided to support
the U.S. military in every major conflict over the past century, which
Ms. Shrimpton assessed in her testimony is due in part to the cen-
trality of the alliance relationship to Australian security and mil-
itary planning.350 Although it does not commit in advance to any
policy position related to a conflict with China, Australia’s 2020 De-
fense Strategic Update describes a U.S.-China conflict in very simi-
lar terms to the conditions that may sufficiently impact Australia’s
interests to call for the engagement of the Australian military.351
The document emphasizes that “high-intensity military conflict . . .
including high-intensity military conflict between the United States
and China” is “less remote” than in the past; recognizes that “state-
on-state conflict . . . could engage the Australian Defense Force (ADF)
where Australia’s interests are threatened”; and states that “the
ADF must be better prepared for [high-intensity] conflict if deter-
rence measures fail, or to support the United States and other part-
ners where Australia’s national interests are engaged.” 352
Australian policymakers have publicly committed to acting in a
conflict over Taiwan and may be supported in doing so by the Aus-
tralian public, but this action may not include direct military partic-
ipation. In 2021 and 2023, successive Australian defense ministers
publicly stated that it is “inconceivable” that Australia would not
support the United States in any conflict with China over Taiwan
and that the consequences of a U.S.-China conflict over Taiwan “are
so grave that we cannot be passive bystanders.” 353 Joint official
statements at the head of state and ministerial levels in 2023 also
emphasized shared opposition to unilateral changes of the status
quo in the Taiwan Strait.354 Nevertheless, some experts caution that
Australia does not consider a Taiwan conflict as direct a threat to its
own security as Japan does by virtue of its geography, raising ques-
tions about what shape this support might take.355 Ms. Shrimpton
further noted in her testimony for the Commission that although
there is a broad consensus in Australia about the importance of
maintaining freedom of navigation in the South China Sea and Tai-
wan Strait, “there is yet to be a serious national debate on Austra-
lia’s potential response to a Chinese invasion of Taiwan.” 356 A public
opinion survey in 2023 revealed similarly varied views among the
Australian public. The poll suggests that approximately 64 percent
of Australians view a military conflict between the United States
and China over Taiwan as a “critical threat” to Australia’s vital in-
terests, double the proportion from two years earlier, while an ad-
ditional 32 percent rank it an “important” threat.357 A majority of
respondents to the poll also support Australia taking certain actions
to assist in the event of such a conflict, up to and including provision
of arms and military support and the involvement of the Austra-
585
lian Navy in countering a blockade; however, there is no majority

support for sending Australian personnel to Taiwan itself.* 358 Ryan
Neelam, director of public opinion at the Lowy Institute, the foreign
policy think tank conducting the poll, summarizes the takeaway as,
“When it comes to a specific scenario where Taiwan is under mili-
tary threat and the U.S. is engaged, Australians feel quite forward
leaning about taking action to support Taiwan . . . but that doesn’t
extend as far as putting boots on the ground.” 359
The U.S. interests at stake in a regional conflict scenario—includ-
ing the defense of treaty allies and potentially other Indo-Pacific
partners—justify dedicated attention to assessing the PLA’s count-
er-intervention capabilities and ensuring sufficient U.S. and allied
preparedness to counter them. PLA aggression against one of its
neighbors in the Indo-Pacific region could have serious consequenc-
es for the security of the individual parties involved, for freedom
of navigation through regional waters and airspace, for broader re-
gional stability and prosperity, and potentially for the United States’
reputation as a reliable security partner and ally. Ensuring that the
United States has the military capability it needs to defend its al-
lies, its access, and the rules-based international order in a potential
conflict with the PLA—should circumstances demand it—is part of
the overall task of deterring such aggression in the first place. Ex-
panding access, basing, and overflight (ABO) agreements with U.S.
allies and partners in the region will also play an important role in
this effort.
China seeks to overcome the challenges posed by U.S. and allied
evolving capabilities and operational concepts to counter its count-
er-intervention. The PLA continues to build up its already large
stockpile of offensive missiles to target U.S. and allied forces, and it
has placed greater emphasis on improving the PLA’s C4ISR and EW
capabilities. In addition, the PLA is developing kinetic and non-ki-
netic counter-C4ISR capabilities to attack, degrade, and paralyze
the United States’ own C4ISR capabilities, which are vital to the
United States’ ability to project power. These activities could compli-
cate and threaten current U.S. and allied capabilities to effectively
counter China’s military aggression in conflict.
Publicly available evidence suggests that while China is paying
close attention to U.S. and allied efforts to strengthen their military
capabilities, it is also paying attention to any challenges regarding
implementation.360 Chinese observers are aware of the inherent dif-
ficulties in reorienting U.S. force posture in the region, deepening
alliance cooperation, and strengthening the capabilities of the U.S.
defense industrial base.361 Stagnation, delay, or reversal of existing
* Regarding potential response to a military conflict between the United States and China over
Taiwan, 76 percent of survey respondents support imposing sanctions, 64 percent support sending
arms and military supplies to Taiwan, and 61 percent support participation by the Australian
Navy to counter a blockade of the island, but only 42 percent support sending “Australian mil-
itary personnel to Taiwan to help defend it from China.” These numbers collected by the Lowy
Institute in Australia are comparable to those reported in the United States in 2022 by the Chi-
cago Council on Global Affairs regarding the U.S. public’s willingness to take the same actions.
Kristy Needham, “Australians Say They Would Support Taiwan if China Attacked, with Limits,
Poll Shows,” Reuters, June 20, 2023; Lowy Institute, “Poll 2023: Potential Conflict over Taiwan.”;
Chicago Council on Global Affairs, “Defending Taiwan.”
586
efforts in these areas risks harming deterrence against China by

encouraging doubts about U.S. and allied capacity to follow through
on defense objectives in the region. Addressing these challenges,
meanwhile, will require sustained and focused attention as well as
a commitment to balancing competing priorities.
Finally, although the PLA’s substantial strengths in a counter-in-
tervention scenario merit focused attention, they should not be con-
sidered without reference to accompanying weaknesses or viewed in
isolation. Understanding potential limitations to PLA performance
in a counter-intervention scenario, whether from underdeveloped lo-
gistics and maintenance systems or from other areas, can be as im-
portant for informing U.S. approaches as understanding the PLA’s
strengths. The PLA’s growing ability to challenge U.S. military free-
dom of operation within the first or second island chains also does
not imply a similar level of PLA capability in other domains and
scenarios, such as global power projection, indicating that there
are still areas of competition where the U.S. military maintains a
greater advantage over the PLA.362 Being prepared to counter PLA
threats to U.S. interests across a wide range of domains and scenar-
ios may involve tradeoffs, and weighing those competing priorities
will require U.S. policymakers to have an in-depth understanding of
the requirements in each case.
587
1. Kristen Gunness and Phillip C. Saunders, “Averting Escalation and Avoiding
War: Lessons from the 1995–1996 Taiwan Strait Crisis,” National Defense University
Press, China Strategic Perspectives 17 (December 22, 2022): 37; U.S.-China Economic
and Security Review Commission, 2021 Annual Report to Congress, November 2021,
392.
Developments Involving the People’s Republic of China 2023, October 19, 2023, 87–91.
3. Andrew Krepinevich, Barry Watts, and Robert Work, “Meeting the Anti-Access
and Area-Denial Challenge,” Center for Strategic and Budgetary Assessments, 2003,
3–5.
4. Thomas Shugart, written testimony for U.S.-China Economic and Security Re-
view Commission, Hearing on China’s Evolving Counter Intervention Capabilities and
Implications for the United States and Indo-Pacific Allies and Partners, March 21,
2024, 3–7; J. Michael Dahm, written testimony for U.S.-China Economic and Security
Review Commission, Hearing on China’s Evolving Counter Intervention Capabilities
and Implications for the United States and Indo-Pacific Allies and Partners, March
21, 2024, 31–35; U.S. Department of Defense, Annual Report to Congress: Military
and Security Developments Involving the People’s Republic of China 2023, October
19, 2023, 87–90.
5. Timothy Heath and Andrew Erickson, “Is China Pursuing Counter-Interven-
tion?” Washington Quarterly 38:3 (Fall 2015): 144, 148.
6. Timothy Heath and Andrew Erickson, “Is China Pursuing Counter-Interven-
tion?” Washington Quarterly 38:3 (Fall 2015): 148.
7. China Aerospace Studies Institute, In Their Own Words: 2019 China’s National
Defense in the New Era, March 16, 2021; State Council Information Office of the
People’s Republic of China, China’s Military Strategy, May 2015; Information Office
of the State Council of the People’s Republic of China, The Diversified Employment
of China’s Armed Forces, April 16, 2013; Information Office of the State Council of
the People’s Republic of China, China’s National Defense in 2010, March 31, 2011;
Information Office of the State Council of the People’s Republic of China, China’s
National Defense in 2008, January 20, 2009; Information Office of the State Council
of the People’s Republic of China, China’s National Defense in 2006, December 2006;
National Defense in 2004, December 2004; Information Office of the State Council
National Defense in 2000, October 2000.
8. Information Office of the State Council of the People’s Republic of China, China’s
Defense in the New Era, March 16, 2021, 4.
10. China Aerospace Studies Institute, In Their Own Words: 2019 China’s Nation-
al Defense in the New Era, March 16, 2021; State Council Information Office of the
11. China Aerospace Studies Institute, In Their Own Words: 2019 China’s Nation-
al Defense in the New Era, March 16, 2021; State Council Information Office of the
588
12. China Aerospace Studies Institute, In Their Own Words: On Maritime Strategic
Access, April 2024, iii–iv, x–xi, 49, 233–234.
Access, April 2024, 49.
Access, April 2024, 235–236.
15. Ye Jianjun, “An Analysis of the U.S. Strategy to Deal with ‘Anti-Access and
Area Denial’ ” (美国应对“反进入和区域拒止”战略评析), Contemporary International Re-
lations 6 (2011): 45–46. Translation.
16. Ye Jianjun, “An Analysis of the U.S. Strategy to Deal with ‘Anti-Access and
Area Denial’ ” (美国应对“反进入和区域拒止”战略评析), Contemporary International Re-
lations 6 (2011): 46. Translation.
17. Zhang Wenzong, “U.S. Deterrence and Coercive Diplomacy toward China and
China’s Response” (美国对华威慑与胁迫及中国应对), Contemporary International Rela-
tions, December 20, 2016. CSIS Interpret Translation.
18. Chen Xi and Ge Tengfei, “An Analysis of the United States’ Deterrence by De-
nial Strategy against China” (美国对华拒止性威慑战略论析), International Security
Studies, September 16, 2022. CSIS Interpret Translation; Zuo Xiying, “Adjustments
in the United States’ Conventional Deterrence Strategy against China” (美国对华常规
威慑战略的调整), International Security Studies, September 16, 2022. CSIS Interpret
Translation.
Studies, September 16, 2022, 2, 8, 12, 19, 22–23. CSIS Interpret Translation; Zuo
Xiying, “Adjustments in the United States’ Conventional Deterrence Strategy against
China” (美国对华常规威慑战略的调整), International Security Studies, September 16,
2022, 8–9, 11, 13, 18, 22. CSIS Interpret Translation.
Affairs, Security Assurances: Working Paper Submitted by China, July 23, 2024; Chi-
na’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Lin Jian’s Regular
Press Conference on July 9, 2024, July 9, 2024; China’s Ministry of Foreign Affairs,
Foreign Ministry Spokesperson Lin Jian’s Regular Press Conference on June 17, 2024,
June 17, 2024; China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson
Mao Ning’s Regular Press Conference on April 11, 2024, April 11, 2024; China’s Min-
istry of National Defense, Ministry of National Defense: United States Is Actually
the World’s Biggest Nuclear Threat (国防部:美国才是世界上最大的核威胁), August 31,
2023. Translation; Embassy of the People’s Republic of China in Singapore, Ambas-
sador Hong Xiaoyong Has a Signed Article “Cooperation or Confrontation? The Way
Ahead for the Region” Published in The Straits Times, June 22, 2020.
Affairs, Security Assurances: Working Paper Submitted by China, July 23, 2024; Chi-
na’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Lin Jian’s Regular
Press Conference on July 9, 2024, July 9, 2024; Embassy of the People’s Republic of
China in Singapore, Ambassador Hong Xiaoyong Has a Signed Article “Cooperation
or Confrontation? The Way Ahead for the Region,” Published in The Straits Times,
June 22, 2020; China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Lin
Jian’s Regular Press Conference on June 17, 2024, June 17, 2024; China’s Ministry of
Foreign Affairs, Foreign Ministry Spokesperson Mao Ning’s Regular Press Conference
on April 11, 2024, April 11, 2024.
22. China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Wang Wen-
bin’s Regular Press Conference on May 24, 2024, May 24, 2024; China’s Ministry of
Foreign Affairs, Foreign Ministry Spokesperson Wang Wenbin’s Regular Press Con-
ference on May 23, 2024, May 23, 2024; China’s Ministry of Foreign Affairs, Foreign
Ministry Spokesperson Lin Jian’s Regular Press Conference on April 19, 2024, April
19, 2024; China’s Ministry of Foreign Affairs, Foreign Ministry Spokesperson Lin Ji-
an’s Regular Press Conference on April 18, 2024, April 18, 2024; China’s Ministry of
Foreign Affairs, Foreign Ministry Spokesperson Mao Ning’s Regular Press Conference
on April 10, 2024, April 10, 2024.
23. Xinhua, “China Opposes U.S. Deployment of Intermediate-Range Missiles in
Asia-Pacific: Spokesperson,” April 12, 2024; Li Zhenjing et al., “Global Command—
The Future Pattern of Joint U.S. Operations” (全域统御——美军联合作战的未来格局),
589
Military Digest 6 (2024). Translation; China National Defense News, “U.S. Military
Steps Up New Combat Concepts in Exercises” (美军加紧新型作战概念演练), People’s
Daily, November 8, 2023. Translation; He Weibo, “Reanalysis of the Scope of Appli-
cation of the Mutual Defense Treaty between the Republic of the Philippines and
the United States of America” (《美菲共同防御条约》的适用范围问题再分析), Chinese
Journal of American Studies 3 (2023). Translation; China’s Ministry of Foreign Af-
fairs, Commentary VII on AUKUS: Fire Cannot Be Wrapped Up in Paper; Whoever
Plays with Fire Will Perish by It, October 6, 2022; Chen Xi and Ge Tengfei, “An Analy-
sis of the United States’ Deterrence by Denial Strategy against China” (美国对华拒止
性威慑战略论析), International Security Studies, September 16, 2022, 11, 13, 14. CSIS
Interpret Translation; Zuo Xiying, “Adjustments in the United States’ Conventional
Deterrence Strategy against China” (美国对华常规威慑战略的调整), International Se-
curity Studies, September 16, 2022, 16, 18. CSIS Interpret Translation; Guangming
Daily, “U.S. Third ‘Offset Strategy’ ” (美第三次“抵消战略”述评), Xinhua, March 2, 2016.
Translation; Zhang Weiwei, “A New Round of Strengthening of the U.S.-Japan Alli-
ance: Content, Motivations, and Prospects” (美日同盟的新一轮强化:内容、动因及前景),
November 18, 2015. Translation; People’s Daily Online, “Report States That U.S. ‘Air-
Sea Battle’ Intentions against China Are Clear” (报告称美国“空海一体战”针对中国意图
昭然若揭), July 24, 2014. Translation; Ye Jianjun, “An Analysis of the U.S. Strategy
to Deal with ‘Anti-Access and Area Denial’ ” (美国应对“反进入和区域拒止”战略评析),
Contemporary International Relations 6 (2011): 45. Translation; China Daily, “RAND
Corporation Makes False Claims about a Taiwan Strait Conflict: States Our Military
Can Deter Contain U.S. Military” (兰德公司妄言台海冲突称我军能遏阻美军), April 4,
2007. Translation.
24. Maryanne Kivlehan-Wise, written testimony for U.S.-China Economic and Se-
curity Review Commission, Hearing on China’s Evolving Counter Intervention Capa-
bilities and Implications for the United States and Indo-Pacific Allies and Partners,
March 21, 2024, 3.
March 21, 2024, 5.
26. Gerry Doyle, “US Strategy for Anti-Ship Weapons to Counter China: Plentiful,
Mobile, Deadly,” Reuters, September 17, 2024; Stephen Losey, “US Air Force Eyes
Missile Defense for Dispersed Bases in China Fight,” Defense News, August 22, 2024;
Scott Smith, “Air and Missile Defense in the Western Pacific,” U.S. Naval Institute,
January 2024.
27. Franz-Stefan Gady, “Revealed: China for the First Time Publicly Displays
‘Guam Killer’ Missile,” Diplomat, August 31, 2015; Ye Jianjun, “An Analysis of the
U.S. Strategy to Deal with ‘Anti-Access and Area Denial’ ” (美国应对“反进入和区域拒
止”战略评析), Contemporary International Relations 6 (2011): 45. Translation.
28. Chen Guangwen, “U.S. Military Desires to Break China’s ‘Anti-Interven-
tion’ Strategy” (美军欲破解中国“反介入”战略), China Youth Reference, May 16, 2012.
Translation. https://web.archive.org/web/20240528142120/https://qnck.cyol.com/
html/2012-05/16/nw.D110000qnck_ 20120516_1-19.htm.
29. Shi Zhangsong, Gong Wenbin, and Wu Shong Heng, “Status and Development of
Long-Range Precision Strike Operations Technology Based on Space-Based Informa-
tion” (基于天基信息的海上远程精确打击技术现状及发展), Journal of Naval University of
Engineering (Comprehensive Edition 17:3 (September 2020): 27. Translation; Xu Qili
and Gong Yun, “The Role of U.S. Overseas Bases in Joint Operations” (美国海外基地
在联合作战中的作用探析), Journal of Naval University of Engineering (Comprehensive
Edition) (March 2020): 31. Translation; Chen Guangwen, “U.S. Military Desires to
Break China’s ‘Anti-Intervention’ Strategy” (美军欲破解中国“反介入”战略), China Youth
Reference, May 16, 2012. Translation. https://web.archive.org/web/20240528142120/
https://qnck.cyol.com/html/2012-05/16/nw.D110000qnck_ 20120516_1-19.htm.
30. China Daily, “RAND Corporation Makes False Claims about a Taiwan Strait
Conflict: States Our Military Can Deter Contain U.S. Military” (兰德公司妄言台海冲
突称我军能遏阻美军), April 4, 2007. Translation.
Studies, September 16, 2022, 8, 10, 15. CSIS Interpret Translation; Zuo Xiying, “Ad-
justments in the United States’ Conventional Deterrence Strategy against China” (
美国对华常规威慑战略的调整), International Security Studies, September 16, 2022, 14.
CSIS Interpret Translation.
32. Stephen Chen, “Chinese Scientists Plan Surface-to-Air Missile with 2,000km
Kill Range,” South China Morning Post, March 28, 2024.
590
Studies, September 16, 2022, 15. CSIS Interpret Translation.
34. China’s Ministry of National Defense, Transcript of May 2024 Ministry of Na-
tional Defense Regular Press Conference (2024年5月国防部例行记者会文字实录), May
30, 2024. Translation; China’s Ministry of Foreign Affairs, Foreign Ministry Spokes-
person Li Jian’s Regular Press Conference on April 18, 2024, April 18, 2024; Xin-
hua, “China Opposes U.S. Deployment of Intermediate-Range Missiles in Asia-Pa-
cific: Spokesperson,” April 12, 2024; Maryanne Kivlehan-Wise, written testimony for
U.S.-China Economic and Security Review Commission, Hearing on China’s Evolv-
ing Counter Intervention Capabilities and Implications for the United States and
Indo-Pacific Allies and Partners, March 21, 2024, 6–7; Zhang Junshe, “Stay Vigilant
against Four New Trends of US Military in Asia-Pacific,” China Military Online, Jan-
uary 28, 2023; China’s Ministry of National Defense, Regular Press Conference of the
Ministry of National Defense on July 28, August 5, 2022.
35. China’s Ministry of National Defense, Transcript of May 2024 Ministry of Na-
tional Defense Regular Press Conference (2024年5月国防部例行记者会文字实录), May
Studies, September 16, 2022, 11, 13, 14. CSIS Interpret Translation.
37. Xinhua, “China Opposes U.S. Deployment of Intermediate-Range Missiles in
Asia-Pacific: Spokesperson,” April 12, 2024; China’s Ministry of Defense, Regular
Press Conference of the Ministry of National Defense on July 28, August 5, 2022.
March 21, 2024, 6–7.
March 21, 2024, 8–9; China National Defense News, “U.S. Military Steps Up New
Combat Concepts in Exercises” (美军加紧新型作战概念演练), People’s Daily, November
8, 2023. Translation; Zhang Yifan, “US’ Military Calculations behind Eagerness to
Bind Three Pacific Nations,” China Military Online, October 2023; Zhang Junshe,
“Stay Vigilant against Four New Trends of US Military in Asia-Pacific,” China Mili-
tary Online, January 28, 2023; Wang Peng, “Real Purpose of US Military’s Intensive
Exercises in Pacific 美军在太平洋地区密集军演为哪般,” China Military Online, August
27, 2021.
40. Maryanne Kivlehan-Wise, oral testimony for U.S.-China Economic and Security
21, 2024, 135; Maryanne Kivlehan-Wise, written testimony for U.S.-China Economic
and Security Review Commission, Hearing on China’s Evolving Counter Intervention
Capabilities and Implications for the United States and Indo-Pacific Allies and Part-
ners, March 21, 2024, 8.
41. China National Defense News, “U.S. Military Steps Up New Combat Concepts
in Exercises” (美军加紧新型作战概念演练), People’s Daily, November 8, 2023. Trans-
lation.
42. China National Defense News, “U.S. Military Steps Up New Combat Concepts in
Exercises” (美军加紧新型作战概念演练), November 8, 2023. Translation; Zhang Yifan,
“US’ Military Calculations behind Eagerness to Bind Three Pacific Nations,” China
Military Online, October 20, 2023; Lin Lin, “Observation | U.S.-Philippines Military
Relations Are Evolving Rapidly, Can They Really Stand ‘Shoulder to Shoulder’?” (观察
｜美菲军事关系快速演进, 真能“肩并肩”一起走?), The Paper, April 7, 2023. Translation;
Wang Peng, “Real Purpose of US Military’s Intensive Exercises in Pacific” (美军在太平
洋地区密集军演为哪般), China Military Online, August 27, 2021. Translation.
43. Song Xiaoming, “Develop Operational Concepts, Design Future Wars” (开发作战
概念设计未来战争), China National Defense News, June 22, 2022. Translation.
44. Maryanne Kivlehan-Wise, oral testimony for U.S.-China Economic and Security
21, 2024, 135; Maryanne Kivlehan-Wise, written testimony for U.S.-China Economic
ners, March 21, 2024, 9.
591
45. China National Defense News, “U.S. Military Steps Up New Combat Concepts
in Exercises” (美军加紧新型作战概念演练), People’s Daily, November 8, 2023. Trans-
lation.
46. People’s Daily, “Report States That U.S. ‘Air-Sea Battle’ Intentions against Chi-
na Are Clear” (报告称美国“空海一体战”针对中国意图昭然若揭), July 24, 2014. Trans-
lation.
47. Guangming Daily, “U.S. Third ‘Offset Strategy’ ” (美第三次“抵消战略”述评),
Xinhua, March 2, 2016. Translation.
48. Li Zhenjing et al., “Research on the Development of U.S. Joint All Domain Com-
mand and Control” (美军联合全域指挥控制发展研究), Military Digest 9 (2024): 7–12.
Translation; Peng Yuting et al., “Research on Changes to U.S. Joint All Domain Com-
mand and Control” (美军联合全域指挥控制变革研究), Military Digest 9 (2024): 13–17.
Translation; Dai Yuchao et al., “Research on the Questions and Challenges of U.S. All
Domain Command and Control” (美军联合全域指挥控制问题挑战研究), Military Digest
9 (2024): 18–21. Translation.
49. Maryanne Kivlehan-Wise, written testimony for U.S.-China Economic and
Security Review Commission, Hearing on China’s Evolving Counter Intervention
Capabilities and Implications for the United States and Indo-Pacific Allies and
Partners, March 21, 2024, 6; Xinhua, “Japanese Media Analyzes the Purpose of
the Reorganization of the US Marine Corps (日媒分析美海军陆战队改编目的),” De-
cember 11, 2023. Translation; Chinese News, “Japan Deploys Missile Forces to Pre-
vent China’s Unification Plan!” YouTube, Video, December 29, 2022. https://www.
youtube.com/watch?v=SpI2_y4O7T8; CCTV, “ ‘Asia Today’ 20221219” (《今日亚洲》
20221219), Video, December 19, 2022. Translation. https://tv.cctv.com/2022/12/19/
V IDEFjx Nr8lRU58IyQ32xZUA 221219.shtml?spm= C45305.PiIkmPvmwrBJ.
E3GBGR5JxwmC.17; CCTV, “ ‘Focus Today’ 20220922 U.S. HIMARS May Stay in Japan,
Japan Seeks to Purchase Attack Drones for Deployment in Southwest” (《今日关注》
20220922 美“海马斯”或常留日本日求购攻击无人机部署西南), Video, September 22, 2022.
Translation. https://tv.cctv.com/2022/09/22/VIDE3NPrhml99ow0WfqdvaoJ220922.
shtml?spm=C45305.PmBKBQYn4ReN.E2d%20BMI2VdbgJ.33; CCTV, “China’s Pub-
lic Opinion Field 20220828” (《中国舆论场》 20220828), Video, August 28, 2022.
Translation. https://tv.cctv.com/2022/08/29/VIDEHy7ayomppYfmqv3Q4vwk220829.
shtml?spm=C52507945305.PXjYs4J0rfFg.%200.0; China’s Ministry of National De-
fense, Regular Press Conference of the Ministry of National Defense on July 28, Au-
gust 5, 2022; CCTV, “ ‘Focus Today’ Three Aircraft Carriers Deployed around China,
United States Pulls Japan and Australia to Intervene in the Taiwan Strait and Stir
up Western Pacific” (《今日关注》 20220112 三航母部署中国周边美拉日澳干涉台海搅
动西太), Video, January 12, 2022. Translation.
March 21, 2024, 5; Maryanne Kivlehan-Wise, oral testimony for U.S.-China Economic
ners, March 21, 2024, 182; Lin Lin, “Observation | U.S.-Philippines Military Relations
Are Evolving Rapidly, Can They Really Stand ‘Shoulder to Shoulder’?” (观察｜美菲军
事关系快速演进, 真能“肩并肩”一起走?), The Paper, April 7, 2023. Translation; Lin Lin,
“Observation | The United States Is Building New Facilities at Four Bases in the
Philippines, Where Is the Sword of Strengthening Defense Cooperation Directed?”
(观察｜美在菲四个基地建新军事设施, 强化防务合作剑指何方?), The Paper, February 3,
2023. Translation; China Daily, “Balance between Powers Big Test for Manila: China
Daily Editorial,” February 1, 2023.
March 21, 2024, 4; China’s Ministry of Foreign Affairs, Foreign Ministry Spokesper-
son Wang Wenbin’s Remarks on AUKUS Nuclear Submarine Cooperation on March
17, 2023, March 17, 2023; China’s Ministry of Foreign Affairs, Commentary VII on
AUKUS: Fire Cannot Be Wrapped Up in Paper; Whoever Plays with Fire Will Perish
by It, October 6, 2022; China’s Ministry of Foreign Affairs, Reality Check: Falsehoods
in US Perceptions of China, June 19, 2022; U.S. Department of Defense, AUKUS: The
Trilateral Security Partnership between Australia, the U.K., and U.S.
March 21, 2024, 4.
592
53. U.S.-China Economic and Security Review Commission, 2023 Annual Report to
Congress, November 2023, 459.
54. U.S.-China Economic and Security Review Commission, 2023 Annual Report to
Congress, November 2023, 459–464.
55. Sarah Kirchberger, written testimony for U.S.-China Economic and Security
Review Commission, Hearing on China’s Pursuit of Defense Technologies: Implica-
tions for U.S. and Multilateral Export Control and Investment Screening Regimes,
April 13, 2023, 4; Zuo Xiying, “Adjustments in the United States’ Conventional Deter-
rence Strategy against China” (美国对华常规威慑战略的调整), International Security
Studies, September 16, 2022, 15. CSIS Interpret Translation; Qi Xiaobin et al., “Appli-
cation of Supercavitation Technology in Anti-Submarine Warfare” (超空泡技术在反潜
作战中的应用设想), Digital Ocean and Underwater Warfare 5:2 (April 2022): 109, 114.
Translation; Alastair Gale, “The Era of Total U.S. Submarine Dominance over China
Is Ending,” Wall Street Journal, November 20, 2020.
56. Qi Xiaobin et al., “Application of Supercavitation Technology in Anti-Subma-
rine Warfare” (超空泡技术在反潜作战中的应用设想), Digital Ocean and Underwater
Warfare 5:2 (April 2022): 109, 112–114; Li Xiang and Huang Kang, “Supercavitating
Weapons: Building Their Own Path Underwater” (超空泡兵器:自己造路水下行), China
Military Online, April 3, 2020. Translation; Military News, “Revealing the Secrets of
Supercavitating Torpedoes: Underwater Speed as Fast as High-Speed Train and Fast-
er than a Helicopter” (揭秘超空泡鱼雷:水下速度如高铁比直升机机快), Xinhua, October
57. Gabriel Honrada, “China Unveils Supersonic Missile-Torpedo Anti-Ship Weap-
on,” Asia Times, September 14, 2022; Stephen Chen, “Chinese Scientists Plan Bo-
ron-Powered Supersonic Missile That Can Fly and Swim, South China Morning Post,
September 13, 2022.
58. Jarry McNeil, “Rising Tide of Underwater Drone Funding Highlights US-China
Rivalry,” Naval Technology, July 15, 2024; Robert W. Burton et al., “A Survey of Mis-
sions for Unmanned Undersea Vehicles,” RAND Corporation, 2009.
59. Jon Harper, “DARPA Tests Undersea Manta Ray Drone Prototype, Looks to
Transition Tech to Navy,” Defense Scoop, May 1, 2024; Defense Advanced Research
Projects Agency, Manta Ray UUV Prototype Completes In-Water Testing, May 1, 2024;
Northrop Grumman, “Manta Ray.”
60. Li Lun, “The United States’ New-Type Unmanned Submersible Makes Its Ap-
pearance” (美新型无人潜航器亮相), China Defense News, June 4, 2024. Translation;
Tank & Armored Vehicle, “Military News from around the World” (环球军讯), 6 (June
1, 2024): 6–8. Translation; Liang Jiayuan, “Technological Parameters Kept Secret,
Provokes Speculation about Combat Scenarios! The United States and Australia Suc-
cessively Announce Progress on Research and Development of Large-scale Submers-
ibles” (技术参数保持神秘,作战场景引发猜想!美澳接连公布大型潜航器研制进展), Global
Times, May 16, 2024. Translation.
61. Li Lun, “The United States’ New-Type Unmanned Submersible Makes Its Ap-
pearance” (美新型无人潜航器亮相), China Defense News, June 4, 2024. Translation.
62. Ma Jun and Liu Yang, “Chinese Version of a Robot Manta Ray Appears at the
Beijing Military Expo, Possesses Low-Noise, Long-Duration, and Fast Speed Charac-
teristics” (“中国版机器蝠鲼”亮相北京军博会,具有低噪音,长续航,速度快等特点), Global
Times, May 18, 2024. Translation.
63. CCTV, “Soft Body Submersibles Imitating Manta Rays Become Popular—
What’s So Miraculous about This ‘Fish’ ” (仿蝠鲼柔体潜水器走红这条“鱼”有何神奇?),
June 10, 2024. Translation; Victoria Bela, “China Plans to Expand ‘Manta Ray’ Sub-
mersible Fleet with Eye on Reconnaissance Roles,” South China Morning Post, June
9, 2024.
64. Global Times, “Israel’s Anti-Missile Operation, Did the U.S. Military Play the
Role of ‘General Dispatcher’? Chinese Military Expert Analysis” (以军反导行动, 美军
扮演“总调度”?中国军事专家分析), Xinhua, April 17, 2024. Translation; Reference News,
“How Israel and Its Allies Could Intercept Incoming Iranian Weapons” (以色列及盟
友如何拦截伊朗来袭武器), Xinhua, April 16, 2024. Translation; Xie Ruiqiang and Zhu
Runyu, “Observation | Iran and Israel Stick to Their Own Stories on the Results of
the Air Raid, Experts: Both Sides May Improve Their Weapons on the Basis of This
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345. Australian Submarine Agency, Australia’s Nuclear-Powered Submarines, Octo-
ber 2, 2024; Australian Government Department of Defence, National Defence Strate-
gy, 2024, 37–38, 42; Kris Osborn, “AUKUS: US, UK & Australian Attack Submarines
vs. China in Pacific,” Warrior Maven, November 22, 2023.
2024, 51, 65; Scott Detrow, “U.S., U.L. and Australia Aim to Counter China with an
Exchange of Submarine Tech,” NPR, March 14, 2023; U.S. Department of Defense,
Spotlight: AUKUS: The Trilateral Security Partnership between Australia, U.K. and
U.S.
21, 2024, 8; Bec Shrimpton, oral testimony for U.S.-China Economic and Security
21, 2024, 221.
21, 2024, 147.
610
2024, 8; Australian Government Department of Defence, United States Force Posture
Initiatives.
21, 2024, 7; U.S. Department of State Office of the Spokesperson, The United States
Australia Relationship, July 27, 2023.
date, July 1, 2020, 6, 14, 17, 29.
date, July 1, 2020, 6, 14, 17, 29.
353. Daniel Hurst, “Australia Cannot Be ‘Passive Bystanders’ in a War between US
and China, Richard Marles Says,” Guardian, October 18, 2023; Richard McGregor,
“Australia’s Caution on Taiwan May Not Last,” Brookings Institution, March 29, 2023.
354. White House, United States-Australia Joint Leaders’ Statement Building an
Innovation Alliance, October 25, 2023; U.S. Department of State, Joint Statement on
Australia-U.S. Ministerial Consultations (AUSMIN) 2023, July 29, 2023.
21, 2024, 190.
21, 2024, 6.
357. Kristy Needham, “Australians Say They Would Support Taiwan if China At-
tacked, with Limits, Poll Shows,” Reuters, June 20, 2023; Lowy Institute, “Poll 2023:
Threats to Australia’s Vital Interests.”
tacked, with Limits, Poll Shows,” Reuters, June 20, 2023; Lowy Institute, “Poll 2023:
Potential Conflict over Taiwan.”
tacked, with Limits, Poll Shows,” Reuters, June 20, 2023.
360. Maryanne Kivlehan-Wise, oral testimony for U.S.-China Economic and Secu-
rity Review Commission, Hearing on China’s Evolving Counter Intervention Capa-
March 21, 2024, 185.
361. Maryanne Kivlehan-Wise, oral testimony for U.S.-China Economic and Secu-
rity Review Commission, Hearing on China’s Evolving Counter Intervention Capa-
March 21, 2024, 185, 189.
362. Thomas Shugart, oral testimony for U.S.-China Economic and Security Re-
21, 2024, 128.
PART IV
TAIWAN AND HONG KONG
CHAPTER 9: TAIWAN
Abstract
China’s actions toward Taiwan in 2024 have been intended to sig-
nal strong discontent with the new administration of Lai Ching-
te, a president whom the Chinese Communist Party (CCP) regards
as a “separatist” challenging Beijing’s stated aspiration to “reunify”
Taiwan with the Mainland. China has sustained a high level of mili-
tary, diplomatic, and economic pressure toward the ruling Democrat-
ic Progressive Party (DPP) of Taiwan, timing actions around events
both to undermine DPP leadership and to extend olive branches to
opposition figures who signal support for closer cross-Strait rela-
tions. The CCP has expanded its toolkit of tactics for intimidating
Taiwan, including greater usage of the China Coast Guard (CCG)
around the outlying islands, new guidelines for punishing “sep-
aratists,” and heightened harassment of Taiwan travelers to the
Mainland. Taiwan has enhanced its defensive capacity through U.S.
assistance and its own internal reforms, with an increased focus
on military and societal resiliency. Taiwan’s military continues to
take notable steps to develop, manufacture, and adopt asymmetric
systems and improve training for conscripts and reservists, but do-
mestic factors and China’s near-daily coercion remain challenges to
this progress. Despite China’s aggressive posture, Taiwan’s vibrant
and advanced economy has performed strongly this year, thanks to
substantial global demand for its high-value exports integral to ar-
tificial intelligence (AI) and technology supply chains. U.S.-Taiwan
relations remain constructive and robust, with the United States
continuing to signal and provide steadfast support for Taiwan in a
variety of ways.
Key Findings
• Lai’s election to the presidency signals broad support for his
policies among Taiwan’s populace; however, the DPP’s loss-
es in Taiwan’s legislature may restrain the Lai Administra-
tion’s agenda. Beijing reacted to Taiwan exercising its right
to self-governance with immediate, extreme rhetoric as well
as policy adjustments aimed at intimidating Taiwan. China
escalated its indirect threats against not only Taiwan’s lead-
ership but also its international supporters by defining “sep-
aratism” in law as a crime punishable by death in certain
circumstances.
(611)
612
• China has refused to communicate directly with the new DPP

president and has chosen to intensify its political coercion ef-
forts against Taiwan, suggesting that the frigid relationship be-
tween the DPP Administration and the Mainland will persist.
Rather, the CCP has shown that it would prefer to go around
the Lai Administration by interacting with opposition parties
and interfering in Taiwan’s political system.
• China has intensified its military coercion around Taiwan, aim-
ing to gain operational experience, degrade the Taiwan military’s
readiness, and intimidate the island’s population while routiniz-
ing its increased presence. The People’s Liberation Army (PLA)
launched its second named military exercise around Taiwan
immediately after Lai’s inauguration in May, as well as a fol-
low-on exercise in October, and continued to violate the island’s
air defense identification zone (ADIZ) on a near-daily basis with
conventional aircraft, drones, and balloons.
• Beijing has also expanded its use of so-called “gray zone” tac-
tics—blurring the line between military and non-military ac-
tions—against Taiwan in the maritime and air domains under
the guise of law enforcement and administrative activity in an
attempt to propagate its claim that Taiwan and the Taiwan
Strait are its territory. The CCG’s robust role in the May PLA
exercise was novel and suggested that the CCG could augment
future PLA operations against Taiwan. The reported presence of
CCG ships around Taiwan’s outlying islands outside the context
of a PLA exercise is similarly concerning, laying the groundwork
for a more persistent presence and representing an attempt to
extend “lawfare” to its gray zone activities. China’s unilateral
modifications of civilian flight paths in the Taiwan Strait also
abrogated a prior commitment made in 2015 to allay Taiwan’s
security concerns, increasing the risk of an air accident and fur-
thering its efforts to nullify the median line.
• Taiwan continues to shore up its remaining diplomatic partners
in the face of Chinese pressure to break ties while deepening its
unofficial relationships with major countries in North America,
Europe, and Asia. Using various points of leverage and influ-
ence, Beijing has engaged in an effort to get other countries
to endorse its false claim that the 1971 UN General Assembly
(UNGA) Resolution 2758 recognizes China’s sovereignty over
Taiwan as a matter of international law and to make state-
ments supportive of China’s unification goals for Taiwan.
• Taiwan’s economy performed strongly in 2024, with AI-fueled
demand for leading-edge chips and other high-tech manufac-
tured products bringing about a surge in exports and a runup
in the domestic stock index. This growth came as cross-Strait
trade tensions heightened in the form of China’s Ministry of
Finance revoking preferential tariff exemptions on 134 products
Taiwan exports to the Mainland in a move announced less than
two weeks after Lai’s inauguration.
• Approved outbound foreign direct investment (FDI) from Tai-
wan into the Mainland fell 39.8 percent year-over-year in 2023
613
to its lowest level in over 20 years. Meanwhile, approved FDI

from Taiwan into the United States surged 791 percent in the
same time period to $9.7 billion, a record high. In April 2024,
Taiwan Semiconductor Manufacturing Company announced it
would expand its planned investment in the United States over
60 percent to $65 billion after receiving a $6.6 billion federal
grant as part of the CHIPS and Science Act.
Recommendations
• Congress amend the Arms Export Control Act of 1976 to include
Taiwan on the list of “NATO Plus” recipients.
• Congress create a “Taiwan Allies Fund” that would provide
foreign assistance only to countries that have an official diplo-
matic relationship with Taiwan. No country could receive more
than 15 percent of the appropriated funding each year. Coun-
tries that no longer have a diplomatic relationship with Taiwan
would immediately be ineligible for this funding.
Introduction
Taiwan’s new president, Lai Ching-te, was inaugurated on May
20, 2024, with Beijing refusing to engage directly and actively wag-
ing a political warfare campaign designed to discredit the new ad-
ministration.1 Three days after the inauguration, China conducted
a military exercise, Operation Joint Sword 2024A, that simulated
surrounding Taiwan in preparation for an invasion or blockade, as
it has done every year since 2022. Beijing also stepped up economic
coercion in the weeks following Lai’s inauguration by revoking pref-
erential trade tariffs on over 100 products, rolling back decades-old
cross-Strait trade arrangements.2 Despite high tensions, Taiwan’s
economy was resurgent in 2024, posting strong economic growth
figures fueled by booming demand for cutting-edge semiconductors
used to train AI.3 This chapter analyzes developments in Taiwan’s
politics, security, and economy between late 2023 and late 2024. It
is based on the Commission’s consultation with experts, open source
research, and fact-finding travel.
Cross-Strait Political Relations Remain Dismal as
Taiwan Elects New DPP Government
At the beginning of 2024, Taiwan’s voters went to the polls to
choose a new president from among three political parties and elect-
ed then Vice President Lai Ching-te of the DPP to be Taiwan’s next
leader. Despite Lai’s success in the presidential election, the DPP
lost its majority in Taiwan’s legislature, leaving the island with a di-
vided government in which the DPP must work with the opposition
parties to enact Lai’s legislative agenda.4 Beijing responded to Lai’s
election with protests, as it had expressed extreme antipathy to-
ward his candidacy during the run-up to the election and waged an
intense disinformation campaign to persuade Taiwan’s voters that
electing Lai would lead to war.5 In the months afterward, Beijing
has doubled down on its coercive rhetoric, interference activities,
and refusal to engage constructively with the DPP-led government
614
while continuing to host and talk with Taiwan’s opposition parties.6

Lai has pledged to continue the previous Tsai Administration’s poli-
cies and expressed a desire to engage constructively with the Main-
land while protecting Taiwan’s democracy and autonomy.7 Taiwan’s
government and civil society continue to combat the CCP’s attempts
to subvert the elected government, polarize the public, and pollute
the media environment with false narratives.8
Chinese Influence Campaigns Fail to Sway

Taiwan’s Election
Chinese officials sought to dissuade Taiwan voters from elect-
ing Lai by denouncing him with harsh official rhetoric and likely
directing robust influence and disinformation campaigns. These
efforts ultimately failed to alter the outcome. According to Taiwan
security officials, senior Chinese leaders held a meeting in early
December 2023 to coordinate efforts to sway the 2024 elections in
Taiwan.9 The meeting, which was led by fourth-ranked Politburo
Standing Committee member Wang Huning, reportedly discussed
the roles of various agencies in influencing Taiwan’s election.10
The meeting resulted in a plan that the CCP’s Propaganda De-
partment and a PLA psychological warfare unit would conduct in-
fluence campaigns through news outlets and social media, while
the Taiwan Affairs Office and United Front Work Department
would engage with Taiwan politicians and provide Taiwan citi-
zens living in the Mainland with discounted airline tickets to fly
home to vote.11 During Taiwan’s presidential campaign, China’s
Taiwan Affairs Office warned voters that they faced a choice be-
tween war and peace, implying that Lai’s election could provoke
a war.12 In the aftermath of a debate among Taiwan presidential
candidates in late December 2023, China’s Taiwan Affairs Office
spokesperson Chen Binhua asserted that Lai had “exposed his
true face as a stubborn ‘worker for Taiwan independence’ and
destroyer of peace across the Taiwan Strait,” continuing a trend
in Chinese official statements of mischaracterizing Lai’s positions
and describing him as a “troublemaker” and “separatist.” 13
U.S. cybersecurity firms also documented a notable uptick in
Chinese state-sponsored disinformation campaigns targeting
Taiwan’s media environment, some of which involve the use of
AI-generated content. According to a report by Microsoft Threat
Intelligence, Chinese state-linked cyber actors conducted an in-
fluence campaign to dissuade Taiwan’s voters from choosing Lai,
constituting what Microsoft says is the first time it has ever ob-
served nation-state actors using AI in an attempt to influence
a foreign election.14 Microsoft highlights cyber actors such as
Storm-1376, which it says used AI to generate memes spread-
ing fake news, falsify images, and create deepfakes of presiden-
tial candidates.* 15 Storm-1376’s online disinformation campaign
* Storm-1376 (also known as “Dragonbridge” or “Spamouflage”) also targeted other actors in
Taiwan’s political scene and election. For example, it reportedly created and amplified a defam-
atory video series about then President Tsai using AI-generated news anchors and ByteDance’s
CapCut video editing app. On the presidential election day in January, Storm-1376 posted likely
AI-generated audio clips of Foxconn owner Terry Gou, formerly an independent candidate in the
presidential race. The audio manipulates Mr. Gou’s voice to make it sound as though he is en-
dorsing Kuomintang (KMT) candidate Hou You-yi, even though he never formally endorsed any
615
Chinese Influence Campaigns Fail to Sway

Taiwan’s Election—Continued
included promotion of AI-generated memes suggesting Lai was
corrupt and an AI-generated news anchor who delivered a report
containing false information about Lai.16 Blackbird.AI, a cyber
threat intelligence firm, also released a report that identifies sev-
eral narratives that China-linked influence actors attempted to
perpetuate during the election cycle.17 These include narratives
that Taiwan’s public is anti-DPP and pro-PLA, that only China
can stop the United States from turning Taiwan into a warzone,
and that Taiwan’s independence would harm stability in Asia.18
Taiwan’s government and civil society have responded vigor-
ously to China’s cognitive warfare campaign. In February 2024,
Taiwan prosecutors charged two Taiwan citizens for allegedly
fabricating and disseminating bogus opinion polls at the direc-
tion of the CCP in an attempt to influence the election, with one
individual fabricating surveys and another publishing those sur-
veys via a media company established in Taiwan after a visit to
the Mainland.19 Nonprofits such as the Information Environment
Research Center (originally Information Operations Research
Group) and Doublethink Lab continue to educate Taiwan’s pub-
lic on media literacy and expose influence operations, while the
grassroots civic group Cofacts operates an online fact-checking
chatbot.20 Taiwan’s government has also established a dedicated
election-related fake news task force reportedly able to provide
factual clarification within four hours of detection, releasing re-
sponses on multiple internet platforms.21
Lai Triumphs Electorally and Beijing Responds with Anger

and Coercion
Lai’s election as Taiwan’s president represents the first time any
of Taiwan’s political parties has won a third consecutive presidential
term and reflects public support for a leader who would stand up
to Beijing’s coercion.22 Lai defeated his opponents Hou You-yi, the
mayor of New Taipei who ran as the Kuomintang (KMT) candidate,
and Ko Wen-je, the former mayor of Taipei who ran as the Taiwan
People’s Party (TPP) candidate.* 23 The candidates presented differ-
ing visions for cross-Strait relations on the campaign trail: while Lai
maintained that negotiations with Beijing should only proceed if the
two sides engage as equals and if the status quo of Taiwan’s de facto
autonomy is maintained, Hou and Ko both struck more conciliatory
notes, favoring the reestablishment of cross-Strait dialogue without
preconditions and a relationship based on shared cultural values
and pragmatism, respectively.24 Lai won with over 40 percent of
the vote in Taiwan’s first-past-the-post electoral system, though he
presidential candidate in the race. Microsoft Threat Intelligence, “Same Targets, New Playbooks:
East Asia Threat Actors Employ Unique Methods,” April 2024, 6–8.
* Founded by then Taipei City Mayor Ko Wen-je in 2019, the TPP markets itself as a pragmatic
party focused on domestic economic issues and government reform. Lillian Ellis, “Youth TPP
Support Explained: A Shift from China to Domestic Economic Concerns,” Global Taiwan Institute,
August 7, 2024; Brian Hioe and Lev Nachman, “From Green to Blue: The Political History of Ko
Wen-je,” Diplomat, November 28, 2023; Taiwan People’s Party, About Us.
616
garnered a smaller proportion of the vote than his predecessor Pres-

ident Tsai Ing-wen, who was reelected with more than 50 percent of
the vote in 2020.25 Hou and Ko earned 33 percent and 26 percent
of the vote, respectively.26
At the same time, the DPP lost its majority in the Legislative
Yuan, resulting in a divided government that could complicate Lai’s
legislative agenda. For the first time since 2004, no single party
has an absolute majority in the national legislature (57 seats): the
DPP won 51 seats, the KMT won 52 seats, and the TPP won eight
seats.27 As a result, the TPP will act as a swing vote and play a
pivotal role in the legislature.28 The Legislative Yuan divisions
will likely complicate the Lai Administration’s efforts to authorize
or fund new policies relating to the Mainland, including defense
spending increases and new weapons acquisitions.29 The last time a
DPP president headed a divided government—under then President
Chen Shui-bian—the KMT-led legislature was often able to obstruct
the defense procurement process, successfully blocking the purchase
of surveillance aircraft and Patriot missiles from the United States
from 2004 to 2007.30
Beijing Tries to Delegitimize Lai’s Win, Asserts “Reunification”
Is Inevitable
Chinese officials and government agencies reacted to Lai’s elec-
tion by attacking his legitimacy, implying foreign interference, and
asserting the result would not change what they claimed was the in-
evitable trend of cross-Strait relations toward a unified Taiwan and
China. China’s Taiwan Affairs Office immediately rejected Lai’s vic-
tory, asserting that the DPP does not represent mainstream public
opinion on the island.31 Chinese state media articles also spun the
unprecedented victory as an effective loss of support for the DPP.
For example, one January 20, 2024, commentary by Xinhua argues
that Lai “only received 40.05% of the votes, which can be described
as a ‘miserable victory,’ ” and it means that 60 percent of public
opinion in Taiwan . . . demands [the] ‘removal of the DPP.’ ” 32 The
commentary claims public opinion is “drifting away from the DPP”
primarily because of its “incompetence in governance, universal cor-
ruption, [and] innumerable scandals” as well as economic issues.33
On January 14, 2024, the day after the election, Wang Yi, China’s
foreign minister and director of the CCP’s Central Committee For-
eign Affairs Commission Office, also issued a warning against any
declaration of “independence” and stated, “Taiwan has never been
a country. It wasn’t in the past, and it certainly won’t be in the
future.” 34 On January 16, 2024, China’s Ministry of State Security
also issued a statement on its official WeChat account, alleging that
Taiwan’s government and intelligence were serving as “thugs” for
“ ‘Taiwan independence’ separatist forces” and unreasonably “hyp-
ing” the Mainland’s interference in Taiwan’s elections.35
Lai’s Inaugural Speech Stresses Consistency but Still
Aggravates Beijing
During his inaugural address on May 20, 2024, Lai signaled a
broad continuation of the Tsai Administration’s approach to cross-
Strait relations, making clear he would protect Taiwan’s democracy.
617
Lai stated that his priorities will be to continue the prior adminis-
tration’s efforts to achieve sustainable peace between Taiwan and
China and to continue collaboration with democratic countries to
strengthen resilience in the face of challenges from authoritarian
regimes.* 36 Like President Tsai, Lai expressed his openness to dia-
logue with Beijing and pledged to uphold the previous government’s
“Four Commitments” for cross-Strait relations, which include cross-
Strait engagement on the basis of equality, protecting Taiwan’s de-
mocracy, resisting annexation, and deciding Taiwan’s future on the
basis of popular will.† 37 He also stated his commitment to maintain-
ing “the status quo” in the Taiwan Strait while promising to “neither
yield [to] nor provoke” Beijing.‡ 38 Lai suggested that the first step
to resuming constructive relations with Beijing could include recom-
mencing tourism and student exchanges.39 He also promoted his
“Four Pillars of Peace action plan,” which consists of strengthened
national defense, improved economic security, “stable and principled
cross-Strait leadership,” and “values-based diplomacy.” 40
Notably, Lai was more explicit than his predecessor in condemn-
ing Beijing’s destabilizing behavior and appealing to the global com-
munity for help. He directly highlighted China’s aggressive behavior
toward the island and called upon its leadership “to cease their po-
litical and military intimidation against Taiwan.” 41 Lai told Taiwan
citizens to “not harbor any delusions” regarding the possibility of
peace with Beijing, noting that “so long as China refuses to renounce
the use of force against Taiwan, all of us in Taiwan ought to under-
stand, that even if we accept the entirety of China’s position and
give up our sovereignty, China’s ambition to annex Taiwan will not
simply disappear.” 42 He also framed cross-Strait tensions as a global
problem and called on the island to stand with other democracies
in forming “a peaceful global community that can demonstrate the
strength of deterrence and prevent war.” 43
Although the substance of President Lai’s speech closely tracked
previous statements by Taiwan’s leaders, Beijing sought to portray
it as a new, provocative “confession of ‘Taiwan independence’ ” and
alleged that President Lai flagrantly promoted separatist ideas and
incited cross-Strait tensions.44 Lai omitted a reference to the 1992
Consensus, a formulation the CCP claims was reached between
mainland China and Taiwan representatives decades ago that as-
serts the two sides of the Taiwan Strait are part of “One China.” § 45
* He also highlighted the DPP’s domestic priorities, such as addressing housing pressure for
young people and resolving issues related to labor insurance funds. Office of the President, Re-
public of China (Taiwan), Inaugural Address of ROC 16th-Term President Lai Ching-te, May 20,
2024.
† The “Four Commitments” is an approach to cross-Strait policy proposed by then President
Tsai in her 2021 National Day address. The commitments are to “a free and democratic constitu-
tional system”; that “the [Republic of China] ROC (Taiwan) and the PRC should not be subordi-
nate to each other”; to “resist annexation or encroachment upon our sovereignty”; and that “the
future of the ROC (Taiwan) must be decided in accordance with the will of the Taiwanese people.”
Taiwan’s government asserts that these commitments reflect mainstream public opinion toward
cross-Strait relations. Government of the Republic of China (Taiwan), Cross-Strait Relations.
‡ Taiwan’s “status quo” is defined by de facto independence while neither seeking nor acknowl-
edging official statehood. Lev Nachman and Brian Hioe, “No, Taiwan’s President Isn’t ‘Pro-Inde-
pendence,’ ” Diplomat, April 23, 2020.
§ The 1992 Consensus is an understanding allegedly reached at a 1992 meeting between repre-
sentatives of two quasi-official organizations that manage cross-Strait relations: China’s Associa-
tion for Relations Across the Taiwan Straits (ARATS) and Taiwan’s Straits Exchange Foundation
(SEF) (then associated with a government under the KMT’s one-party rule). The term “1992 Con-
sensus” was coined in the year 2000 by then Mainland Affairs Council (MAC) Chairman Su Chi
618
Beijing has insisted upon acknowledgment of the 1992 Consensus as

the precondition for constructive relations, while prominent figures
of the DPP have publicly questioned its existence.46 In her 2016 in-
augural speech, then President Tsai had described “various joint ac-
knowledgements and understandings” reached at the 1992 meeting
as a “historical fact” that was one of many elements underpinning
the “existing political foundations” of cross-Strait relations, though
she did not say that any “consensus” had been reached.47
Chinese state media placed the blame for current cross-Strait ten-
sions on Lai in part for refusing to acknowledge the 1992 Consen-
sus.48 State-run media accused Lai of spreading “deceitful political
lies,” stating that he was worse than his predecessors and calling
him a pawn of the West.49 Minister Wang was vitriolic in his re-
sponse, emphasizing that efforts for “Taiwan independence” posed
the most significant threat to cross-Strait stability and that “all ‘Tai-
wan independence’ separatists are set to be nailed to the pillar of
shame in history.” 50
Chinese Officials Reiterate Preference for “Peaceful

Reunification” but Suggest United States Is Trying to
Trick China into War
Despite the vitriolic rhetoric directed toward Lai personally, top
Chinese officials have generally continued to claim in remarks
before internal and external audiences their continued preference
for a “peaceful” path to unification under the “one country, two
systems” framework.51 There have been some notable exceptions
to this formulation, however. Some U.S. observers have point-
ed out the omission of “peaceful reunification” from Premier Li
Qiang’s Work Report to the 14th National People’s Congress in
March 2024 and in fourth-ranked Politburo Standing Committee
member Wang Huning’s speech at the 16th Straits Forum, raising
questions about a potential change in cross-Strait policy.52 Xi and
other Chinese officials have continued to use this formulation,
however, underscoring that official policy has not changed. During
his April 2024 meeting with former Taiwan President Ma Ying-
jeou, for example, Xi asserted that the two sides of the Strait
should jointly pursue “peaceful reunification.” 53 Similarly, at a
seminar in May 2024 on the “One China principle” hosted by the
under the KMT administration of Lee Teng-hui, who said that it referred to the idea that both
sides agreed there is only “one China” but that each side maintained its own differing interpre-
tation of the meaning of “one China” (leaving open the question of whether that “China” was the
Republic of China under the KMT or the People’s Republic of China under the CCP). The 1992
Consensus was first adopted by the KMT in 2008 under the administration of Ma Ying-jeou, and
it was most recently reaffirmed in 2021 under current KMT Chairman Eric Chu. Leaders of the
DPP such as Tsai Ing-wen have questioned the existence of any consensus reached at the 1992
meeting and argued that the 1992 Consensus framework does not reflect the will of the Taiwan
public, since it was reportedly reached prior to the island’s democratization. In a 2019 speech,
General Secretary Xi equated the 1992 Consensus with “one country, two systems.” Since that
time, CCP events and statements have clarified that when they refer to the 1992 Consensus, it
means accepting Taiwan’s unification with the Mainland. Beijing maintains that the agreement
does not allow for different interpretations of “one China” in the first place. Jessica Drun, “The
KMT Continues to Grapple with Its ‘1992 Consensus,’ ” Global Taiwan Institute, September 21,
2022; John Dotson, “The CCP Commemorates the 30th Anniversary of the ‘1992 Consensus”—and
Seeks to Change Its Meaning,’ ” Global Taiwan Institute, September 21, 2022; Derek Grossman,
“Where Does China’s ‘One Country, Two Systems’ Stand in 2020?” RAND Corporation, February
13, 2020; Derek Grossman and Brandon Alexander Millan, “Taiwan’s KMT May Have a Serious
‘1992 Consensus’ Problem,” RAND Corporation, August 9, 2004.
619
Chinese Officials Reiterate Preference for “Peaceful

Reunification” but Suggest United States Is Trying to
Trick China into War—Continued
consul general of China in Osaka, Japan, Xue Jian elaborated
that “peaceful reunification” and “one country, two systems” is the
“basic policy” of the Chinese government to resolve the Taiwan
issue.54
Beijing has also reiterated its longstanding claims that the
United States and other outsiders are encouraging Taiwan to pur-
sue independence, though it has begun to assert that the United
States desires or is even seeking to provoke a Chinese attack on
Taiwan.* 55 Speaking at the Asia Society in January 2024, for-
mer Chinese Ambassador to the United States Cui Tiankai stated
that Beijing would not fall into the trap “somebody” may be pre-
paring for China involving Taiwan, making a veiled reference to
the United States.56 “They will supply military assistance, they
will supply weapons for proxy war, and the Chinese will be killing
Chinese,” former Ambassador Cui said of the supposed ploy by
another country to trick China into a war with Taiwan.57 In June
2024, the Financial Times broke a story that Xi reportedly told
European Commission President Ursula von der Leyen during
a meeting in April 2023 that the United States was attempting
to goad Beijing into attacking Taiwan.58 The media outlet also
claims Xi told President von der Leyen he would not “take the
bait” because a conflict with the United States would destroy
many of China’s accomplishments and undermine his goal of
achieving national rejuvenation by 2049.59 Xi’s remark to Presi-
dent von der Leyen is the first known case of him making such a
claim to a foreign leader, although he has reportedly delivered the
same message to domestic officials.60 U.S. analysts have offered
differing interpretations of Xi’s remarks. Jude Blanchette, Free-
man Chair in China Studies at the Center for Strategic and In-
ternational Studies, suggests this may indicate Xi is not receiving
accurate information about U.S. intentions, while Bonnie Glaser,
managing director of the German Marshall Fund’s Indo-Pacific
program, argues that the statement was propaganda potentially
intended to divide Europe and the United States over Taiwan.61
Post-Inauguration, Beijing Continues Subversion and

Intimidation Campaign
Although Lai’s inauguration proceeded without major incident,
Beijing continued its multifaceted efforts in the months afterward
to subvert and undermine Taiwan’s elected government in hopes it
can weaken the DPP and lay the groundwork for eventual unifica-
tion. Specifically, it conducted influence activities targeting Taiwan’s
* Signs of this disturbing trend became evident as early as 2023. For example, a September
2023 broadcast sponsored by the PLA reportedly claimed that the United States had increased
military assistance to Taiwan in order to replicate its “proxy war” in Ukraine. An August 2023
story ran in China Daily Hong Kong asserting that the United States was actively attempting
to draw China into a “Taiwan quagmire.” Jeff Pao, “PLA Claims US Stirring Ukraine-Like ‘Proxy
War’ for Taiwan,” Asia Times, September 13, 2023; Michael Whitney, “Target China: US Plans to
Goad Beijing into Taiwan War,” China Daily Hong Kong, August 13, 2023.
620
civil society, engaged with Taiwan’s opposition parties, and unveiled

new criminal regulations designed to intimidate DPP supporters
and others it considers “pro-independence” in and outside Taiwan.
Beijing Tries to Create Appearance of Grassroots Support for
Unification
Beijing is attempting to undermine the DPP Administration by
ramping up its influence activities—often referred to by the Party
as “united front work” *—targeting Taiwan’s civil society and polit-
ical life. Two days after Lai’s election in January 2024, the CCP’s
ideological journal Qiushi made public parts of a 2022 speech by
Xi that extolled the Party to use united front work to develop and
strengthen pro-unification forces in Taiwan, oppose “Taiwan inde-
pendence,” and promote “the complete reunification of the mother-
land.” 62 Director-General of Taiwan’s National Security Bureau Tsai
Ming-yen stated in May 2024 that the CCP is increasing its efforts
to strengthen ties with people from various segments of Taiwan’s
society, including legislators and religious, cultural, and business
groups.63 Director-General Tsai notes that a growing number of
Taiwan artists working in China were being coerced into publicly
expressing pro-unification positions and that the CCP forces Tai-
wan individuals working in China to sign consent forms commit-
ting them to promote a unification agenda, threatening tax audits
and other punitive actions if they do not comply.64 In June 2024,
Taiwan’s Ministry of the Interior issued a warning based on media
reporting that the CCP attempted to induce Taiwan nationals to
form political parties.65 Taiwan celebrities R-Chord and Alexis Ho
accused a Chinese company, Beijing Ciguang Film and Television
Media Co., Ltd., of attempting to persuade them to establish a “Tai-
wan Pro-Peace Party” for the purpose of establishing “a new type of
cross-strait relations.” 66 Taiwan’s Ministry of the Interior noted that
forming or funding political parties at the behest of a hostile foreign
actor is in violation of Taiwan’s Political Party Act and Anti-Infiltra-
tion Act.67 The ministry stated it had knowledge that other minor
political parties in Taiwan, such as the Taiwan Republican Party
and the Taiwan People’s Communist Party, were suspected of receiv-
ing funding and directives from the CCP.68 Under Taiwan’s Political
Party Act, the Ministry of the Interior had deregistered 65 political
parties in Taiwan suspected of violating the act by being funded or
directed by the CCP.69
In response to these activities, Taiwan’s government has made
or considered updates to existing foreign interference laws. In May
2024, Taiwan broadened the types of CCP-affiliated organizations
from which Taiwan citizens are banned by updating the Act Govern-
ing Relations between the People of the Taiwan Area and the Main-
* “United front work” is a way of managing relationships with important groups and indi-
viduals outside of the CCP that is based on Russian revolutionary Vladimir Lenin’s concept of
forming a “united front,” or a temporary alliance with one’s friends and lesser enemies, to defeat
greater enemies. Contemporary united front work encapsulates the various activities of CCP
organs, Chinese government agencies, and their affiliates to coopt or coerce groups outside of the
CCP into comporting with the Party’s demands and advancing Chinese national interests as the
CCP defines them. U.S.-China Economic and Security Review Commission, 2023 Annual Report,
November 14, 2023, 230. Alex Joske, written testimony for U.S.-China Economic and Security
Review Commission, Hearing on China’s Global Influence and Interference Activities, March 23,
2023, 2; Peter Mattis, written testimony for U.S.-China Economic and Security Review Commis-
sion, Hearing on China’s Global Influence and Interference Activities, March 23, 2023, 2–4.
621
land Area.70 According to the updated law, Taiwan citizens are now
prohibited from membership in any CCP organization or proxy that
conducts united front work against Taiwan or is considered a threat
to its national security or interests, including entities such as the
Association for Relations Across the Taiwan Straits (ARATS) and
Confucius Institutes.* 71 There has also been debate among Taiwan’s
political parties about whether to relax or strengthen Taiwan’s 2020
Anti-Infiltration Act. KMT officials, including former President Ma
Ying-jeou, have called to relax the act on the grounds that it could be
used to infringe on human rights and inhibit cross-Strait exchanges,
while DPP legislators have previously proposed strengthening the
act to combat political parties that collaborate with malign actors.72
A May 2024 poll conducted by Taiwan’s Mainland Affairs Council
suggests that a majority of respondents support an expansion of
the act to combat the CCP’s intensified united front work activities,
with 55 percent of respondents supporting measures to strengthen
the act.73
Beijing Continues to Engage Opposition Parties as Political
Alternative
Beijing has sought to strengthen its ties with Taiwan’s opposi-
tion parties in a bid to cultivate alternative interlocuters across
the Strait and undermine the DPP. According to National Security
Bureau Director-General Tsai, Taiwan security officials noticed an
uptick in CCP exchanges with members of both the KMT and the
TPP after the January election.74 Notably, Beijing has continued to
host current and former KMT officials in cross-Strait meetings. In
April 2024, former Taiwan President Ma of the KMT visited main-
land China for 11 days, the second such trip he has undertaken in
two years.75 Ma was accompanied by a student delegation and spent
much of his trip stressing that Chinese and Taiwan people share a
mutual cultural identity.76 Ma held a meeting with Taiwan Affairs
Office Director Song Tao, during which Song called for more frequent
cross-Strait exchanges and urged joint endeavors to rejuvenate the
Chinese nation, oppose “Taiwan independence,” and counter foreign
interference.77 Ma also received an audience with Xi, who asserted
that “compatriots on both sides of the Taiwan Strait must resolutely
oppose ‘Taiwan independence’ separatist activities and interference
by external forces” and “jointly pursue a beautiful future of peaceful
reunification.” † 78 Ma said that adhering to the 1992 Consensus and
opposing “Taiwan independence” are the “common political founda-
* The Association for Relations Across the Taiwan Straits is a quasi-official government organi-
zation set up by China’s Taiwan Affairs Office through which the Mainland has formally handled
cross-Strait contact with Taiwan. Confucius Institutes are organizations located at educational
establishments funded and directed by the Chinese government to promote a CCP-approved vi-
sion of China through educational and cultural programs. Center for Strategic and International
Studies, “Glossary”; Government Accountability Office, China: With Nearly All U.S. Confucius
Institutes Closed, Some Schools Sought Alternative Language Support, October 30, 2023; Thomas
Lum and Hannah Fischer, “Confucius Institutes in the United States: Selected Issues,” Con-
gressional Research Service, IF11180, May 2, 2023; Fukuda Madoka, “The Characteristics of Xi
Jinping’s Policy-Making on Taiwan Affairs: The Conflict between Institutionalization and Central-
ization,” Journal of Contemporary East Asia, 11.2 (February 19, 2023): 244–263.
† China’s state media have repeatedly published pieces that condemn the DPP for its “de-Si-
nicization” of Taiwan and carrying out “anti-Chinese cultural education” through revisions to
textbooks and educational reform, accusing the DPP of attempting to erase Taiwan’s Chinese
cultural identity. China Daily, “ ‘Taiwan Independence’ Ideology Condemned,” May 21, 2024; Xin-
hua, “Mainland Slams DPP’s ‘De-Sinicization’ Attempts in Education Sector,” December 13, 2023.
622
tion for the peaceful development of cross-strait relations,” implying

that the KMT is capable of engaging with Beijing because of its
embrace of the 1992 Consensus, as opposed to the DPP.79 Ma later
described his meeting with Xi in glowing terms in an August 2024
speech to an overseas Chinese association in Thailand.80 Ma de-
scribed Xi’s attitude as “soft and gentle” and said the Chinese leader
claimed that anything can be discussed between Taiwan and China
so long as “both sides recognize themselves as part of the Chinese
nation.” 81 Ma went on to blame President Lai and the DPP for de-
teriorating cross-Strait relations and rejecting Xi’s “goodwill.” 82
Another notable way Beijing engages opposition parties is
through its annual Straits Forum in Xiamen, Fujian Province.* In
June 2024, KMT and TPP officials attended the 16th Straits Fo-
rum despite Taiwan’s Mainland Affairs Council issuing a warning
that the event is a tool for the CCP’s united front work.83 At the
event, KMT Vice Chairman Lian Sheng-wen claimed that most
of Taiwan’s populace does not support Taiwan independence and
that the KMT would continue to develop good relations between
Taiwan and the Mainland.84 Vice Chairman Lian said that both
sides should strengthen youth exchanges and are both members
of a “Chinese nation.” 85
Despite this engagement, Taiwan’s main opposition party main-
tains that it is willing to defend the island’s interests from encroach-
ment by Beijing. As the KMT’s traditional stance on relations with
China becomes less appealing to Taiwan’s electorate, a younger,
“light blue” generation of the KMT has embraced positions closer
to the DPP’s policy platform, in contrast to the older “deep blue”
generation of the KMT.86 While KMT leaders have repeatedly ex-
pressed support for their own interpretation of the 1992 Consen-
sus, KMT officials have also claimed support for maintaining the
“status quo” in cross-Strait relations, and during the 2024 election
Hou publicly opposed China’s “one country, two systems” framework
for unification.87 KMT officials say they favor stronger defense co-
operation with the United States and the adoption of asymmetric
capabilities.88 According to KMT officials, they believe their party
is better positioned to serve as a productive interlocuter with Bei-
jing.89 Domestically, the KMT seeks to leverage its advantageous po-
sition in the Legislative Yuan to empower the legislature to conduct
greater oversight of the executive branch, and it seeks to increase
its appeal among Taiwan’s youth voters by focusing on domestic eco-
nomic issues.90
New Intimidation Tactics: Special Punishments for Taiwan
“Separatists” and Harassment of Travelers
In 2024, China announced new guidelines for punishing sup-
posed supporters of “Taiwan independence,” which has been in-
terpreted as an attempt to intimidate Taiwan residents and even
foreigners involved with Taiwan. In June 2024, China’s Supreme
People’s Court, the Supreme People’s Procuratorate, the Minis-
* First held in 2009, the Straits Forum is an annual conference that serves as the centerpiece
of China’s outreach toward Taiwan. Its official purpose is to facilitate people-to-people exchanges
on both sides of the Taiwan Strait. China’s Taiwan Affairs Office claimed that this year the forum
would be attended by 7,000 Taiwan nationals. Yanyue Dang, “Taiwan: Forum Reveals State of
Cross-Strait Travel and How to Boost It,” South China Morning Post, June 17, 2024.
623
try for Public Security, the Ministry of State Security, and the
Ministry of Justice jointly published guidelines officially desig-
nating “Taiwan independence” as a crime and laying out the pun-
ishments for such a crime.91 Punishable acts include the denial
of Beijing’s claim that Taiwan is part of China, the promotion of
Taiwan’s participation in international organizations, leading a
“Taiwan independence secessionist organization,” and attempting
to change Taiwan’s status through legal means in Taiwan.92 Sus-
pects could be tried in absentia and sentenced to punishments
that include detention, prison terms ranging from three years to
life, confiscation of possessions, and even the death sentence.93
Chinese state media describe the new regulations as a “refine-
ment” of China’s Anti-Secession Law in response to Lai’s election
that should act as a warning to “external forces who would not
keep their hands off affairs related to Taiwan.” 94 Notably, the
guidelines do not specify that they are only applicable to Taiwan’s
citizens and could hypothetically apply anywhere to anyone Bei-
jing views as encouraging Taiwan independence in ways identified
by the law.95 In August 2024, China’s Taiwan Affairs Office and
Ministry of Public Security launched websites denouncing a list of
current and former Taiwan officials as “diehard secessionists” and
calling for people to report “clues” and alleged crimes committed
by those on the list.96 The sites also encourage reporting new
“ ‘Taiwan independence’ diehards who commit serious crimes.” 97
Two months after the publication of the sentencing guidelines, a
mainland court sentenced a Taiwan activist to nine years in pris-
on for political activities carried out in Taiwan, marking the first
known case of China’s authorities convicting an individual from
Taiwan with “separatism.” 98 Because the law effectively includes
an aiding and abetting provision, the new guidelines may have
a chilling effect on foreign individuals and businesses that have
dealings with both China and Taiwan, potentially forcing them to
consider whether the individuals from Taiwan they interact with
qualify under the provisions.99
Moreover, Beijing has increased its intimidation of individuals
from Taiwan, further illustrating its propensity for coercion and un-
dermining the appeal of people-to-people exchanges. Beijing’s intim-
idation tactics include temporary detentions and random identifica-
tion checks of Taiwan citizens visiting China and Hong Kong, such
as the following: 100
• In March 2024, an off-duty soldier in Taiwan’s military who was
rescued by the CCG while fishing off the coast of Kinmen was
detained for allegedly “intentionally conceal[ing] information”
about his military affiliation.101 According to the Mainland Af-
fairs Council, eight retired military and police personnel from
Taiwan have been detained in China over the past year.102
• In May 2024, a photographer and author from Taiwan was de-
tained and interrogated for “spreading obscene images” while
promoting his books documenting the lives of gay men at a book
fair in Nanjing.103 In a separate occasion, a Taiwan national
was detained for days while traveling with a tour group in Fu-
jian.104
624
• Taiwan tourists were briefly stopped and interrogated by Hong

Kong police on May 30, 2024.105 These incidents prompted Tai-
wan’s Mainland Affairs Council to issue a travel advisory in
June to Taiwan citizens wishing to travel to Hong Kong.106 The
Mainland Affairs Council issued another travel alert for main-
land China, Hong Kong, and Macau later that month, respond-
ing in part to China’s new guidelines for punishing supposed
supporters of “Taiwan independence.” 107
China Continues to Apply Military Pressure on
Taiwan, Adopts Enhanced Gray Zone Tactics
China continues its multidomain pressure campaign against Tai-
wan, attempting to hone its operational skills for blockade or inva-
sion and normalize its presence around Taiwan and its outlying is-
lands. As a result, a stronger and more emboldened PLA is crossing
the median line * as though it does not exist, conducting frequent
air operations inside of Taiwan’s ADIZ †, maintaining a consistent
presence of naval vessels in the vicinity of Taiwan, and undertak-
ing large-scale military exercises with greater frequency. Alongside
these military actions, Chinese officials have increasingly disputed
the existence of the median line and passed new regulations that
empower the CCG to detain Taiwan vessels throughout the Taiwan
Strait.
PLA Exercises around Taiwan Intimidate Populace and
Enhance Capabilities
The PLA conducted a military exercise around Taiwan in May
2024 that was designed to demonstrate displeasure with the new
Lai government and practice useful operational skills, marking the
third year in a row it has conducted exercises at such scale. On May
23, three days after Lai’s inauguration, the PLA Eastern Theater
Command announced it would be conducting a two-day military ex-
ercise around Taiwan and its outlying islands, naming the exercises
Joint Sword 2024A.108 A spokesman for the PLA’s Eastern Theater
Command stated that the intent of the drills was to “serve as a
* The median line, also known as the center line, is an informal demarcation extending down
the middle of the Taiwan Strait. The line was drawn in 1955 by General Benjamin O. Davis, then
commander of the U.S. Air Force’s Taiwan-based 13th Air Force. While the Chinese government in
Beijing never formally agreed to the establishment of the median line, both the PLA and Taiwan’s
military observed the line in practice. In the decades immediately following the drawing of the
median line, Taiwan’s military superiority made it too dangerous for PLA aircraft to cross the
line. In fact, the Taiwan military also never publicly acknowledged the median line until 1999,
when the PLA’s first deliberate crossing occurred. With the shift in the cross-Strait military bal-
ance in China’s favor over the last two decades, Taiwan is no longer able to prevent PLA aircraft
from crossing the line. In 2019, two Chinese fighter aircraft intentionally crossed the median
line for the first time since 1999. China’s continued median line crossings constitute a unilateral
change to the cross-Strait status quo. While China’s foreign ministry said in September 2020
that the median line did not exist, Taiwan’s defense ministry described its existence as a “fact”
in August 2022. Reuters, “Taiwan Says Strait Median Line Is a ‘Fact,’ ” August 8, 2022; Ralph
Jennings, “What Is the Median Line between China and Taiwan?” Voice of America, October 28,
2020; U.S.-China Economic and Security Review Commission, Chapter 5, “Taiwan,” in 2019 An-
nual Report to Congress, November 2019, 449.
† An air defense identification zone (ADIZ) is an area of airspace over land or water in which
the ready identification and location of all aircraft is required in the interest of a nation’s national
security. While Taiwan’s claimed ADIZ covers large portions of mainland China, its Ministry of
National Defense only reports on aircraft that enter Taiwan’s de facto ADIZ. Ben Lewis, “2022 in
ADIZ Violations: China Dials Up the Pressure on Taiwan,” Center for Strategic and Internation-
al Studies, March 23, 2023; Federal Aviation Administration, ENR 1.12 National Security and
Interception Procedures.
625
strong punishment for the separatist acts of ‘Taiwan independence’

forces and a stern warning against the interference and provoca-
tion by external forces.” 109 According to the PLA’s Eastern Theater
Command, the exercises focused on “joint sea-air combat-readiness
patrol, joint seizure of comprehensive battlefield control, and joint
precision strikes on key targets.” 110 U.S. PLA experts speculate the
drills served to improve coordination between the PLA and the CCG,
practice skills needed for both blockade or invasion scenarios, and
intimidate the people of Taiwan.111 Despite Beijing’s assertion that
the exercises were a “punishment” in response to Lai’s inauguration,
Joint Sword 2024A was likely planned in advance.112 The naming
convention of the exercises suggested that Beijing intended to con-
duct similar drills annually, possibly in multiple stages throughout
the year—a suggestion borne out by additional exercises in October
2024.* 113
Joint Sword 2024A had some notable parallels to prior major exer-
cises conducted in 2022 and 2023 but included novel elements such
as the increased participation of the CCG, and on the whole the
exercise seemed smaller and less ambitious than prior iterations.†
Like the previous two years of exercises, Joint Sword 2024A em-
phasized “encirclement” exercises encompassing the waters around
Taiwan. However, the location and operational skills practiced by
Joint Sword 2024A varied somewhat from the exercises in 2022 and
2023. Notable features included:
• Training focuses on jointness and blockade skills: According
to the Eastern Theater Command, PLA army, navy, air force,
rocket force, and other forces practiced joint sea and air com-
bat readiness patrols, “joint seizure of comprehensive battle-
field control,” joint precision strikes on key targets, and what
it described as integrated operations inside and outside of
Taiwan to test the actual “joint combat capabilities” of its
forces.114
• Exercise locations could facilitate blockade and include outlying
islands: The PLA’s eight declared exercise zones included areas
that would be crucial to block energy imports or to intercept
U.S. military force flows toward the island, and two of them ap-
peared to extend into Taiwan’s contiguous zone.115 In contrast
to previous years’ focus on the main island of Taiwan, three of
these zones were superimposed on Taiwan’s outlying islands.116
During the exercise, the Fujian Province Coast Guard exercised
in the waters around the Wuqiu and Dongyin islands “to test
its joint patrol, rapid reaction and emergency response capa-
bilities.” 117 In a first, CCG patrol vessels entered the waters
* The exercises the PLA conducted in the spring of 2023 were also named Joint Sword. As
some military experts have noted, the addition of a year and letter designation suggested that
follow-on exercises may be planned in the future. As discussed below, this analysis was correct.
John Dotson and Jonathan Harman, “The PLA’s Inauguration Gift to President Lai: The Joint
Sword 2024A Exercise,” Global Taiwan Institute, June 12, 2024; Lee Ya-wen et al., “Chinese Mili-
tary Drills around Taiwan Could Be First in Series: Expert,” Focus Taiwan, May 23, 2024.
† The PLA launched similar exercises in the air and waters surrounding Taiwan in 2022 follow-
ing then Speaker of the House Nancy Pelosi’s visit to the island, and in 2023 after then Taiwan
President Tsai transited the United States. Lee Ya-wen et al., “Chinese Military Drills around
Taiwan Could Be First in Series: Expert,” Focus Taiwan, May 23, 2024; Bonny Lin et al., “Track-
ing China’s April 2023 Military Exercises around Taiwan,” Center for Strategic and International
Studies, 2023.
626
around Wuqiu and Dongyin, reportedly coming as close as 2.8

nautical miles from the Wuqiu islands and as close as 3.1 nau-
tical miles from Dongyin before being warned off by the Taiwan
Coast Guard vessels.118
• China Coast Guard joins PLA in exercising around Taiwan in
apparent first: In concert with the PLA exercises, CCG forces
conducted a “comprehensive law enforcement exercise” around
Taiwan’s outlying islands in a potential first, suggesting the
CCG could be preparing to assert China’s maritime claims in
the Taiwan Strait or augment future PLA operations against
Taiwan.119 According to data released by Taiwan’s Ministry of
National Defense, four CCG ships navigated to the east of Tai-
wan in proximity to the eastern PLA exercise zone off the Hual-
ien coast, and three CCG ships sailed toward the southwest of
Taiwan, close to the southern entrance of the Taiwan Strait.120
On the first day of the exercises, Taiwan’s Ministry of National
Defense recorded as many as 16 CCG ships in the vicinity of
Taiwan and its surrounding islands.121 CCG forces reportedly
engaged in mock inspections of foreign vessels and exercised
the use of a water cannon.122
• No aircraft carrier but some key weapons systems appear: The
PLA did not employ any significant new platforms during the
exercises and did not deploy an aircraft carrier group.123 The
Eastern Theater Command did highlight six key PLA weapons
systems reportedly deployed in the exercise, namely J-20 and
J-16 fighter aircraft, Type 052D destroyers, a Type 071 amphib-
ious transport dock, a Dongfeng series ballistic missile, and a
PHL-16 Multiple Rocket Launch System (MRLS).124
• Smaller scale overall, but greater naval component: Unlike pre-
vious years, these exercises reportedly did not feature live fire
components.125 Fewer aircraft were involved than in previous
years, with a total of 82 aircraft intrusions into the ADIZ and
74 median line crossings.126 Similar to the August 2022 exer-
cises, Joint Sword 2024A featured demarcated exercise zones
encircling Taiwan, while the 2023 exercises did not.127 The 2024
exercise did feature more ships in the waters around Taiwan
than the 2022 or 2023 exercises, totaling 27 vessels on May 24,
including Chinese maritime law enforcement vessels.128
As the naming convention suggests, on October 14, 2024, Chi-
na conducted another large-scale military exercise around Taiwan
and its outlying islands called Joint Sword 2024B. 129 According to
a spokesperson for the PLA Eastern Theater Command, the one-
day drills involved troops from China’s army, navy, air force, and
rocket force and focused on honing the PLA’s ability to blockade
Taiwan’s ports, attack “maritime and ground targets,” and achieve
other strategic objectives.130 The drills were held several days after
President Lai delivered an annual address to commemorate the Na-
tional Day of the Republic of China (Taiwan) on October 10, 2024,
and Beijing once again justified the military activity as a response
to the “provocations” of “Taiwan independence” forces.131 Taiwan’s
Ministry of National Defense announced that a single-day record of
627
153 PLA aircraft * as well as 14 PLA Navy vessels and 12 “official

ships” (such as CCG ships) were detected in the waters and airspace
around Taiwan on the day of the drills.132 Significantly, Joint Sword
2024B also marked the first time the PLA’s Liaoning aircraft carrier
participated in military drills aimed at Taiwan.133
Figure 1: Map of the PLA’s Joint Sword 2024A Exercises
Representative Positions*
PLA Navy Vessels
CCG Coast Guard Vessels EAST CHINA SEA
PLA Aircraft Flightpath

Joint Sword—2024A Zones Territorial Waters
Contiguous Zone
Taipei
IT MIYAKO STRAIT
RA
ST
N
A
IW
TA
TAIWAN
CHINA
PHILIPPINE SEA
SOUTH CHINA SEA

* Indicates areas in which CCG/PLA
presence was reported.
Note: Map depicting the areas in which China held Joint Sword 2024A exercise this year. No-
tional flight paths of aircraft are depicted based on commonly followed paths of PLA aircraft. The
solid line indicates Taiwan’s de facto ADIZ. According to Taiwan’s Ministry of National Defense,
over the two days of this exercise 111 PLA aircraft conducted violations of Taiwan’s de facto
ADIZ, and there were 82 median line crossings. As many as 46 PLA vessels took part in the
exercise, including as many as 16 CCG vessels around both Taiwan’s main and outlying is-
lands.134
Source: Bonny Lin and Brian Hart, “How Is China Responding to the Inauguration of Tai-
wan’s President William Lai?” Center for Strategic and International Studies, May 24, 2024; Fo-
cus Taiwan, “No PLA Live-Fire Exercises Detected in Taiwan Strait: Taiwan Military,” May 23,
2024; China’s Ministry of National Defense, The Eastern Theater Command Released a Diagram
of the “Joint Sword-2024A” Exercise Area (东部战区发布“联合利剑—2024A”演习区域示意图), May
23, 2024. Translation; Republic of China (Taiwan) Ministry of National Defense, PLA Activities
in the Waters and Airspace around Taiwan (中共解放軍臺海周邊海、空域動態), May 23–25, 2024.
Translation.
Exercises like Joint Sword 2024A will likely become recurring

events, allowing China to ratchet up military pressure at will in
ways that allow Beijing to signal its displeasure at Taiwan’s govern-
ment while further improving the PLA’s capabilities.135 Such exer-
cises carry high potential to be used as cover for military hostilities
against the island.136
China Continues Gray Zone Campaign against Taiwan with
No Significant Repercussions
In 2024, China continued its gray zone † campaign against Tai-
wan, expanding its operations and incorporating new methods for
* Of the 153 PLA aircraft, 111 crossed the median line of the Taiwan Strait and proceeded to
enter Taiwan’s ADIZ. Taiwan’s Ministry of National Defense, PLA Activities in the Waters and
Airspace around Taiwan (中共解放軍臺海周邊海、空域動態), October 15, 2024. Translation.
† A 2019 RAND Corporation study defined the “gray zone” as “an operational space between
peace and war, involving coercive actions to change the status quo below a threshold that, in
most cases, would prompt a conventional [kinetic] military response, often by blurring the line
628
increasing pressure on the Lai Administration and Taiwan’s popu-

lace. China continued its efforts to degrade Taiwan’s resolve through
near-daily incursions into Taiwan’s ADIZ while simultaneously in-
creasing activity via its coast guard, balloons, and unilateral civil-
ian flight route modifications that aim to enforce China’s claims of
sovereignty over the island and the Taiwan Strait. China’s increas-
ingly aggressive activity in the Taiwan Strait via its maritime law
enforcement agencies represents an escalation of its decades-long
“lawfare” campaign to intimidate Taiwan’s populace and give Chi-
na’s actions in the Strait an illusion of legitimacy. China’s actions
represent what the former Commander of U.S. Indo-Pacific Com-
mand Admiral John Aquilino described as a “boiling frog” strate-
gy: gradually increasing threatening activity in the Taiwan Strait
so that the ultimate danger will not be appreciated until it is too
late.137
China Continues Intimidation of Taiwan in the Air with
Balloons, New Flight Routes
PLA air operations around Taiwan are now a near-daily occur-
rence, compared to just five years ago, when incursions over the me-
dian line and into the ADIZ were rare.138 After Lai’s inauguration,
PLA incursions into Taiwan’s ADIZ increased significantly over the
pace set in 2023. According to a database currently maintained by
defense analysts Gerald C. Brown and Ben Lewis that compiles data
published by Taiwan’s Ministry of National Defense, approximately
2,301 PLA aircraft made sorties into Taiwan’s ADIZ between Janu-
ary 1 and October 10, 2024, 64 percent more than the 1,396 sorties
that occurred over the same period in 2023.139 The most intense
period occurred in July 2024, with 278 aircraft reported over a two-
week period from July 1 to 13, tying a daily record number of 56
aircraft set in 2021.140
between military and non-military actions and the attribution for events.” Gray zone tactics can
occur through military intimidation, paramilitary activity, the economic activities of state-owned
enterprises or private proxies, information operations, diplomacy, and economic coercion. Lyle J.
Morris et al., “Gaining Competitive Advantage in the Gray Zone: Response Options for Coercive
Aggression below the Threshold of Major War,” RAND Corporation, 2019, 8, 30–40.
629
Figure 2: PLA Incursions into Taiwan’s ADIZ 2019 to October 10, 2024
PLA Incursions into Taiwan’s ADIZ

2019 to October 10, 2024
Partial
Year
Sorties
2,400 2,301
2,200
2,000
1,800 1,738 1,703
1,600
1,400
1,200
1,000 972
800
600
390
400
200
20
0
2019 2020 2021 2022 2023 2024
(as of Oct. 10)
Years
Note: Figure compares reported incursions by PLA aircraft into Taiwan’s ADIZ between 2019
and 2024. Increased PLA activity surrounding the October Joint Sword 2024B exercise would
bring the total number of ADIZ violations to 2,459 for the period of January 1 to October 14,
2024.141
Source: Taiwan’s Ministry of National Defense, compiled by Gerald C. Brown and Ben Lewis.
Gerald C. Brown and Ben Lewis, “Taiwan ADIZ Violations,” PLA Tracker, last updated October
10, 2024.
Starting in December 2023, China augmented its air operations

in Taiwan’s ADIZ with balloons launched from the Mainland. On
December 7, 2023, a balloon was observed crossing the median line
for the first time on the same date that multiple PLA aircraft and
ships were observed in the proximity of Taiwan.142 Throughout
December 2023 and January to February 2024, balloon sightings
became a near-daily occurrence before tapering off in March and
abruptly ending in April.143 The first overflight of a balloon over
Taiwan occurred on January 3, 2024, and escalated to an unprec-
edented scale in the weeks before and after Taiwan’s presidential
election.144 During this period, more than a hundred balloons were
tracked flying near Taiwan in total.145 When questioned about the
initial reports of balloons in December 2023, Wu Qian, a spokesman
for China’s Ministry of National Defense, did not confirm or deny
knowledge of any flights while simultaneously reiterating China’s
claims over Taiwan and accusing the DPP of exaggerating the issue
in order to gain votes in the presidential election.146 Multiple Tai-
630
wan officials told the press that the balloons were mostly weather
balloons collecting atmospheric data but are still part of China’s
gray zone campaign against Taiwan.147 The balloons were tracked
at unusually low altitudes for meteorological balloons in air cor-
ridors used for commercial aviation, which posed risks for midair
collisions.148 Taiwan experts and officials did speculate that the
balloons could have other purposes, such as gathering atmospheric
data to enable PLA air or missile operations, confusing Taiwan mil-
itary radar, or signaling to Taiwan’s populace that its government
cannot defend its airspace.149
China’s aviation authorities made a major unilateral change to
civilian air traffic routes around Taiwan in January, abrogating a
2015 compromise reached with Taiwan’s government and further-
ing their longstanding effort to nullify the median line. Two weeks
after Taiwan’s election, the Civil Aviation Administration of China
(CAAC) made an unanticipated change to the M503 flight route in
the Taiwan Strait, canceling a six-nautical-mile “offset” of the flight
path, which runs north to south through the Strait.* 150 Planes fol-
lowing the flight path—one mainly used by Chinese airlines but also
by some foreign carriers—will now come as close as 4.2 nautical
miles to the median line, a demarcation that once acted as an infor-
mal barrier between aircraft from the two sides.151 In addition, the
CAAC announced the initiation of eastbound flights on the W122
and W123 paths, which link the M503 flight path to the cities of
Fuzhou and Xiamen, respectively, and were previously restricted
to only westbound flights.152 China’s Taiwan Affairs Office spokes-
persons called the changes “routine,” stating there was no need to
discuss the change with Taiwan and rejecting the existence of the
median line.153 Experts in Taiwan and the United States disagree,
however, arguing that the move was an act of “legal warfare” de-
signed to put pressure on the Lai Administration and degrade the
existence of the median line.154
China’s unilateral modification of civilian air traffic routes in-
creases the risk for miscalculation and decreases aviation safety in
the Taiwan Strait. Because PLA aircraft now regularly fly east from
China to cross the median line, the change in flight routes provides
the PLA with increased opportunity to disguise military flights be-
hind a civilian façade, reducing Taiwan’s ability to identify, warn,
and defend against attack.155 The introduction of bidirectional air
* China’s unilateral flight path adjustments represent a rejection of both its previous agree-
ments with Taiwan and an erosion of the rules-based international order. After Taiwan objected to
China establishing the M503, W121, W122, and W123 civilian flight routes in 2015, China agreed
to move the M503 route six nautical miles to the west; limit traffic to only southbound non-mil-
itary flights; and not make changes to routes or implement the W121, W122, and W123 flight
routes without consulting Taiwan’s Civil Aeronautics Administration (CAA). This agreement was
made during the administration of then Taiwan President Ma Ying-jeou, a period of compara-
tively positive cross-Strait relations. In 2018, China breached the agreement by launching north-
bound flights in M503 and westbound flights in W121, W122, and W123 without consulting the
CAA. Taiwan was excluded from the International Civil Aviation Organization (ICAO) in 2016
after pressure from China and thus had no international forum to voice its concerns. China’s
unilateral adjustment of the flight routes runs contrary to its commitments under the ICAO.
United States Indo-Pacific Command, Topic: The PRC’s Modification of Civilian Flight Routes in
the Taiwan Strait, March 8, 2024; Lin Feng, “Taiwan Snubbed by ICAO, Under Pressure from Chi-
na,” Voice of America, September 23, 2016; Taiwan’s Mainland Affairs Council, The Government
Has Secured Taiwan’s Rights and Interests through Cross-Strait M503 Air Route Consultations
and Respected Congressional Oversight, March 27, 2015; International Civil Aviation Organiza-
tion, “The First Meeting of South China Sea Major Traffic Flow Review Group (SCS-MTFRG/1),”
January 20, 2015.
631
traffic and higher volumes of aircraft so close to Taiwan’s ADIZ and

the Taipei Flight Identification Region will also likely strain the
Taiwan Civil Aeronautics Administration’s capacity to ensure the
safety of civilian flight in the Taiwan Strait.156
Chinese Maritime Operations Aim to Bolster Legal Claims
over Taiwan
In 2024, China intensified its naval presence around Taiwan
through increased deployments of military, law enforcement, and
ostensibly civilian ships with the likely goals of routinizing its pres-
ence and bolstering its legal claims over the island and the Taiwan
Strait.* According to data released by Taiwan’s Ministry of National
Defense, China’s naval and coast guard vessels were observed in the
vicinity of Taiwan 1,937 times between January 1 and October 10
of 2024, a figure 37 percent higher than the 1,414 vessels observed
during the same timeframe in 2023.† 157 The enhanced naval pres-
ence around Taiwan is likely meant to demonstrate China’s superior
maritime capability and to force Taiwan’s navy and coast guard to
expend finite resources in response.158 China’s increased maritime
efforts are not limited to naval vessels. In late 2023, Zhu Hai Yun,
an advanced Chinese research ship connected to the PLA and ca-
pable of operating a dual-use naval drone swarm, circumnavigated
Taiwan, likely taking maritime surveys.‡ 159 Zhu Hai Yun reportedly
skirted and briefly entered Taiwan’s contiguous zone § and is one of
a number of Chinese research vessels that have done so in the past
year.160
Beijing has enhanced CCG participation in gray zone activities,
providing new capabilities and enhancing its “lawfare” approach to
Taiwan Strait issues. Beijing intends to provide a façade of legality
for its gray zone activities and to support its claims on the island
and the Taiwan Strait.161 For example, China could seek to regulate
global shipping through the Taiwan Strait and frame any military
action against Taiwan as an “internal matter.” 162 Beijing has used
a recent fishing incident to justify a more aggressive coast guard
presence in the Taiwan Strait and around Taiwan’s outlying islands,
launching “law enforcement patrols” to further China’s claims that
the Taiwan Strait constitutes its internal waters.163 In February
2024, a China-registered boat sailing in Taiwan’s territorial waters
* Chinese officials on multiple occasions have claimed that the Taiwan Strait is not interna-
tional waters, instead arguing that the Taiwan Strait is China’s internal waters, a claim rejected
by Taiwan, the United States, and its allies. China’s Foreign Ministry spokesman Wang Wenbin
stated in June 2023 that “China has sovereignty, sovereign rights and jurisdiction over the Tai-
wan Strait.” China’s statements may aim to establish a legal basis on which to attempt to deny
U.S. and foreign military vessels access to the Taiwan Strait. Alex Wilson, “China Asserts Juris-
diction over Taiwan Strait, Shuns ‘International Waters’ Stance by US,” Stars and Stripes, June
14, 2022; China’s Ministry of Foreign Affairs, “Foreign Ministry Spokesperson Wang Wenbin’s
Regular Press Conference on June 13, 2022,” June 13, 2022; Peter Martin, “China Alarms US
with Private Warnings to Avoid Taiwan Strait,” Bloomberg, June 12, 2022.
† Increased PLA activity surrounding the October Joint Sword 2024B exercise would bring the
total number of vessels observed around Taiwan to 1,976 for the period of January 1 to October
14, 2024.
‡ While the research conducted is ostensibly for civilian purposes, the data (such as seabed
characteristics, salinity, currents, and diurnal heating) could also be used to support naval war-
fare, particularly underwater warfare. Zack Liao, “China’s Grey Zone Maritime Operations near
Taiwan Intensify,” GeoStrategy, April 3, 2024.
§ Consistent with UN Convention on the Law of the Sea (UNCLOS) regulations, Taiwan defines
its territorial sea as beginning 12 nautical miles from its coast and its contiguous zone as begin-
ning 24 nautical miles from its coast. UN Convention on the Law of the Sea, Part II, “Territorial
Sea and Contiguous Zone,” Section 4, Article 3, 33.
632
off of Kinmen carrying four Chinese fishermen capsized during a

chase after it refused inspection by Taiwan authorities, resulting in
the deaths of two of the fishermen.164 China’s Taiwan Affairs Office
framed the event as a “vicious incident” and attributed the cause to
Taiwan’s DPP Administration for treating mainland fishermen in
a “rough and dangerous manner.” 165 A few days after the incident,
the Chinese authorities declared their intention to intensify patrols
in the vicinity of Kinmen.166 On the same day as the declaration—
and for the first time—the CCG boarded and conducted a 30-minute
search on a Taiwan tourist ship before granting it permission to
return to Kinmen.167 In May 2024, Taiwan officials reported that 11
Chinese vessels intruded into what Taiwan refers to as “restricted
and prohibited waters”* around Kinmen island, a record number
in one day.168 Seven Chinese vessels, including Maritime Safety
Administration and fisheries enforcement ships, entered Kinmen’s
restricted waters and were suspected of engaging in a maritime ex-
ercise with three Chinese fishing boats.169 At the same time, an-
other group of four CCG ships entered “restricted and prohibited
waters” south of Kinmen, marking the first time CCG and other
official Chinese ships have sailed into the waters around Kinmen
simultaneously.170 In mid-May 2024, approximately one week prior
to the Joint Sword 2024A exercises, Chinese official media stated
that the intensified “Kinmen model” of law enforcement inspections
it launched this year “can also be applied to Matsu and Penghu is-
lands, and even the entire Taiwan Strait.” 171 Western PLA experts
assess that these exercises could be conducted with the intent of
imposing a CCG-led “quarantine” of Taiwan, which could force ship-
ping destined for the island to comply with Chinese rules and assert
Beijing’s claims of sovereignty over Taiwan.172 Also in May 2024,
China passed additional regulations that would authorize the CCG
to detain foreign ships that illegally enter “waters under [China’s]
jurisdiction.” † 173 Taiwan Coast Guard Administration Deputy Di-
rector-General Hsieh Ching-chin linked the new regulation to the
* Taiwan’s Ministry of National Defense first designated “restricted and prohibited waters in
the area surrounding Kinmen” on October 7, 1992, in accordance with the “Act Governing Re-
lations between the People of the Taiwan Area and the Mainland Area,” which stipulates that
“mainland Chinese vessels are not allowed to enter Taiwan’s restricted and prohibited waters
without permission.” The prohibited area surrounding Kinmen extends approximately 2.48 miles
(4,000 meters) to the east, approximately 4.97 miles (8,000 meters) to the south, and between
0.93 and 1.24 miles (1,500–2,000 meters) off the north and west coasts closer to China. The re-
stricted area extends approximately 1.24 miles (2,000 meters) beyond the prohibited area to the
south and east. China does not recognize the restricted and prohibited waters surrounding Kin-
men. CNA, “Chinese Coast Guard Spotted near Kinmen after Warning,” Taipei Times, February
19, 2024; Taiwan’s Mainland Affairs Council, “The CCP Persistently Condones Illegal Fishing by
the ‘Three No’s’ Vessels. Taiwan will Continue Responding with Strict, Firm, and Consistent Law
Enforcement. The MAC Deeply Regrets the Baseless Accusations by the TAO in Disregard of the
Efforts by All Parties to Investigate the Cause and Handle the Follow-Up Matters of the Incident”
(中共長期縱容「三無」船舶違法濫捕,我方仍將持續嚴正穩健執法,國台辦無端指控,無視各方積極調查肇
因與善後處理的努力,陸委會深表遺憾), February 18, 2024. Translation; Taiwan’s Mainland Affairs
Council, Map of Kinmen Area Restricted (Prohibited) Waters (金门地区限制（禁止）水域图), June
† In 2021, China passed the China Coast Guard Law, which allows the CCG to engage in law
enforcement operations in “maritime areas under Chinese jurisdiction” (without defining those
areas) and to conduct forcible eviction of foreign military vessels that “violate” Chinese domestic
law. The law stipulates that Chinese authorities may use all means—including force—against for-
eign organizations or individuals it judges to be infringing on Chinese sovereignty, and it allows
them to set up provisional maritime warning areas in which the passage of vessels and people
could be restricted or prohibited. Japan Ministry of Defense, The Coast Guard Law of the People’s
Republic of China; China Coast Guard, Provisions on Administrative Enforcement Procedures
of Coast Guard Agencies (2024) ((2024年)海警机构行政执法程序规定), May 16, 2024. Translation;
China Daily, “ ‘Kinmen Model’ Can Be Expanded to Taiwan Strait,” May 14, 2024.
633
July seizure of a Taiwan-registered fishing boat by the CCG in the

waters off the coast of Kinmen.174 According to Director-General
Hsieh, this is the first such incident since 2007.175 (For more on
CCG operations in the Indo-Pacific, see Chapter 2, “U.S.-China Se-
curity and Foreign Affairs (Year in Review).”)
While Taiwan continues to develop and train its coast guard to com-
bat China’s gray zone operations, it remains outmatched by the CCG.
Taiwan’s Coast Guard Administration (CGA) responds regularly to
Chinese maritime incursions, as it did during the PLA’s Joint Sword
2024A exercise this year when CGA ships warned off CCG ships that
had entered restricted waters around the Taiwan-controlled outlying
islands of Dongyin in Matsu and Wuqiu in Kinmen.176 Taiwan has
been steadily designing and launching advanced coast guard vessels as
part of a shipbuilding project that was initiated in 2018.177 The project
aims to build 141 vessels by 2027, including four 4,000-ton class patrol
vessels, six 1,000-ton class patrol vessels, 12 600-ton class patrol ves-
sels, 17 100-ton class patrol boats, 52 35-ton class patrol boats, and 50
littoral utility boats.178 Despite this investment, Taiwan’s coast guard
forces are outmatched by the CCG in terms of both numbers and ton-
nage.179 Taiwan also cannot match the CCG’s ability to draw resourc-
es from China’s other maritime forces, such as the Maritime Security
Agency, which has at least three dozen oceangoing vessels as well as
hundreds of smaller patrol craft, or the thousands of fishing vessels
associated with China’s maritime militia.180
Figure 3: Comparison of China and Taiwan’s Coast Guard Fleet
China Coast Guard (CCG) Taiwan Coast Guard Administration (CGA)

545 Patrol and Coastal Combatants* 170 Patrol and Coastal Combatants
100 Ships 100 Ships
* Not counting China Maritime Safety Administration or China Maritime Militia Vessels
Note: Chart depicting the number of ships in both the CCG and Taiwan’s CGA in units of 100.
Source: International Institute for Strategic Studies, “Military Balance: Asia,” 124:1 (2024):
263, 317.
To date, China has not faced significant repercussions for its ex-
panding gray zone activities against Taiwan. Taiwan’s military and
coast guard regularly intercept Chinese aircraft and vessels violat-
ing its ADIZ and waters but have not taken more aggressive action
to date.181 The U.S. Department of State responded to the CCG’s
634
seizure of a Taiwan fishing vessel by stating it was closely monitor-

ing the incident and called for resolution via open communication
between both sides, but it did not unveil any punitive actions.182
Lai Administration Continues Defense Reforms, Pursuing
Asymmetric Capabilities and Better-Trained Personnel
The Lai Administration has made it clear that it intends to con-
tinue the military strategy embraced by the previous Tsai Admin-
istration. High-level personnel shuffling has retained veterans of
the previous administration, indicating commitment to the ongoing
reforms of Taiwan’s military. Taiwan continues to modernize its mil-
itary human capital, improving training, launching quality-of-life re-
forms, and taking the first steps toward a new military culture bet-
ter suited to modern warfighting conditions. In public statements,
defense officials have committed to adopting equipment applicable
to an asymmetric strategy, but Taiwan’s armed forces continue to
desire conventional platforms useful for responding to the pressure
created by China’s daily gray zone operations.183 The United States
continues to support Taiwan’s defense through increasing focus on
resources in the Indo-Pacific and via arms sales to Taiwan, but is-
sues remain in the delivery of long-awaited systems.
Taiwan’s National Security Apparatus Maintains Course,
Enhances Resilience Efforts
Taiwan’s new cabinet signals a continuity of policy under Lai by
retaining veteran security officials. Tsai Ming-yen remains as direc-
tor-general of Taiwan’s principal intelligence agency, the National
Security Bureau, a position typically held by former military officers
and one Tsai has held since January 2023.184 Joseph Wu, former for-
eign minister, heads Taiwan’s National Security Council, a position
he previously held under Tsai from 2016 to 2017.185 Secretary-Gen-
eral of Taiwan’s National Security Council Wellington Koo serves
as defense minister—the first not drawn from the ranks of retired
generals since 2013.186 Koo’s appointment is likely intended to cre-
ate a greater push for the Lai Administration’s desired reforms and
changes to the political culture of the armed forces.187
Taiwan is also seeking to enhance the resilience of its society and
institutions to better prepare for various contingencies. In June
2024, Lai announced the creation of the Whole-of-Society Defense
Resilience Committee under the Presidential Office and announced
he would serve as its head.* 188 Lai’s establishment of that commit-
tee signals a fresh commitment to improving Taiwan’s civil resil-
ience. According to Lai, the committee will enhance emergency pre-
paredness and disaster resilience by focusing on expanding civilian
training, ensuring adequate supplies and shelters, and reinforcing
energy and critical infrastructure security.189 Lai emphasized the
importance of the public’s commitment to resiliency initiatives, not-
ing that “only when our entire society possesses a strong will for
self-defense and an unwavering confidence in ourselves can Taiwan
effectively respond to various disasters and risks.” 190
* Vice President Hsiao Bi-khim, National Security Council Secretary-General Joseph Wu, and
Secretary-General to the President Pan Men-an will serve as deputy conveners. Office of the
President, Republic of China (Taiwan), President Lai Holds Press Conference to Mark First Month
in Office, June 19, 2024.
635
Societal resilience is key as Taiwan faces threats of blockade or

invasion from China. Taiwan’s handling of disinformation enhances
its societal resilience while government and civil society organiza-
tions continue to bolster its civil defense capabilities.191 In Septem-
ber 2024, the U.S. nonprofit Spirit of America and Taiwan’s Forward
Alliance held a joint emergency preparedness exercise in Taipei with
over 300 participants taking part in the exercise, which was attend-
ed by Vice President Hsiao Bi-khim.192 China-origin disinformation
efforts have been pushing various narratives designed to degrade the
Taiwan public’s will to resist should a conflict break out.193 Scott W.
Harold, senior political scientist at the RAND Corporation, assesses
these include narratives designed to induce doubts about Taiwan’s
leadership, present Taiwan’s armed forces as incapable of defending
the island, and spread fears that the United States would abandon
Taiwan in a contingency.194 Experts assess that perceptions of the
likelihood of U.S. military intervention in the event of conflict are
a key factor in the Taiwan public’s willingness to resist a Chinese
attack and a major focus of Chinese state-sponsored disinformation
efforts.* 195 Polls conducted by Taiwan’s National Chengchi Univer-
sity examining Taiwan’s confidence in U.S. involvement in a conflict
have shifted based on U.S. actions. For instance, public confidence
temporarily declined after observations that the United States was
only sending weapons to Ukraine, rather than troops.196 Later in
2022, academic researchers in Taiwan found that visits by high-level
U.S. officials to the island had boosted confidence in the U.S. com-
mitment to Taiwan.197 A 2024 poll found that about 54 percent of
people in Taiwan believed the United States would come to Taiwan’s
aid regardless of who the U.S. president is, even as only around
24 percent of respondents in Taiwan viewed the United States as
“trustworthy” or “very trustworthy.” 198 Other 2024 polls conducted
in Taiwan found that respondents who were not confident in U.S.
military involvement in a Taiwan conflict correspondingly had low
confidence in Taiwan’s military capabilities and lower willingness
to fight.199 More broadly, polling conducted by Taiwan’s Institute
for National Defense and Security Research (INDSR) from Septem-
ber 2021 to August 2023 found that support among Taiwan’s popu-
lace to fight to defend Taiwan averaged between 65 percent and 75
percent during those two years.200 The most recent INDSR survey,
published in October 2024, is consistent with earlier results, finding
that about 68 percent of respondents would be willing to fight to
defend Taiwan and approximately 53 percent believed the United
States would send troops to Taiwan to aid in its defense.† 201
* A survey conducted by the Election Study Center at National Chengchi University in 2024
found that 59.6 percent of respondents believe the United States will use force to defend Taiwan
if China attacks, with 31.7 percent believing it will not; 58.2 percent of respondents answered
that U.S. support for Taiwan’s security had increased in recent years. National Chencghi Univer-
sity, “2024 Survey Results of the ‘American Portrait’ Press Release,” July 18, 2024.
† According to Li Guangcheng, assistant research at the National Defense Academy, the poll
results also indicated that if China invades Taiwan with force, most of the Taiwan public believes
the United States would help Taiwan in indirect ways such as “airlifting food or medical supplies
to Taiwan,” “impos[ing] economic and diplomatic sanctions on China,” and “provid[ing] weapons
and military supplies to Taiwan.” However, there are reservations regarding the possibility of
direct military intervention by the United States should conflict occur. Lai Yuzhen, “Institute for
National Defense and Security Research Survey: More than Half of the Public Thinks That U.S.
Troops Would Come to Help if China Militarily Invades Taiwan” (國防院民調:中國若武力犯台逾半
民眾認為美軍將馳援), Central News Agency, October 9, 2024. Translation.
636
Taiwan Continues Military Reforms to Manpower and

Training
Taiwan has taken steps to reform its armed forces, addressing a
variety of issues related to training and recruitment, but it remains
difficult for outside observers to assess its progress. Shortly after
becoming defense minister, Koo emphasized the importance of devel-
oping better combat resilience, mobilizing civilian defense, strength-
ening reserve forces, promoting defense autonomy, and prioritizing
the wellbeing of soldiers.202 Defense Minister Koo has ordered up-
dates to military regulations to improve the quality of life of Taiwan
troops and remove training judged to have little practical use in
modern warfare, such as bayonet drills and ceremonial goose-step-
ping.203 Before being cut short after three days due to troops being
mobilized to support disaster-relief efforts following Typhoon Gaemi,
the field portion of Taiwan’s annual Han Kuang exercise was to be
unrehearsed and less scripted than in previous years and to feature
Taiwan forces operating at night and independently of orders from
central command.* 204 Exercises were also to be staged involving
military-civilian cooperation, including testing the ability to conduct
wartime supply delivery missions to maintain links to the outside
world in the event of a blockade.205 Such reforms are intended to
address criticisms that Taiwan’s military training lacks realism
and rigor, with Koo stating that Taiwan’s Ministry of National De-
fense would cancel live-fire exercises that are “put up for a show
or demonstration purposes only.” 206 An October 2023 report by the
Legislative Yuan’s Budget Center showed Taiwan has 155,218 active
volunteer soldiers, the lowest number in its military in the past five
years, and some army units are manned at as low as 80 percent of
their authorized strength.207 Combined with Taiwan’s longstanding
recruitment problems for its volunteer force, this situation height-
ens the need for Taiwan’s active conscripts and reservists to become
better trained and more capable.208
Taiwan Continues Reforms to Conscription System
Taiwan has prioritized reforms to its conscription system, but
challenges remain in implementation. In January 2024, Taiwan’s
government followed through with its Strengthening All-People’s
Defense Military Force Restructuring Plan, announced by then Pres-
ident Tsai in 2022 to initiate a new program that would extend con-
scripted military service for males from four months to one year.209
This program reverses a decline in mandatory conscription periods
that successive Taiwan administrations had pursued since the early
2000s; the Chen Shui-bian Administration reduced the mandatory
length of service from two years to one year in 2008, while the Ma
Ying-jeou Administration in 2013 reduced the mandatory length of
conscription from one year to fourth months.210
Taiwan’s Ministry of National Defense has improved basic training
for conscript troops, basing the eight-week course on the training re-
ceived by active-duty soldiers.211 Announced reforms in 2023 involve
* Taiwan’s military did exercise portions of the planned exercises during the first three days,
including naval and air disbursal drills, naval mine-laying drills, mobilization of reservists, and
a “nighttime counter-infiltration drill.” John Dotson, “The 2024 Han Kuang Exercise—a Small
Step towards More Decentralized Operations for Taiwan’s Military?” Global Taiwan Institute,
August 7, 2024.
637
more civil defense training, including medical training, air defense

evacuation, and emergency rescue training intended to enhance the
resiliency of Taiwan’s populace by increasing the number of civilian
former conscripts trained in civil defense skills.212 The new train-
ing will include greater weapons familiarization for the individual
conscript; training with advanced weapons; and nuclear, biological,
and chemical (NBC) training.213 Most of the new conscript recruits
will be directed to service in the army’s new “garrison troops” classi-
fication—the forces charged with performing territorial defense and
rear-echelon service as defined by the government’s 2022 plan.214
The new program represents a significant social change and could
provide additional manpower to the understrength Republic of Chi-
na (ROC) armed forces by freeing up active-duty volunteers to fo-
cus on combat operations.215 Issues with implementation of these
reforms remain, however; due to lack of equipment, some one-year
conscripts did not train on the use of drones or advanced weap-
ons this year as originally planned.216 Questions also remain about
how the Taiwan Ministry of National Defense will manage the new
conscripts once their year of active service concludes and they are
enrolled in Taiwan’s reservist program.217
Taiwan Seeks to Expand Reserve System
Taiwan’s reforms to its reservist systems also aim to alleviate its
military manpower shortages. As part of the 2022 plan, Taiwan’s
Ministry of National Defense was to improve the training and readi-
ness of Taiwan’s reservists.218 Defense Minister Koo has highlighted
reforms to Taiwan’s reserves as a priority.219 There are some indi-
cations of improvements. Taiwan has launched a limited expansion
of firearms refresher programs for reservists and has opened the
reserves to female veterans.220 However, Taiwan faces a significant
challenge in reforming its reserves into an effective force. In 2022,
Major General Yu Wen-cheng of Taiwan’s All-Out Defense Mobiliza-
tion Agency stated that training capacity limitations mean Taiwan
can only host training for approximately 110,000 reservists per year,
a number far smaller than the 300,000 reservists required to under-
go annual training.221 Taiwan reservists are officially required to
undergo a refresher training course every two years, but in practice,
many attend far less frequently. 222 Taiwan launched an extended
two-week refresher training course for reservists in 2022, but re-
portedly only one-fifth of eligible reservists were able to participate
in that program as of 2023.223 Furthermore, Taiwan’s army report-
edly does not have enough weapons and equipment to supply all of
its reserve troops should they be mobilized.224
Taiwan Continues Development and Procurement of
Indigenous Asymmetric Systems
Taiwan continues to develop indigenous advanced military equip-
ment applicable to an asymmetric warfighting strategy. While Tai-
wan has made progress on reforms, its military is pulled between
the competing priorities of reform and modernization, adopting
asymmetric equipment, and maintaining conventional capabilities
to respond to China’s gray zone operations. In a report to the Leg-
islative Yuan, Defense Minister Koo emphasized the importance of
638
adopting an asymmetric strategy focused on “precision, mobility,

lethality, dispersion, survivability, and cost-effectiveness.” * 225 He
has indicated that Taiwan is developing new battlefield air defense
systems, high-performance naval ships, prototype submarines, vari-
ous drone types, and precision munitions such as the Hsiung Feng
IIE land-attack cruise missiles and Wan Chien air-to-ground cruise
missiles.† 226 Specific examples of capabilities that would further an
asymmetric warfighting strategy include:
• Corvettes: In March 2024, Taiwan’s navy commissioned four
Tuo Chiang-class corvettes equipped with anti-ship and
anti-air missiles as well as stealth capabilities.227 Taiwan
currently has six of the corvettes and hopes to have 11 by
2026.228
• Drones: Taiwan is in the process of acquiring an initial 3,225
micro and small military drones from local suppliers by 2025,
making progress toward the goals of sourcing from domestic
suppliers a fleet of 7,000 commercial and 700 military drones by
2028, as laid out in Taiwan’s 2023 National Defense Report.229
However, Taiwan’s indigenous drone program faces problems in
some areas; for example, its Teng Yun drone, first unveiled in
2015, is still undergoing testing.230
• Anti-drone system: Taiwan also recently integrated a new
electronic warfare anti-drone weapon into its armed forces in
late February 2024, part of a $146 million program aimed at
strengthening defense capabilities across Taiwan’s military
bases and countering Chinese drone intrusions over its out-
lying islands.231
• A new military innovation unit: Defense Minister Koo also an-
nounced the creation of a new military technology development
unit modeled after the U.S. Defense Innovation Unit.‡ 232 The
new unit, which will report directly to Koo, will work to com-
bine the resources and capabilities of the Ministry of National
Defense’s top research unit, the National Chung-Shan Institute
of Science and Technology (NCSIST), with those of other civil-
ian-run defense technology companies.233 Instead of attempting
to develop defense technology from scratch, the new unit will
instead focus on investing in proven defense technologies such
as next-generation drones and unmanned ships.234 NCSIST has
* In August, Taiwan’s Ministry of National Defense announced it would be retiring over 1,000
aging vehicles and weapons systems between 2024 and 2028, including M41D tanks, CM24 ar-
mored vehicles, and F-5 jets, some of which had been in service for over 50 years. The Ministry
of National Defense claimed that the decommissioning of the systems will result in savings of
$98.6 million. Focus Taiwan, “Taiwan Military to Retire M41D Tanks, CM24 Armored Vehicles,
F-5s in 5 Years,” August 13, 2024.
† Taiwan has also ordered equipment to enhance infantry capability with improved ballistic
vests scheduled for delivery in 2025, built to U.S. military standards and reportedly able to with-
stand hits from standard-issue PLA bullets. Taiwan has also ordered 80,000 new T112 assault
rifles for use by Taiwan’s army, reserves, and military police that are set for delivery from 2025
to 2028. The newly developed rifles feature a standard optical sight and increased range and
barrel life. Taiwan News, “Taiwan Army to receive over 80,000 T112 rifles in 2025,” September
19, 2024; Military News Agency, “Minister Gu Thanked Friends in the Media For Emphasizing
The Continued Improvement Of National Defense Capabilities And Resilience” (顧部長感謝媒體
諍友強調持續提升國防戰力與韌性), September 19, 2024. Translation; Joe Saballa, “Taiwan Army
to Buy 25,000 Upgraded Assault Rifles: Reports,” Defense Post, April 9, 2024.
‡ The Defense Innovation Unit is an organization within the U.S. Department of Defense that
was established to expedite the U.S. military’s adoption of emerging commercial technologies
through partnerships with private technology companies. Defense Innovation Unit, About.
639
reportedly launched a two-year “unmanned attack vessel” devel-

opment program, with the goal of starting production of at least
200 unmanned ships by 2026.235
Taiwan’s defense spending as a share of its gross domestic prod-
uct (GDP) has remained steady even as it continues to increase the
nominal total. In August 2024, the Lai Administration proposed a
2025 defense budget 7.7 percent larger than the previous year, at
$20.2 billion, a record high.236 Although an increase in gross spend-
ing, this proposed budget would amount to 2.45 percent of Taiwan’s
GDP, a slight decrease from the previous two years’ budgets that
had rates closer to 2.5 percent of GDP.237 Hsieh Chi-hsien, head of
the Ministry of National Defense’s Comptroller Bureau, notes that
increasing the budget to 3 percent of GDP remains a goal, but does
not give a timeline.238 The proposal includes funding for the man-
ufacture of seven additional indigenous submarines and a special
fund for local development and production of missiles.239
Taiwan Learns Lessons from Russia’s War in Ukraine
Taiwan continues to observe the Ukraine conflict for lessons that
may apply in the case of Chinese military action. The conflict in
Ukraine gave Taiwan greater impetus to reform its reservist sys-
tem, enhance reservist training, and better incorporate reservists
into defense plans.240 In the summer of 2022, following Russia’s
invasion of Ukraine, reservists were featured in Taiwan’s annual
Han Kuang exercise and have been involved in subsequent annual
exercises.241 Taiwan’s 2023 National Defense Report notes that the
war in Ukraine underscores the importance of energy security and
Taiwan’s vulnerability to disruptions of the international food mar-
ket, energy imports, and supply chains for military materiel.242 The
report specifically cites the conflict in Ukraine as the reason for the
Taiwan government’s renewed emphasis on civil-military coordina-
tion and the publication of All-Out Defense Handbooks in 2022 and
2023.243 The expansion of Taiwan’s annual Wan An air raid drill
and enhanced efforts to build its drone fleet have also reportedly
occurred in response to lessons learned from Ukraine.244
Taiwan has begun a program to launch its own communications
satellites to ensure connection to the outside world in the event of
Chinese military action, inspired by the role that SpaceX’s Star-
link constellation has played in Ukraine’s defense.245 Similar to
Starlink, Taiwan’s system would provide internet access through
low Earth orbit (LEO) satellites, allowing individuals to tap into
the data link emitted from overhead satellites for a variety of
purposes, including civilian communication as well as military
command and control.246 In 2023, then President Tsai pledged
an additional $1.3 billion to Taiwan’s space program, which aims
to begin launching its first dedicated communication satellite by
2026.247 Taiwan’s Ministry of Digital Affairs announced in July
2024 that LEO and medium earth orbit satellite signals now cov-
er all of Taiwan and its outlying islands.248 The ministry also
tested LEO satellites’ connectivity to over 700 ground terminals
enabling military and government users to maintain communica-
tion capabilities during emergencies for a period of 12 hours each
day via commercial satellites.249
640
The United States Continues to Provide Support for Taiwan’s

Defense
The United States continues to support Taiwan’s defense through
arms sales (see Appendix II) and foreign military financing path-
ways. Regarding priority acquisitions from the United States, De-
fense Minister Koo outlined plans to Taiwan’s legislature to procure
Patriot III Extended Range air defense missiles, Harpoon precision
strike systems, Exocet missile coastal defense systems, F-16V fight-
ers, and other long-range precision weapons for air, land, and mar-
itime targets.250 A slate of man-portable anti-air and anti-armor
munitions ordered in 2015 is expected to be delivered to Taiwan
by the end of this calendar year.251 In a significant boost to Tai-
wan’s asymmetric systems inventory, the U.S. Department of State
announced in June 2024 that it had approved the sale of over 1,000
loitering munitions for sale to Taiwan to be delivered by the end
of 2025.252 However, Taiwan also remains committed to building
expensive, conventional systems, such as the Yushan-class landing
platform docks, commissioning the first such vessel in 2022 with
a total of four planned.253 Taiwan’s anticipated delivery of F-16V
fighters and Abrams tanks are also of questionable applicability to-
ward an asymmetric strategy and make up over half of the current
backlog of arms sales to Taiwan.254
Despite U.S. support, significant challenges remain with the back-
log of arms that have been ordered but not yet delivered. The back-
log of U.S. arms sales to Taiwan is currently estimated at over $19
billion in gross value.255 According to analysis conducted by the
CATO Institute, 55 percent ($10.87 billion) of the backlog’s value is
for capabilities considered “traditional” (e.g., F-16V, M1A2T Abrams
tanks) rather than those supporting an “asymmetric” strategy (e.g.,
Harpoon coastal defense system, HIMARS,* and munitions).256 For
example, two U.S.-made MQ-9B SkyGuardian drones, originally or-
dered in 2020, are not set for delivery until 2026, with another pair
slated for 2027.257 The MQ-9Bs are a platform that could also assist
Taiwan in countering China’s gray zone campaign by monitoring
Chinese naval assets. In addition to delays resulting from limita-
tions in the U.S. defense industrial base, a House Foreign Affairs
Committee Foreign Military Sales TIGER Task Force report pub-
lished in February 2024 assesses several causes for Foreign Military
Sales (FMS) delays attributed to the U.S. government’s FMS pro-
cesses.258 The task force finds that more arms sales cases are sub-
ject to congressional review because that threshold has not scaled
with increases in costs of advanced systems over time, causing far
more cases to be subject to congressional review than originally in-
tended.† 259 The task force also attributes delays in the process to a
* U.S.-supplied High Mobility Artillery Rocket System (HIMARS) medium-range mobile rocket
artillery systems have proven to be highly effective when employed by the Ukrainian military in
its conflict with Russia. Lyle Goldstein and Nathan Waechter, “China Considers CounterMeasures
to US HIMARS Missile System,” Diplomat, June 22, 2023.
† Congress is to be notified for major defense equipment sales of $14 million or more, any de-
fense articles and services of $50 million or more, and design and construction services of $200
million or more, with a 30-day review period. This threshold was last set in 2003 and has not
been adjusted for inflation since. While this process is typically resolved quickly, the task force
found that it has been the cause of significant delays in a small number of cases. House Foreign
Affairs Committee, Foreign Military Sales Foreign Military Sales TIGER Task Force: Report, Feb-
ruary 7, 2024, 8.
641
lack of a sense of urgency among relevant agencies, as well as the

time it takes to reconfigure weapons systems to comply with U.S.
export policy.* 260
The task force and Administration officials find that another criti-
cal factor contributing to weapons delays are systemic issues within
the U.S. defense industry itself.261 Consolidation across the defense
industry has left fewer suppliers and production lines to meet grow-
ing demand for U.S. weapons abroad, a challenge that has been ex-
acerbated by complex production processes and long supply chains
that are vulnerable to disruption.262 Inconsistent demand signals
from the U.S. government due to yearly budget uncertainty and
continuing resolutions have led defense manufacturers to purpose-
ly refrain from investing in greater manufacturing capacity lest an
anticipated demand fail to materialize.263 In an attempt to address
these delays and long delivery timelines, Taiwan has increased pro-
duction of indigenous systems and is exploring munitions co-produc-
tion.264 (For more information on the U.S. defense industrial base,
see Chapter 8, “China’s Evolving Counter-Intervention Capabilities
and the Role of Indo-Pacific Allies.”) Taiwan is in the early stages
of partnering with U.S. defense contractor Northrop Grumman to
produce 30 mm munitions on-island under license.265
Prominent leaders in Taiwan have called for closer cooperation
with the United States to help Taiwan produce and procure the
weapons necessary for effective deterrence and defense. In May
2024, Taiwan’s then Vice President-elect, Hsiao Bi-khim, suggested
that Taiwan and the United States enter into a Security of Supply
Arrangement, an idea that was also endorsed by Taiwan’s minister
of foreign affairs at the time, Joseph Wu.266 Security of Supply Ar-
rangements aim to “ensure the mutual supply of defense goods and
services” by encouraging partner nations “to acquire defense goods
from each other, promote interoperability, and provide assurance of
timely delivery during peacetime, emergency, and armed conflict.” 267
The United States currently maintains Security of Supply Arrange-
ments with 18 countries, including Indo-Pacific countries such as
India, Japan, Korea, Australia, and Singapore.† 268
In 2024, U.S. lawmakers continued to seek new pathways to pro-
vide for the defense of Taiwan while reducing the backlog of arms
sales to Taiwan’s military. The Further Consolidated Appropriations
Act 2024 makes available no less than $300 million in foreign mil-
itary financing (FMF) for Taiwan.269 Separate emergency supple-
mental appropriations for fiscal year (FY) 2024 include $8.12 billion
to strengthen U.S. military capabilities and infrastructure in the
Indo-Pacific and assist Taiwan and other regional partners in de-
terring China.270 This includes $1.9 billion specifically for replacing
* The task force also found that the lack of a “common operating picture” for the FMS process
across DOD, the State Department, defense industry, and U.S. allies and partners has led to con-
fusion and inefficiency in FMS cases globally. House Foreign Affairs Committee, Foreign Military
Sales Foreign Military Sales TIGER Task Force: Report, February 7, 2024, 3.
† The 18 countries with which the United States maintains Security of Supply Arrangements
are as follows: Australia, Canada, Denmark, Estonia, Finland, India, Israel, Italy, Japan, Latvia,
Lithuania, the Netherlands, Norway, the Republic of Korea, Singapore, Spain, Sweden, and the
United Kingdom. Canada is included in the list of countries with which the United States main-
tains Security of Supply Arrangements because DOD has a Memorandum of Understanding with
Canada to “mutually provide priorities support.” Assistant U.S. Secretary of Defense for Industri-
al Base Policy, Security of Supply; U.S. Department of Defense, DOD, India Ministry of Defence
Enter into Security of Supply Arrangement, August 22, 2024.
642
stocks of U.S. defense articles and for services provided to Taiwan

and $2 billion in FMF for the Indo-Pacific region as a whole, of which
Taiwan could be a recipient.271 This emergency supplemental could
enable the Biden Administration to authorize further Presidential
Drawdown Authority (PDA) transfers to Taiwan now that the U.S.
military has funding to backfill any transferred equipment.272 PDA
use by the Administration is unlikely to significantly reduce Tai-
wan’s arms sale backlog, however, as it is not applicable to the big-
gest-ticket items on backlog.273 PDA only enables the Administra-
tion to send defense articles that are already in the U.S. military’s
inventory.274 Taiwan’s F-16V aircraft, which make up approximately
40 percent of the backlog, are not applicable to PDA, as that variant
is not in U.S. military inventory and is still being manufactured for
Taiwan.275
Taiwan Advances Unofficial Ties while Beijing
Works to Build Support for Its Territorial Claim
Taiwan began the year with a critical election that had global
ramifications. Immediately after Lai’s election, Beijing intensified
its international campaign designed to further diplomatically isolate
Taiwan. In response to international support for Taiwan, China has
become increasingly vocal in its protestations and heavy-handed in
its approach. Beijing’s strategy has evolved, with Chinese officials
now more blatant in their deliberate misrepresentation of interna-
tional law and diplomatic agreements that serve their claim that
Taiwan is an inalienable part of China.
Beijing’s International Diplomacy Seeks to Isolate Taiwan,
Build Support for “Reunification”
Taiwan continues to lose diplomatic allies as a result of Chinese
pressure to switch diplomatic recognition. Immediately after the re-
sults of Taiwan’s presidential election were announced in January
2024, the country of Nauru switched diplomatic recognition from
the ROC to the People’s Republic of China (PRC) in a move that
was likely purposefully timed to be announced after the election.276
Taiwan’s Central News Agency (CNA) claimed the switch was con-
nected to a funding shortfall related to the Australian immigration
detention facility Nauru hosts.277 Prior to the switch, CNA claims
Nauru had asked Taiwan for $83.23 million to keep the facility
open.278 (For more on China’s engagement with Pacific Islands, see
Chapter 2, “U.S.-China Security and Foreign Affairs (Year in Re-
view).”) Taiwan is now left with 12 diplomatic partners in a contin-
uation of a trend that Beijing accelerated in 2016 after the election
of Tsai, when Taiwan had formal relations with 22 countries.* 279
Beijing has been campaigning internationally to conflate various
countries’ “One China policy” with its own “One China principle,”
accusing U.S. officials of violating the “One China principle” despite
the United States never endorsing Beijing’s viewpoint.† 280 (For a
* The remaining states that officially recognize Taiwan are: the Marshall Islands, the Republic
of Palau, Tuvalu, Eswatini, the Holy See, Belize, the Republic of Guatemala, Haiti, the Republic of
Paraguay, St. Kitts and Nevis, Saint Lucia, and St. Vincent and the Grenadines. Taiwan Ministry
of Foreign Affairs, Diplomatic Allies.
† China’s “One China principle” refers to the Chinese government’s position that Taiwan is an
inalienable part of the state called “China” ruled by the PRC. Countries that maintain official
643
discussion of the differences between Beijing’s “One China princi-

ple” and the U.S. “One China policy,” see Appendix I.) For example,
the Chinese consulate in Los Angeles directly misrepresented the
United States’ position in a May 2024 statement, falsely writing
that the United States “recognizes” China’s position that there is
only one China and Taiwan is part of China.* 281 That same state-
ment falsely claimed that every nation that established diplomatic
relations with Beijing has endorsed its “One China principle” and
that the principle is universally recognized.282 Chinese government
officials routinely accuse the United States of violating the “One
China principle” for actions such as defense sales to Taiwan despite
the United States never agreeing to the principle.283 In a similar ex-
ample, China misleadingly portrayed Ireland as in agreement with
its “One China principle” during a recent meeting between leaders.
According to the Chinese readout of a January 2024 meeting be-
tween Irish Prime Minister Leo Varadkar and Chinese Premier Li,
Varadkar stated that Ireland abides by the “One China principle”
and that he “hopes that China will achieve peaceful reunification
at an early date.” 284 Varadkar later corrected the record however,
stating that at the meeting he had instead reaffirmed Ireland’s One
China “policy.” 285
In an important departure from the past, in 2024 Beijing also be-
gan to actively cultivate support from other countries for Taiwan’s
“reunification” with the Mainland. (For more on Beijing’s use of “re-
unification,” see Appendix I.) No longer satisfied with states just
voicing support for the “One China principle,” China has apparently
begun persuading countries to make statements endorsing China’s
“national reunification.” 286 This strategy has been evident in several
statements between Chinese officials and foreign leaders, particular-
ly in countries looking to China for economic development.287 In a
statement during Chinese Premier Li’s visit to Malaysia on June 20,
for example, Prime Minister Anwar Ibrahim said that his country
firmly supports China in “achieving national reunification.” 288 King
Hamad bin Isa Al Khalifa of Bahrain has said he supports “peaceful
reunification,” while leaders from Equatorial Guinea, Egypt, Paki-
stan, and Suriname have said they support “reunification” or “com-
plete reunification” without reference to peaceful conditions.289 After
separate meetings between Xi and their respective heads of state
this year, the Solomon Islands, Vanuatu, and the Federated States of
Micronesia all expressed support for China’s “national reunification,”
while Fiji reaffirmed “its adherence to the one-China principle.” 290
ties with Beijing and unofficial ties with Taiwan often use the phrase “One China policy” to de-
scribe their own stance of officially recognizing the PRC while simultaneously recognizing that
the interpretation of “One China” is up for debate. The United States maintains its own “One
China policy” that similarly recognizes the PRC as the sole legal government of China, but it
does not endorse—it only acknowledges—Beijing’s position that Taiwan is a part of China, with
the expectation that cross-Strait differences would be resolved peacefully. (For a fuller discussion
of Beijing’s “One China policy,” see Appendix I.) Amrita Jash, “The ‘One China Principle’: China’s
‘Norm’ versus Global Realities, Global Taiwan Institute, February 21, 2024; Economist, “A New
Diplomatic Struggle Is Unfolding over Taiwan,” January 25, 2024; Steven M. Goldstein, “Under-
standing the One China Policy,” Brookings Institution, August 31, 2023.
* In May 2024, the Chinese consulate in Los Angeles claimed that “UNGA Resolution 2758 fully
reflects and solemnly reaffirms the one-China principle” and that the resolution “made clear”
that “Taiwan is a part of China, not a country,” despite the complete absence of any judgment on
sovereignty over Taiwan in the resolution. Consulate-General of the People’s Republic of China
in Los Angeles, UNGA Resolution 2758 Brooks No Challenge, and the One-China Principle Is Un-
shakable, May 17, 2024; Jessica Drun and Bonnie Glaser, “The Distortion of UN Resolution 2758
and Limits on Taiwan’s Access to the United Nations,” German Marshall Fund, March 24, 2022.
644
Beijing’s Efforts to Distort UNGA Resolution 2758

Beijing has consistently misrepresented the meaning of UN
General Assembly (UNGA) Resolution 2758, asserting the res-
olution provides a basis in international law for its claim that
Taiwan is a part of China. The UNGA passed Resolution 2758 on
October 25, 1971, recognizing the representatives of the govern-
ment of the PRC as the “only legitimate representatives of China
to the United Nations” while simultaneously “expel[ling] . . . the
representatives of Chiang Kai-shek” (i.e., representatives from
Taipei’s government) from China’s seat at the UN.291 Because
member states were unable to reach a conclusion regarding the
legal status of Taiwan, Resolution 2758 solely addressed the ques-
tion of China’s representation in the UN and did not address the
question of Taiwan’s sovereignty.292 Nonetheless, Beijing has in-
creasingly asserted that Resolution 2758 endorses China’s sover-
eignty over Taiwan.293 According to a spokesperson for China’s
permanent mission to the UN in 2020, “Resolution 2758 of the
UN General Assembly has restored the lawful seat of the People’s
Republic of China at the UN and affirmed the one-China princi-
ple at the Organization, which has been strictly observed across
the UN system and widely respected by UN Member States.” 294
Beijing has used its influence to require official UN references
to Taiwan to be written as “Taiwan, Province of China” or refer
to Taiwan as an “integral part” of China.295 Beijing also invokes
Resolution 2758 to justify denying Taiwan’s international partic-
ipation in the UN or any other international organization whose
membership is confined to sovereign states.296 Beijing pressures
countries with which it maintains an official relationship to en-
dorse its interpretation of UNGA Resolution 2758. When the gov-
ernment of Nauru officially switched its recognition to the PRC
in January 2024, its statement specifically invoked Resolution
2758.297 If Beijing is successful in propagating its interpretation
of Resolution 2758 as analogous to its “One China principle,” it
may be able to more convincingly justify the use of force or coer-
cion against Taiwan as lawful.298
Beijing Attempts to Deter Engagement with Taiwan

International messages of congratulations to Lai after the presiden-
tial election were met with outcry from Beijing. When President Fer-
dinand Marcos of the Philippines congratulated Lai on his victory in
the 2024 presidential election, China’s ambassador to the Philippines
protested, stating that Marcos’ remarks “constitute a serious violation
of the One China principle and . . . a serious breach of the political com-
mitments made by the Philippines to the Chinese side” and suggesting
that Marcos ought to “read more books to properly understand the ins
and outs of the Taiwan issue, so as to draw the right conclusions.” 299
Similarly, when Singapore’s foreign ministry welcomed and congratu-
lated the election, China’s Ministry of Foreign Affairs swiftly delivered
démarches to Singapore.300 The Chinese Embassy in Japan also lodged
a protest with Japan’s government after the Japanese Foreign Minister
sent a congratulatory message to Lai.301
645
In response to international support for Taiwan, China engaged in

more blatant attempts to dissuade foreign officials from interacting
with it. For example, China waged an aggressive influence campaign
to deter participation in this year’s Inter-Parliamentary Alliance on
China (IPAC) * summit held in Taiwan. In the days leading up to
the July 2024 meeting, reports emerged of some delegates being con-
tacted by Chinese diplomats in what they said was a “clear attempt
to intimidate and dissuade” them from attending.302 The Guard-
ian reported that Luke de Pulford, executive director of IPAC, said
some members had received calls or demands for meetings sched-
uled at the same time as the summit to “express to them why they
shouldn’t wade into the Taiwan question,” or they were offered trips
to China “as if they could be bought off.” 303 At the summit, Taiwan
formally joined IPAC, with representatives from the DPP and TPP
selected to serve as co-chairs leading Taiwan’s delegation to the alli-
ance.† 304 IPAC members also launched the 2758 Initiative, pledging
to pass resolutions in their respective legislatures to reject Beijing’s
distortion of UNGA 2758 as international law.305 In March 2024,
the U.S. Department of Justice unsealed an indictment revealing
that in or about 2021, Chinese hackers associated with the Ministry
of State Security targeted 124 politicians that are members of the
alliance.306
Taiwan Deepens Engagement with Unofficial Partners in
Asia and Europe
Taiwan continued its efforts to find ways to deepen cooperation
with other like-minded democracies. European nations and political
parties appeared to be increasingly receptive to Taiwan’s outreach
and deepening economic relationships through trade agreements
and investments in the continent. In Asia, more countries enhanced
their relationships with Taiwan, much to Beijing’s ire.
Europe Increasingly Receptive to Taipei’s Outreach
Taiwan under DPP administrations has sought to strengthen ties
with European countries by appealing to shared values of democ-
racy and human rights, an effort the Lai Administration is seeking
to enhance during a moment of increased trade tensions between
Europe and China.307 Besides the Vatican, which maintains official
diplomatic ties with Taiwan, every other European country conducts
relations with Taiwan through unofficial channels, with many stip-
ulating their own versions of a “One China policy.” 308 The EU also
maintains a “One China policy” that recognizes the PRC as the sole
legal government of China while maintaining relations and coop-
eration with Taiwan in a variety of areas.309 Europe has a vested
interested in peace and stability in the Taiwan Strait. An estimated
* The Inter-Parliamentary Alliance on China (IPAC) is a cross-party alliance of 250 lawmakers
from 40 legislatures focused on relations with China and the CCP. The alliance was founded in
2020 and works to enhance the visibility of issues related to China and support lawmakers in
developing their countries’ China policies. Inter-Parliamentary Alliance on China, “Inter-Parlia-
mentary Alliance on China”; Inter-Parliamentary Alliance on China, “About.”
† Due to perceptions that IPAC is “anti-China,” no KMT representatives attended the IPAC
summit. KMT legislator Lin Szu-ming explains that although the KMT did not send any repre-
sentatives to participate in the summit, it also did not prevent KMT members from participating
on their own accord. Yang Yaoru, Wang Yangyu, and Wang Chengzhong, “DPP and TPP Attend
as Taiwan Joins IPAC, KMT Members Do Not Participate” (綠白出席台灣加入IPAC 藍委未參與),
Central News Agency, July 30, 2024. Translation.
646
40 percent of the EU’s external trade passes through the Taiwan

Strait, total trade with Taiwan was $73.8 billion in 2023, and some
30,000 Europeans live in Taiwan.310
In March 2024, then Vice President-elect Hsiao traveled to four
European countries: Belgium, the Czech Republic, Lithuania, and
Poland, marking the first visit of an incumbent Taiwan Vice Pres-
ident to Europe.311 In Brussels, Hsiao met with over 30 European
Parliament members, advocating for the uptake of a trade frame-
work between Taiwan and the EU similar to the U.S.-Taiwan 21st
Century Trade Agreement.312 In November 2023, Taiwan and the
UK signed an Enhanced Trade Partnership, the first such deal
in Europe.313 The bilateral framework came months after the EU
members scuttled an investment agreement between the bloc and
Taiwan proposed by the Tsai Administration.314 Notably, Taiwan
Semiconductor Manufacturing Company (TSMC) broke ground on
an $11 billion semiconductor fab in Dresden, Germany, in August
2024 after about half the funding was provided in subsidies by the
German government.315
Former Soviet and Eastern Bloc countries in central and eastern
Europe have been among the most outspoken in their support for
Taiwan. Their shared experience resisting a threatening revisionist
power intent on eroding their national identity has only come into
sharper relief since Russia’s invasion of Ukraine, opening an op-
portunity for Taiwan to appeal to these countries’ historical sense
of self determination.316 In 2021, Lithuania opened a “Taiwanese
Representative Office in Lithuania” using the national nomencla-
ture rather than Beijing-approved “Chinese Taipei,” a decision it has
upheld despite coming under pressure from China.317 Taiwan has
also stepped up efforts to foster business ties with the region with
the $200 million state-backed Central and Eastern Europe (CEE)
Investment fund.318
Taiwan Increasingly Factored into Indo-Pacific Nations’
International Policies
Japan and Taiwan continued to deepen ties, though limitations
remain. As discussed above, Japan congratulated Taiwan for a suc-
cessful democratic election and Lai on his victory, to China’s dis-
may.319 Lai hosted a delegation of 70 members of Japan’s Liberal
Democratic Party’s Youth Division in August, stating that Taipei
and Tokyo have “a shared future.” 320 Taiwan’s TSMC opened a
new plant in Kumamoto, Japan, and Japan increased imports of
Taiwanese pineapples, demonstrating Japan’s willingness to assist
Taiwan in withstanding China’s economic coercion.321 The Japan
Coast Guard and Taiwan’s CGA carried out a joint maritime ex-
ercise.322 In July 2024, a Taiwan coast guard ship, Hsun Hu No.
9, engaged in a search, rescue, and communication drill with the
Japan Coast Guard’s Sagami patrol vessel after making a port call
at Tokyo for supplies of fuel, water, and food.323 A Chinese Foreign
Ministry spokesman protested this event, stating: “We urge Japan to
abide by the ‘one-China’ principle . . . correct its mistakes immediate-
ly, not condone and support Taiwan independence separatist forces
in any form.” 324 Direct Japanese cooperation with Taiwan remains
limited, however, as the country lacks a domestic legal framework
647
for building closer ties, particularly on defense issues.325 Japan and

Taiwan maintain a regular maritime cooperation dialogue but lack
any kind of formal security cooperation.326 While Japan’s govern-
ment has started describing peace and stability in the Taiwan Strait
as important to its own security interests in strategic documents,
Japanese businesses are wary of economic retaliation should Japan
openly enhance ties during peacetime.327
Indo-Pacific nations are also increasingly signaling support for
maintaining peace in the Taiwan Strait through defense dialogues
and training. In August 2024, Australia and Canada released a
joint statement on strengthening their bilateral defense rela-
tionship that reaffirmed both nations’ commitment to deterring
conflict in the Indo-Pacific and opposing any unilateral changes
to the status quo in the Taiwan Strait.328 The joint statement
of the United States-Japan-South Korea Trilateral Chiefs of De-
fense Meeting in June 2024 emphasized the importance of peace
and stability across the Taiwan Strait.329 Likely in response to
the increased aggressive activities of the CCG around the Philip-
pines, Japan, and Taiwan, Japan conducted its first ever trilateral
coast guard exercise with the United States and the Philippines
in June 2024.330 The United States continues to deepen its part-
nership with the Philippines through joint training and the up-
grading of military bases in the Philippines, which may prove
vital in the case of a Taiwan contingency.331 (For more on U.S.
alliance-strengthening and deterrence efforts in the Pacific, see
Chapter 8, “China’s Evolving Counter-Intervention Capabilities
and the Role of Indo-Pacific Allies.”)
Taiwan Seeks to Diversify Trade
Taiwan’s economy registered strong topline growth in 2024, fueled
by global demand for its high-value technology exports as the shift
of outbound investment from Taiwan away from the Mainland ac-
celerated. Taiwan’s dynamic market economy in 2023 ranked 22nd
largest in the world, with a nominal GDP of $753.6 billion, just
behind Poland and ahead of Belgium.332 The island’s 23.4 million
inhabitants enjoy a high standard of living, with per capita income
of $76,900, when adjusted for purchasing power parity, over three
times higher than China ($25,000) and nearly on par with that of
the United States ($85,400).333 Taiwan achieved rapid economic ad-
vancement through pursuit of an export-oriented growth strategy,
and today exports still account for about 70 percent of total GDP.334
Taiwan is a top trading partner for both China and the United
States for important industries, including electronics, information
technology, petrochemicals, textiles, steel, cement, autos, pharma-
ceuticals, and machinery.335 Notably, Taiwan fabricates 92 percent
of the world’s most advanced semiconductors, an industry thrust
into greater prominence during pandemic-induced supply chain dis-
ruptions and continuing with the AI boom.336 In recent years, the
semiconductor industry has accounted for 13–15 percent of Taiwan’s
total economic output.337 Despite its prosperity, Taiwan’s economy
faces a number of external and internal destabilizing forces, includ-
ing threats from natural disasters, dependency on imported energy,
land and housing constraints, a low birthrate and an aging popula-
648
tion, ongoing economic coercion from China, and the risks of poten-
tial shocks from a breakdown in cross-Strait relations.338
The stability of the global economic system is inextricably linked
to the stability of Taiwan’s industries, particularly technology.339
Semiconductors are a key input across a variety of sectors, including
automotive, durable household goods, and consumer electronics. Giv-
en Taiwan’s critical position in semiconductor supply chains, a dis-
ruption to Taiwan’s output would increase prices across the board.
Staff economists from the U.S. International Trade Commission esti-
mated that, in the event of a major disruption of output in Taiwan,
the cost of logic chips may increase as much as 59 percent for buyers
in the United States.340 The authors stipulate this is a lower bound
estimate—they suggest price increases would be much higher after
accounting for U.S. imports of downstream products assembled with
Taiwan chips.* 341 The impact on the global economy from a disrup-
tion to Taiwan’s output would likely dwarf Russia’s 2022 invasion of
Ukraine, as recent projections from Bloomberg Economics estimate
a 5 percent drop in global GDP from a blockade scenario and a 10
percent drop in the event of Chinese invasion, equivalent to a cost
of $10 trillion.342
Taiwan’s Domestic Economy
Taiwan posted strong topline economic numbers to start 2024, re-
surgent on the back of global demand for advanced chips used for AI
applications.343 The government’s statistical bureau reported a year-
over-year real GDP growth rate of 6.56 percent in Q1 and 5.09 per-
cent in Q2, fueled by 11.4 percent year-over-year export growth.† 344
The Taiwan Stock Exchange (TWSE) has been on an extended bull-
ish run since October 2022; the weighted stock index is up 26.1
percent in the 2023 calendar year and 24 percent through Q3 of
this year.345 Over this period, Taiwan’s stock market has outper-
formed most exchanges globally, including U.S. exchanges, where the
S&P 500 grew 24.2 percent in 2023 and is up 20.8 percent through
Q3 2024.346 The market capitalization of Taiwan’s largest company,
TSMC, stood at $805.1 billion (NTD 25.6 trillion) ‡ on September 30,
2024, over one-third of the total value of the 997 companies listed
on the TWSE.347 So far this year, TSMC is responsible for about 70
percent of total market capitalization growth of all companies listed
on the exchange and has reported net revenue of $63.8 billion (NTD
2 trillion) through the first three quarters of 2024, a 31.9 percent
year-over-year increase.348
Beyond accelerated growth in the export sectors and the equi-
ty markets, key domestic economic indicators remained steady. The
unemployment rate was 3.48 percent in August 2024, and despite
concern over rising energy costs, inflation as measured by the con-
* Their model also assumes that chips from China could be used to replace supply from Taiwan,
which may also cause them to underestimate the price impact. Lin Jones et al., “U.S. Exposure to
the Taiwanese Semiconductor Industry,” U.S. International Trade Commission, November 2023,
26.
† It should be noted that a strong base effect is present in the GDP growth figure for Q1, as the
growth rate a year prior was -3.49 percent. For this reason alone, GDP growth for the remaining
quarters in 2024 is expected to moderate, with official estimates forecasting 3.94 percent GDP
growth for the whole of 2024.
‡ Unless noted otherwise, this section uses the following exchange rate throughout: $1 = NTD
31.8.
649
sumer price index (CPI) has remained relatively low at just under 2
percent.349 After ticking up interest rates 12.5 basis points in March
2024, Taiwan’s central bank held its benchmark discount rate at
2.00 percent in June.350 Real average wage growth grew in the first
half of 2024 for the first time in three years.351 The price of hous-
ing remains exorbitantly high, with the average price of a dwell-
ing in Taipei hovering around 16 times the average annual income,
higher than London (8.6 times), New York (5.9 times), or Vancouver
(13 times).352 Constrained land, high savings rates, and specula-
tion contributed to surging housing prices starting after the 2008
global financial crisis, yet since 2015 the unaffordability issue has
moved out of Taipei to smaller cities around the island.353 However,
some observers believe decreasing overall population * will alleviate
price pressure on housing in the coming years.354 In August 2024
consumer confidence reached its highest level since March 2020.355
Trade and Investment
Taiwan is a heavily trade-dependent economy. In 2023, Taiwan’s
total goods and services trade with the world was $783 billion, with
exports of $432 billion and imports of $352 billion, resulting in an
$81 billion trade surplus.356 Through September 2024, exports and
imports are each up 10.2 percent from the same period in 2023.357
China was Taiwan’s top trading partner in 2023, accounting for al-
most 30 percent of trade (the Mainland accounted for 21.2 percent,
and Hong Kong and Macau accounted for an additional 7.4 per-
cent).358 The United States (14.9 percent), Japan (9.7 percent), and
South Korea (6.0 percent) round out Taiwan’s top five trading part-
ners.359 China was the top export market for Taiwan’s products in
2023 (Mainland $95.7 billion; Hong Kong and Macau $56.6 billion),
followed by the United States ($76.2 billion) and Japan ($31.4 bil-
lion).360 Exports to the United States have outpaced exports to the
Mainland through the first half of 2024, marking the first time this
has been the case since 2003.361
Under the DPP, Taiwan has pursued policies to diversify its eco-
nomic and trade relationships in recognition of the vulnerabilities
of being reliant on China as its top trade partner. In 2016, the Tsai
Administration established the Office of Trade Negotiation as an
independent agency under the Executive Yuan, headed up by the
minister without portfolio.362 As part of this drive to recalibrate
the trade profile, Taiwan’s government has sought to join existing
multilateral agreements like the Comprehensive and Progressive
Trans-Pacific Partnership (CPTPP), ink new bilateral agreements,
and promote its own regional initiatives, namely the Tsai Adminis-
tration’s flagship New Southbound Policy (NSP).363
Taiwan Presses for Ascension to the CPTPP
Three years after formally applying for membership in the CPTPP,
the multilateral successor to the Trans-Pacific Partnership, Taiwan
* Taiwan has one of the lowest fertility rates in the world at 0.87 children per female. Taiwan’s
National Development Council assesses if the total fertility rate stabilizes at the projected rate of
0.9 the population is estimated to shrink from 23 million in 2023 to 15 million in 2070. Fuxian Yi,
“The Demographic Costs of a War Over Taiwan,” Diplomat, April 10, 2024; Eric Cheung, “Taiwan
Needs More Babies. But Conservative Traditions Are Holding Back Some Fertility Solutions,”
CNN, March 30, 2024.
650
officials have identified an opportunity in 2024 to clear the initial

screening process for entry.364 The United States is not a partici-
pant in the CPTPP, a comprehensive agreement that includes rela-
tively high environmental, labor, and investment standards, market
access provisions for both goods and services, and a dispute set-
tlement mechanism.365 To date, the UK has been the only country
to join through an accession process, bringing the trade bloc to a
combined 15 percent of global GDP.366 For Taiwan, CPTPP members
represent 24 percent of its total annual international trade, and the
National Development Council estimates joining would result in a
2 percent increase to GDP.367 China applied to join the CPTPP less
than a week before Taiwan in 2021, complicating Taiwan’s efforts to
join the agreement.368 Thus far, no member country has dismissed
either China or Taiwan’s prospects of joining, though some analysts
doubt that all CPTPP countries would support Taiwan’s accession
given risks of retaliatory action from China.369
The next meeting of the CPTPP Executive Committee where
members will likely take steps to consider both applications is set
to take place in the latter half of 2024.370 Canada is the rotating
chair for the year and will host the meeting, a situation Taiwan of-
ficials have described as a “window of opportunity” given close ties
and the recent completion of a bilateral investment agreement be-
tween Ottawa and Taipei.371 If Taiwan’s application proceeds, the
next step would be establishment of an Accession Working Group to
negotiate details of accession before a process requiring unanimous
approval.372
“New Southbound Policy”
A central pillar of Taiwan’s recent efforts to reduce trade reliance
on China has been to establish its own framework for stronger eco-
nomic and cultural ties with Indo-Pacific nations, a policy the Lai
Administration has signaled intent to continue. Announced in 2016,
the New Southbound Policy (NSP) was a flagship element of Tsai
Ing-wen’s foreign policy and economic diversification strategy seek-
ing to draw Taiwan closer to 18 countries in south Asia, southeast
Asia, and Oceania.* 373 Along with promoting closer economic and
trade relationships, the NSP prioritized cultural and people-to-peo-
ple ties; resource-sharing in medical, agricultural, technology, and
small and medium-sized enterprises; and expanded opportunities
for official engagement on multilateral and bilateral trade agree-
ments.374 Aggregate trade between Taiwan and these countries in-
creased 58.9 percent between 2016 and 2023 from $95.8 billion to
$152.2 billion, outpacing the 54.2 percent total trade increase by
Taiwan over the same period (see Figure 4).375 While campaigning,
President Lai indicated an intention to maintain the NSP in its
current form and in June 2024 announced an investment agreement
with Thailand to add to similar agreements signed since 2016 with
India, Vietnam, and the Philippines.376
* New Southbound Policy countries are Australia, Bangladesh, Bhutan, Brunei, Cambodia, In-
dia, Indonesia, Laos, Malaysia, Burma (Myanmar), Nepal, New Zealand, Pakistan, the Philip-
pines, Singapore, Sri Lanka, Thailand, and Vietnam.
651
Figure 4: Taiwan’s Total Trade with Top Trading Partners
(2014–September 2024)
300.0
250.0
200.0
US$ Billions
150.0
100.0
50.0
0.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
(Jan-Sep)
China + HK and Macau New Southbound Policy USA Japan EU
Source: Taiwan’s International Trade Administration, Trade Statistics.
Taiwan Business Community Shifts Focus of Investment out

of the Mainland
The shift of outbound investment flows away from China gained
momentum in 2023 after years of slow movement by the business
community to substantively diversify operations, though significant
dependency remains given the cumulative stock of capital invest-
ment. Many of the reasons behind this shift are consistent with a
similar shift in other advanced economies, driven by increased sec-
ular risk from China and concerns about the uncertainty stemming
from Xi Jinping’s economic and regulatory policies.377 Flows of ap-
proved outbound FDI from Taiwan globally jumped from $15 billion
in 2022 to $26.6 billion in 2023 thanks to investment by digital and
information technology companies in overseas manufacturing facili-
ties.378 Between 2013 and 2022, annual approved outbound FDI av-
eraged $18.2 billion, with investment into the Mainland accounting
for an average portion of 43.4 percent.379 China’s share of Taiwan’s
annual FDI flows had slowly declined over that decade (from about
65 percent in 2013 to about 30 percent in 2021), but 2023 could
signal a major acceleration of the trend. Approved outbound invest-
ment from Taiwan into the Mainland dropped off nearly 40 percent
in 2023, accounting for merely 11.4 percent of total approved out-
bound FDI for the year.380 By contrast, investment into the United
652
States and Europe surged 791 percent and 502 percent year-over-
year, respectively, and together they accounted for 56.7 percent of
Taiwan’s total approved outbound FDI (see Figure 5).381 A large
portion of these increases are attributable to major investments by
TSMC in semiconductor production facilities in Arizona and Dres-
den, Germany.382 In April 2024, TSMC announced it would expand
its planned investment in the United States over 60 percent to $65
billion after receiving a $6.6 billion federal grant as part of the
CHIPS and Science Act.383
It is worth noting that Taiwan’s total FDI stock in China remains
significant, as announced FDI projects from Taiwan-based companies
into the Mainland totaled $139 billion in the two decades from 2003 to
2023, compared to $64.9 billion in the United States.384 Taiwan’s top
businesses, including Foxconn, TSMC, and Acer, remain dependent on
Chinese-based manufacturing for a significant portion of their supply
chains.385 This dependency remains a considerable source of leverage
for China over Taiwan, would require years to alter, and likely would
be accompanied by high costs and disruptions to output.386 Further-
more, the deep cross-Strait business ties complicate Taiwan’s domestic
politics. For instance, in October 2023, China’s Ministry of Commerce
(MOFCOM) announced an investigation into Foxconn, owned by Terry
Gou, who at that time was an independent candidate for president
of Taiwan. The move was largely seen as political in nature, as Gou’s
candidacy was likely to pull votes away from China’s preferred candi-
date.387 Lastly, as of 2022 there were 177,000 Taiwan citizens working
in mainland China, a point of growing concern given the recent in-
crease of detentions and arrests of Taiwan citizens by Chinese authori-
ties under expanding national security and anti-espionage laws.388
Figure 5: Taiwan Outbound FDI Annual Flows by Region
(2014–August 2024)
100% 40
90%
35
80%
30
Total FDI US$ Billions (line)
70%
Percent of Total (bars)
25
60%
50% 20
40%
15
30%
10
20%
5
10%
0% 0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
(Jan-Aug)
Year
Mainland United States Europe ROW Total
Note: ROW stands for rest of world.

Source: Taiwan’s Ministry of Economic Affairs, Economic Indicators: Approved Outbound In-
vestment by Area, October 2024.
653
Heavy Reliance on Fuel Imported by Sea Persists despite

Effort to Reconfigure Energy Grid
With scant natural energy resources of its own and a decision
to largely abandon nuclear energy, Taiwan is heavily dependent on
energy imports. Such import dependence makes Taiwan particularly
vulnerable to a blockade. In 2023, crude oil and petroleum made
up the largest portion of Taiwan’s total energy mix (44.0 percent),
followed by coal (28.8 percent), natural gas (20.3 percent), nuclear
(3.9 percent), and renewables (3.0 percent).389 Imported energy com-
prised 96.7 percent of Taiwan’s annual energy supply.* 390
Nuclear power has become a point of contention in the island’s
domestic politics and a key consideration for assessing Taiwan’s
preparedness to withstand an external energy shock.391 Construc-
tion on three nuclear power plants began in the 1970s, and their
combined power generation provided nearly 50 percent of total
electricity production by the mid-1980s.392 However, in the wake
of the Fukushima nuclear incident in 2011, concerns grew over the
risk of reactors on an earthquake-prone island, leading the DPP to
announce plans to phase out nuclear power completely.393 In July
2024, one of two units at the last operational nuclear plant on the
island was decommissioned, with the second unit slated to shutter
in May 2025.394 Though a majority of citizens still support the re-
duction of nuclear reactors, a slew of high-profile power outages in
recent years has increased concern over the grid’s ability to effective-
ly manage demand.395 Furthermore, increased industrial production
in the semiconductor and manufacturing sectors has steadily raised
demand for electricity and resulted in surging energy rates.396 Thus
far, broader prices have been largely unaffected by energy costs as
Taiwan’s government has provided heavy subsidies to offset sus-
tained losses of the state power company, though recently prices for
industrial consumers have begun to increase.397
Starting in 2016, the DPP sought to accelerate the adoption of
clean energy † and improve the power system’s resilience by setting
ambitious targets for an electricity generation mix of 50 percent
natural gas, 30 percent coal, and 20 percent renewables by 2025.398
The amount of clean energy Taiwan uses to generate electricity
stood at 16.1 percent in 2022, half that of the average for the whole
of Asia and well behind China’s 34.9 percent.399 Though the Tsai
Administration made strides toward increasing renewable energy
capacity and building out liquified natural gas (LNG) facilities and
infrastructure, in 2023, natural gas-fired plants generated 39.5 per-
cent of the island’s power, coal-fired 42.2 percent, and renewables
9.5 percent—leading to a reduction of the 2025 renewable energy
target downward to 15 percent.400
Beyond concerns over how energy constraints may raise prices
or fail to meet peak demand during peacetime, the proposal to in-
corporate more clean energy and natural gas has implications for
China’s ability to disrupt power during a military operation against
the island. The government’s current stockpile requirements man-
* Taiwan’s government includes nuclear in import figures, as uranium used in domestic reactors
is sourced elsewhere. Joseph Webster, “Does Taiwan’s Massive Reliance on Energy Imports Put
Its Security at Risk?” Atlantic Council, July 7, 2023.
† Clean energy includes wind, solar, hydro, nuclear, biomass, and other renewables. Ember,
“Data into Action.”
654
date that oil operators and importers maintain a 60-day supply—on

top of a national 30-day strategic reserve—and eight days of natural
gas.401 Given that natural gas generates nearly 40 percent of elec-
tricity and is set to increase to 50 percent, major disruptions would
occur from a one- to two-week blockade once the stockpile was de-
pleted.* 402 Currently there are two operational LNG terminals, the
largest in the southern city Kaohsiung and another in Taichung,
from which gas is piped to major cities along the western coast and
in the north.403 Three new LNG receiving terminals are planned,
as well as expansion of the existing facilities.404 Resupplying LNG
would be difficult to impossible under a maritime blockade enforced
by China.405
Cross-Strait Economic and Trade Relations
Economic and trade relations between the PRC and the govern-
ment of Taiwan have steadily deteriorated since President Tsai Ing-
wen was first elected in 2016, a signal of Beijing’s willingness to
use economic levers to signal displeasure with the ruling DPP and
attempt to coerce Taiwan into submission.
Economic Coercion Enters a New Phase Post-Election
Along with stepping up its rhetoric and military exercises in the
immediate aftermath of Lai’s inauguration on May 20, 2024, Beijing
announced on May 29 that it would impose punitive trade measures
on 134 export products from Taiwan.406 This is the latest move in a
concerted pressure campaign carried out by MOFCOM to weapon-
ize cross-Strait trade. In 2021, China banned imports of pineapples
from Taiwan and a handful of other food products, citing sanitary
and phytosanitary issues.407 However, there was a clear correlation
between the southern rural districts that produce the majority of
products subject to bans and the historically high levels of support
for the DPP in these districts.408 Over the course of 2022 and 2023,
China continued to ban imports that accounted for a small portion
of cross-Strait trade but for which producers relied on the mainland
market; the bans were often timed around political events Beijing
took issue with, like then Speaker of the U.S. House of Representa-
tives Nancy Pelosi’s visit to Taipei in August 2022.409
China laid the groundwork for the recent bans with a sprawling
trade probe launched last year at the onset of Taiwan’s campaign cy-
cle that intended to threaten rollback of preferential trade arrange-
ments contingent upon the outcome of the election. In April 2023,
one week after then President Tsai met with then Speaker of the
U.S. House of Representatives Kevin McCarthy and one day after
Lai Ching-te announced his candidacy, MOFCOM announced it was
launching a unilateral investigation into nearly 2,500 products it
alleged Taiwan subjected to unfair restrictions, including agricul-
tural, plastic, metal, and chemical products.410 The investigation
was set to expire one day before Taiwan’s election and carried the
implicit threat of revoking in part or completely the Economic Coop-
* Taiwan is expected to have 20 days of LNG storage capacity by 2025. However, total storage
capacity of LNG is limited by atmospheric evaporation called “boiling off” that afflicts this fuel
when stored in large quantities. S&P Global, “Taiwan Vulnerable to LNG Supply Risks in the
Event of a Maritime Blockade,” May 30, 2024; Taiwan Ministry of Economic Affairs Energy Ad-
ministration, Stable Supply of Natural Gas, February 21, 2024.
655
eration Framework Agreement (ECFA) between China and Taiwan

that reduced tariffs on a broad swath of cross-Strait trade since its
enactment in 2010.* 411 Taiwan’s premier denied the allegations of
unfair trade barriers, saying the investigation was clearly intended
to influence voters and did not adhere to dispute resolution channels
under the WTO, of which both sides are members.412 Less than a
month before the election, China suspended preferential tariffs on
12 petrochemical products under the ECFA.413 After the election, as
noted above, China expanded suspensions of preferential tariffs to
the 134 export products previously mentioned, including chemical
products, textiles, metals, rubbers and plastics, and machinery, for
which China comprises 16–35 percent of Taiwan’s exports.414 Con-
firming the political nature of its trade actions, on April 28, 2024,
MOFCOM announced it would lift the ban on some Taiwan fruit and
seafood products after KMT legislative caucus leader Fu Kun-chi
visited the Mainland and expressed support for Beijing’s interpreta-
tion of the 1992 Consensus.415
China Continues Efforts to Acquire Taiwan’s Technology,
Talent, and Knowhow
In recent years, Chinese companies and the government have in-
creasingly carried out licit and illicit efforts to obtain trade secrets
from Taiwan’s leading firms in industries of strategic importance.
No economy is more integrated in global semiconductor supply
chains than Taiwan’s, with its national champion TSMC responsi-
ble for producing leading-edge logic chips, including those designed
by NVIDIA for AI training and the 3nm chips that power Apple
smartphones.416 In February, Taiwan’s representative in the United
States Alexander Yui said of China’s chip makers that they “cheat”
and “steal” technology.417
National security laws on the island were tightened in 2022 to
prohibit Chinese investment in certain parts of the industry and
the transfer of trade secrets, making it difficult for Chinese chip
companies to legally operate in Taiwan.418 That same year, Taiwan’s
Investigation Bureau opened around 100 probes into Chinese com-
panies suspected of illegally poaching Taiwan technology talent.419
Chinese competitors often look to poach workers from Taiwan by
offering salaries two to three times higher in some cases.420 In April
2024, four Taiwan nationals were convicted of poaching on behalf
of Chinese tech companies, and in May authorities named eight
companies accused of conducting illegal operations in Taiwan and
poaching talent, including Chinese Apple supplier Luxshare Preci-
sion Industry and Zhejiang Dahua Technology, a company currently
on the U.S. Entity List.421
Taiwan’s coveted engineering workforce would become an even
more significant strategic asset in the event of a Chinese invasion.
If invasion appears imminent, Benjamin Noon of the Vandenberg
Coalition and Allison Schwartz, formerly of the American Enterprise
Institute, have advocated for evacuating Taiwan’s semiconductor
engineers in an effort akin to the allied Operation Paperclip that
* For more background on the ECFA and evolution of the cross-Strait trade relationship, see
U.S.-China Economic and Security Review Commission, Chapter 5, Section 2, “Taiwan,” in 2023
Annual Report to Congress, November 2023, 615–616.
656
brought German scientists to the United States in the twilight days

of World War II.422 This proposal would seek to relocate them at
foundries in the United States and allied nations to ramp up pro-
duction and curb the ensuing supply shock.423 As discussed previ-
ously, staff from the U.S. International Trade Commission released
a working paper in November 2023 that projected a 58.6 percent
average price increase for logic chips in the U.S. market in the hy-
pothetical event of a major disruption to Taiwan’s semiconductor
output, noting this may be a conservative estimate.424
The continued operation of Taiwan’s chip fabs would be subject
to other constraints beyond staffing during a blockade. The deeply
integrated supply chains for semiconductor fabrication inputs such
as chemicals, silicon, and photomasks are mainly supplied by the
United States and its allies and, if cut off, would inhibit utilization
of the facilities.425 TSMC Chair Mark Liu has stated that it would
be impossible to take TSMC by force because operations depend
on “real-time connection with the outside world [for] materials to
chemicals to spare parts to engineering software and diagnosis.” 426
Chemicals, gases, and other raw materials used in fabs are sourced
from a few suppliers and spoil in a matter of months, which would
render the facilities inoperable after existing supplies run out.427
Furthermore, the Dutch company ASML reportedly claimed in May
2024 that in the event of a Chinese invasion they maintain the ca-
pability to remotely disable their $217 million extreme ultraviolet
machines used to etch silicon wafers in TSMC’s fabs.428
U.S.-Taiwan Economic and Trade Relations
Taiwan is a key trade partner of the United States, and over the
past year efforts to enhance ties by both Taipei and Washington have
resulted in substantial investment announcements and continued
progress on substantive agreements like the U.S.-Taiwan Initiative
on 21st Century Trade. According to the U.S. Bureau of Economic
Analysis data, Taiwan ranked 13th among U.S. trade partners on
the basis of total two-way trade in goods and services in 2023 ($152
billion), behind France and ahead of Singapore.429 Looking at only
goods trade in 2023, Taiwan was the United States’ seventh-larg-
est merchandise trading partner ($128 billion), tenth-largest export
market ($40 billion), and eighth-largest source for imports ($88 bil-
lion).430
Trade Negotiations Progress
Negotiations for the U.S.-Taiwan Initiative on 21st Century Trade
remain ongoing.431 The initiative was announced in June 2022 and
seeks to reach commitments and “economically meaningful out-
comes” in 11 areas as part of its negotiating mandate, according to
the Office of the U.S. Trade Representative.432 A first agreement was
signed on June 1, 2023—exactly one year after the initiative was
announced—and covered four of the 11 issue areas: customs admin-
istration and trade facilitation, regulatory practices, anticorruption,
and small and medium-sized enterprises.433 These issue areas were
seen as the less complex areas where interests and existing regula-
tions between the two parties were already in relative alignment.434
657
In April 2024, negotiators convened an in-person round of talks

on issues pertaining to agriculture, environment, and labor as part
of efforts to reach a second-stage agreement on the next three man-
date areas.435 If this stage of negotiations concludes successfully, the
remaining mandate areas of digital trade, standards, state-owned
enterprises, and non-market policies and practices will be addressed
in a final stage.436
To date, these negotiations do not include traditional “market ac-
cess” issues (e.g., tariffs, services market access) or investment pro-
tections. Additionally, it is not clear if the broader U.S. suspension of
digital trade negotiations in the Indo-Pacific Economic Framework
for Prosperity (IPEF) following withdrawal of U.S. support for stan-
dards at the WTO will apply to the digital chapter in these negoti-
ations.437
Taiwan remains a potential flashpoint for conflict with China.
China’s leadership has expressed its intention to bring the island
under its control and has not deviated from its goal of unification.
Beijing has made it clear that it is willing to use a wide variety of
methods to achieve this goal, from information operations to shape
Taiwan’s public opinion to the use of force. While Lai’s election raises
concerns in Beijing, the DPP’s position as a minority government is
likely to be interpreted by Chinese leadership as a sign of weakness
and potential opportunity to further its agenda through engagement
with the opposition. This interpretation will likely result in Beijing
intensifying its pressure campaign on the DPP, raising the risk for
miscalculation between not only China and Taiwan but possibly also
China and the United States.
While the Lai Administration is clear in its intent to adopt an
asymmetric defense strategy, China’s pressure campaign presents
challenges to the adoption of that strategy, as Taiwan will have to
make complex decisions about resource allocation between counter-
ing China’s gray zone activities or following through on adopting
equipment more appropriate for countering an invasion. The United
States can assist Taiwan in both countering China’s gray zone ef-
forts and in providing materiel for its asymmetric strategy, but chal-
lenges exist in the rapid armament of Taiwan. U.S. defense industri-
al base manufacturing limitations and extended delivery timelines
mean that at the current rate, Taiwan is unlikely to be armed to a
degree sufficient to deter or counter China from invading on its own,
and so it will rely on the United States to provide for its deterrence
as the PLA continues to approach its 2027 and mid-century mod-
ernization goals. Even if it can be deterred from outright invasion,
China continues to build the capability to quarantine or blockade
the island, which represents a unique challenge for U.S. and Taiwan
leaders.
Cross-Strait economic relations have significantly deteriorated
given Beijing’s increased intimidation and economic coercion activ-
ities. Though China remains Taiwan’s top trading partner, exports
to the United States have surged since late 2023, driven in large
part by demand for advanced integrated circuits used for AI and
advanced computing. This coincides with substantial investment by
658
TSMC in production facilities outside of Taiwan, including construc-

tion of three semiconductor foundries in Arizona capable of produc-
ing cutting-edge logic chips. In the meantime, Taiwan remains by
far the most dominant in production of advanced semiconductors,
and any disruption to output on the island will have major ramifica-
tions for the global economy and—more importantly—U.S. national
and economic security.
659
Appendix I: Beijing’s “One China Principle” and

the U.S. “One China Policy”
Though Beijing attempts to conflate the issue of “One China,” Bei-
jing’s “One China principle” and the U.S. “One China policy” are
very different. Beijing’s One China principle claims that Taiwan is
an inalienable part of the People’s Republic of China (PRC). In con-
trast, the U.S. One China policy does not take an official stance
on the PRC’s claim to sovereignty over Taiwan. Rather, the United
States only “acknowledges” Beijing’s position “that there is but one
China and Taiwan is part of China.” 438
Beijing’s “One China Principle”
Beijing’s One China principle insists that “there is only one China
in the world, Taiwan is part of China, and the government of the
PRC is the sole legal government representing the whole of Chi-
na.” 439 According to a Chinese government white paper on Taiwan
published in February 2000, Beijing developed the One China prin-
ciple after the 1949 founding of the PRC in order to establish diplo-
matic relations with other countries while safeguarding its national
sovereignty and territorial integrity.440 Nevertheless, prior to 1949,
CCP leaders had sometimes expressed explicit support for Taiwan’s
independence. In 1936, Mao Zedong, who had recently consolidat-
ed his position as the dominant figure in the CCP, told American
journalist Edgar Snow that the CCP would support Taiwan in its
“struggle for independence” from Japanese imperialism.* 441 While
CCP authorities have consistently claimed sovereignty over Taiwan
since 1949, the specific term “One China principle” was not widely
used until the 1970s, and the phrase only became a mainstay of of-
ficial Chinese government rhetoric in the 1990s and early 2000s.† 442
The PRC’s first white paper on Taiwan in 1993 only mentioned the
“principle of one China” in passing on four occasions.443 In contrast,
China’s 2000 white paper on Taiwan was titled “The One China
Principle and the Taiwan Issue” and uses the term on 41 separate
occasions.444 Since the early 2000s, the “One China principle” has
been ubiquitous in Chinese propaganda about Taiwan, and Chinese
officials often repeat the false claim that all countries with which
it has established diplomatic relations accept the “One China prin-
ciple.” 445
Beijing’s Use of “Reunification”
In Chinese propaganda, the “One China principle” is closely as-
sociated with Beijing’s stated goal of achieving “reunification” with
Taiwan.446 Beijing uses the term “reunification” to refer to the pro-
* These interviews were published in Edgar Snow’s 1937 book, Red Star Over China. Chinese
translations of Red Star Over China continued to include Mao’s quote supporting Taiwan inde-
pendence until at least 1979. More recent Chinese editions of the book, however, have censored
Mao’s comment on Taiwan. Edgar Snow, Red Star Over China (New York: Grove Press, 1994),
110; Edgar Snow, Red Star Over China (西行漫记) (Beijing: SDX Joint Publishing Company, 1979),
83–84. Translation; Edgar Snow, Red Star Over China (西行漫记) (Beijing: Foreign Language
Teaching and Research Press, 2005), 146. Translation.
† The first use of the term “One China principle” (一个中国的原则) in People’s Daily was not
until March 1971. People’s Daily, “The Japanese Reactionary Faction’s Ambition to Plot to Re-Oc-
cupy China’s Taiwan Province Is Exposed” (日本反动派阴谋重新霸占我台湾省的野心毕露), March
21, 1971, 6. Translation.
660
cess of absorbing Taiwan as an inalienable part of the state called

“China” and to imply that cross-Strait relations are “purely an in-
ternal matter for China.” 447 In contrast, Taiwan, the United States,
and some international observers generally avoid the term “reuni-
fication” because Taiwan has never been governed by the PRC.* 448
This report uses the term “reunification” only when quoting CCP
sources and sources that conform to CCP preferences. The choice
to use “unification” or “reunification” is primarily an issue for En-
glish-language sources, as both words are used to translate the
same Chinese-language term, tongyi (“to unite as one”). Neverthe-
less, the CCP has not always used the English term “reunification”
to describe its ambition to rule Taiwan. After 1949, Beijing vowed
to “liberate” Taiwan from Chiang Kai-shek and the Kuomintang by
military means before adopting the term “peaceful liberation” in the
mid-1950s in a reexamination of its policies and an attempt to sway
Chiang’s government toward a negotiated political settlement.449 It
was not until the 1970s that the CCP consistently replaced “liber-
ation” with “reunification.” 450 Deng Xiaoping made this change in
terminology official during his visit to the United States in 1979,
speaking of “reunifying the motherland” and telling U.S. senators
that China “no longer use[s] the term ‘liberation of Taiwan.’ ” 451 Xi
Jinping and CCP leaders now refer to the “complete reunification”
of China—by which they mean imposing PRC sovereignty over
Taiwan—as “indispensable for the realization of China’s rejuvena-
tion.” 452 China’s 2022 white paper on Taiwan uses the term tongyi
(translated in English as reunification) no fewer than 124 times.453
The U.S. “One China Policy”
Despite Beijing’s false claim that China and the United States
established diplomatic relations “on the basis of the One China
principle,” the U.S. One China policy does not take a position on
sovereignty over Taiwan. As articulated by the U.S. Department of
State Bureau of East Asian and Pacific Affairs: “The United States
has a longstanding one China policy, which is guided by the Tai-
wan Relations Act, the three U.S.-China Joint Communiques, and
the Six Assurances.” † 454 Significantly, in the 1978 U.S.-China Joint
Communique, which established diplomatic relations between the
United States and the PRC, the United States reaffirmed it only
“acknowledges” (but does not endorse) “the Chinese position that
* English-language statements published by Taiwan’s government, including the Mainland Af-
fairs Council and Ministry of Foreign Affairs, generally refer to China’s pursuit of “unification”
with Taiwan. The U.S. government generally does not use either “unification” or “reunification” in
official statements pertaining to cross-Strait relations, which instead refer to the United States’
opposition to “any unilateral changes to the status quo from either side.” Major international
newspapers, including the New York Times and Washington Post, also generally use the term
unification. Taiwan’s Mainland Affairs Council, MAC 2024 First Quarter Report on the Situation
in Mainland China, May 6, 2024; Taiwan’s Ministry of Foreign Affairs, MOFA Response to False
Claims Made in Joint Communiqué between PRC and Russia Regarding Taiwan, December 22,
2023; U.S. Department of State Bureau of East Asian and Pacific Affairs, U.S. Relations with Tai-
wan: Bilateral Relations Fact Sheet, May 28, 2022; Chris Buckley and Christ Horton, “Xi Jinping
Warns Taiwan That Unification Is the Goal and Force Is an Option,” New York Times, January
1, 2019; Adela Suliman, “China’s Xi vows peaceful ‘unification’ with Taiwan Days after Sending a
Surge of Warplanes near the Island,” Washington Post, October 9, 2021.
† A detailed explanation of the Taiwan Relations Act (1979), Three Joint Communiques (1972,
1978, 1982), and the Six Assurances (1982) can be found in the Commission’s 2019 Annual Re-
port. U.S.-China Economic and Security Review Commission, 2019 Annual Report to Congress,
November 2019, 452–453.
661
there is but one China and Taiwan is part of China.” * 455 Beijing has
obfuscated this distinction through deliberate mistranslation. The
Chinese text of the 1978 Communique translates “acknowledges” as
chengren (“to recognize”), a term that in Chinese clearly implies U.S.
agreement with China’s position.456 In contrast, the Chinese text of
the 1972 Joint Communique, which first articulated each respective
government’s position on Taiwan, had translated “acknowledges” as
renshi (“to be aware of”), a term that more faithfully conveys the
meaning of the English text.457
According to its One China policy, the United States:
• “Oppose[s] any unilateral changes to the status quo from either
side”;
• “[Does] not support Taiwan independence”;
• “Expect[s] cross-Strait differences to be resolved by peaceful
means”; and
• “Continue[s] to have an abiding interest in peace and stability
across the Taiwan Strait.” 458
In line with the Taiwan Relations Act (1979), the United States
also makes available defense articles and services to Taiwan “as nec-
essary to enable Taiwan to maintain a sufficient self-defense capa-
bility” and maintains its own ability to resist any use of “force or
other forms of coercion that would jeopardize the security, or the
social and economic system, of Taiwan.” 459
* In the 1972 Joint Communique, the “U.S. side declared [that] the United States acknowledges
that all Chinese on either side of the Taiwan Strait maintain there is but one China and that
Taiwan is a part of China. The United States Government does not challenge that position. It
reaffirms its interest in a peaceful settlement of the Taiwan question by the Chinese themselves.”
American Institute in Taiwan, U.S.-PRC Joint Communique (1972), March 31, 2022.
662
Appendix II: U.S. Military Sales to Taiwan,

September 2023–September 2024
Date of State
Department
Approval * Content of Purchase Value
December 15, 2023460 Follow-on life cycle support to maintain $300 million
Command, Control, Communications, and
Computers (C4) capabilities managed
under its Syun An program. The C4
capabilities consist of previously procured
Multifunctional Information Distribution
Systems-Low Volume Terminals (MIDS-
LVT) and Joint Tactical Information Dis-
tribution System (JTIDS) equipment as
well as procurement of spare and repair
parts; repair and return of equipment;
technical documentation; personnel train-
ing; software and hardware; software
development; maintenance of Continental
United States (CONUS) technical labora-
tories; U.S. government and contract en-
gineering and technical support; logistics;
and other related elements of logistics
and program support.
February 21, 2024 461 Foreign Military Sales (FMS) Cross $75 million
Domain Solutions (CDS); High Assurance
devices; Global Positioning System (GPS)
receivers; communications equipment;
requirements analysis; engineering; tech-
nical services; and other related elements
of logistics and program support.
June 5, 2024 462 Standard spare and repair parts, com- $220 million
ponents, consumables, and accessories
for F-16 aircraft; U.S. government and
contractor engineering, technical, and
logistics support services; and other
related elements of logistics and program
support.
June 5, 2024 463 Non-standard spare and repair parts, $80 million
components, consumables, and accesso-
ries for F-16 aircraft; U.S. government
and contractor engineering, technical,
and logistics support services; and other
related
elements of logistics and program sup-
port.
* According to the U.S. Defense Security Cooperation Agency, the Foreign Military Sales (FMS)
program is a form of security assistance authorized by the Arms Export Control Act (AECA), as
amended by 22 U.S.C. 2751, et. seq., and a fundamental tool of U.S. foreign policy. Under Section
3 of the AECA, the United States may sell defense articles and services to foreign countries
and international organizations when the president formally finds that to do so will strengthen
the security of the United States and promote world peace. Under the FMS program, the U.S.
government and a foreign government enter into a government-to-government agreement called
a Letter of Offer and Acceptance (LOA). The secretary of state determines which countries will
have programs. The secretary of defense executes the program. See Defense Security Cooperation
Agency, Foreign Military Sales (FMS).
663
Appendix II: U.S. Military Sales to Taiwan,

September 2023–September 2024—Continued
Date of State
Department
Approval Content of Purchase Value
June 18, 2024 464 Up to 291 ALTIUS 600M-V systems, $300 million
composed of an Unmanned Aerial Vehicle
(UAV) loitering munition with extensible
warhead and electro-optical/infrared (EO/
IR) camera; ALTIUS 600 inert training
UAVs; Pneumatic Integrated Launch
Systems (PILS); PILS transport trailers;
ground control systems; associated sup-
port, including spares; battery chargers;
operator and maintenance training; oper-
ator, maintenance, and training manuals;
technical manuals; logistics and fielding
support; testing; technical assistance
CONUS and OCONUS, including for en-
gineering services; program management;
site surveys; facility, logistics and mainte-
nance evaluations; quality assurance and
de-processing team support; field service
representative support; transportation;
June 18, 2024 465 Seven hundred twenty (720) Switchblade $60.2 million
300 (SB300) All Up Rounds (AURs)
(includes 35 fly-to-buy AURs) and one
hundred one (101) SB300 fire control
systems (FCS). The following non-Major
Defense Equipment will also be included:
first line spares packs; operator manu-
als; operator and maintenance training;
logistics and fielding support; Lot Accep-
tance Testing (LAT); U.S. government
technical assistance, including engineer-
ing services, program management, site
surveys, facilities, logistics, and mainte-
nance evaluations; quality assurance and
de-processing team; field service repre-
sentative(s); transportation; and other
related elements of logistics and program
support.
September 16, 2024 466 Return, repair, and reshipment of $228 million
classified and unclassified spare parts
for aircraft and related equipment; U.S.
government and contractor engineering,
technical, and logistics support services;
664
1. International Crisis Group, “The Widening Schism across the Taiwan Strait,”
September 26, 2024; Russel Hsiao, “China’s New Non-Military Offensives against
Taiwan,” Global Taiwan Institute, July 24, 2024.
2. Thompson Chau, “Taiwan Protests as China Strips Preferential Tariffs on 134
Products,” Nikkei Asia, May 31, 2024.
3. Taiwan’s Directorate General of Budget, Accounting, and Statistics, GDP: Pre-
liminary Estimate for 2024Q2 and Outlook for 2024–25; Yian Lee, Chien-Hua Wan,
and Hailey Wang, “Taiwan’s Economy Expands More than Expected, Riding AI Boom,”
Bloomberg, July 31, 2024; Reuters, “Taiwan’s Economy Seen Expanding 5.6% in First
Quarter on Strong Exports: Reuters Poll,” April 29, 2024.
4. Elizabeth Hsu, “DPP Wins Presidency but Loses Majority in Legislature,” Focus
Taiwan, January 14, 2024.
5. Elizabeth Palmer and Lucy Craft, “China Calls Taiwan’s 2024 Election a Choice
between Peace and War. Here’s What to Know,” CBS News, January 12, 2024.
6. Jeremy Huai-Che Chiang, “Beijing’s Animosity toward Taiwan’s DPP Is Bad
for Everyone,” Diplomat, December 13, 2019; Wu Jui-chi and Matthew Mazzetta,
“Ex-President Ma Departs on Trip of ‘Friendship and Peace’ to China,” Focus Tai-
wan, April 1, 2024.
7. Office of the President, Republic of China (Taiwan), Inaugural Address of ROC
16th-term President Lai Ching-te, May 20, 2024.
8. Nick Aspinwall, “Taiwan Learned You Can’t Fight Fake News by Making It Il-
legal,” Foreign Policy, January 16, 2024; Kento Awashima and Ryo Namiki, “Taiwan
Civic Groups Lead Fight against Disinformation as Election Nears,” Nikkei Asia,
January 1, 2024; Yimou Lee, “Taiwan Intelligence Says China Leadership Discussed
Election Interference - Sources,” Reuters, December 8, 2023.
9. Yimou Lee, “Taiwan Intelligence Says China Leadership Discussed Election In-
terference - Sources,” Reuters, December 8, 2023.
10. Yimou Lee, “Taiwan Intelligence Says China Leadership Discussed Election
Interference - Sources,” Reuters, December 8, 2023.
11. Yimou Lee, “Taiwan Intelligence Says China Leadership Discussed Election
Interference - Sources,” Reuters, December 8, 2023.
12. CGTN, “Mainland Official: Taiwan Faced with Choice between ‘Peace and
War,’ ” August 31, 2023.
13. CGTN, “Lai Ching-te, the Troublemaking Wild Card for Everyone,” January 16,
2024; Thompson Chau, “Lai Ching-Te, the Miner’s Son Who Staunchly Defends Tai-
wan’s Sovereignty,” Nikkei Asia, January 4, 2024; Straits Times, “China Calls Taiwan
Presidential Front Runner a Destroyer of Peace,” January 1, 2024.
14. Microsoft Threat Intelligence, “Same Targets, New Playbooks: East Asia Threat
Actors Employ Unique Methods,” Microsoft, April 2024, 6–7.
17. Hallie Stern, “Deep Fakes and Disinformation in Taiwan,” Blackbird AI, Jan-
uary 11, 2024.
18. Hallie Stern, “Deep Fakes and Disinformation in Taiwan,” Blackbird AI, Jan-
uary 11, 2024.
19. Taipei Times, “Two Charged for Allegedly Faking Polls for the CCP,” February
10, 2024; Flor Wang and Su Mu-chun, “Two Indicted for Publishing Fake Presiden-
tial Election Polls,” Focus Taiwan, February 8, 2024; Chen Yufu, “There Is a Polling
Company with Funds Coming from China! The National Security Bureau Confirmed
That the CCP Invited Responsible Persons and Scholars to China” (有民調公司資金
來自中國!國安局證實中共邀負責人,學者赴中), Liberty Times Net, November 6, 2023.
Translation.
20. Kento Awashima and Ryo Namiki, “Taiwan Civic Groups Lead Fight against
Disinformation as Election Nears,” Nikkei Asia, January 1, 2024; Information Oper-
ations Research Group, “About,” July 17, 2024; Doublethink Lab, “About Doublethink
Lab,” 2022.
21. Hallie Stern, “Deep Fakes and Disinformation in Taiwan,” Blackbird AI, 2024;
Chen Yu-fu, Tsai Chang-sheng, and Jake Chung, “Task Force to Combat False Re-
ports,” Taipei Times, October 29, 2023.
22. Elizabeth Hsu, “DPP Wins Presidency but Loses Majority in Legislature,” Fo-
cus Taiwan, January 14, 2024; Tessa Wong, “Taiwan Elects William Lai President in
Historic Election, Angering China,” BBC, January 13, 2024.
665
cus Taiwan, January 14, 2024.
24. Kyodo News, “Taiwan Presidential Hopeful Lai Vows to Keep Cross-Strait Sta-
tus Quo,” January 9, 2024; Hou Yu-ih, “Taiwan’s Path between Extremes,” Foreign
Affairs, September 18, 2023; Lai Ching-te, “My Plan to Preserve Peace in the Tai-
wan Strait,” Wall Street Journal, July 4, 2023; Taipei Times, “Maintaining ‘Status
Quo’ Taiwan’s Only Choice, Ko Says,” September 16, 2023; Center for Strategic and
International Studies, “Fireside Chat with Dr. Ko Wen-je, Chairman of the Taiwan
People’s Party and Former Mayor of Taipei,” April 20, 2023; Lee I-chia, “Two Sides,
One Family, Ko Says Again,” Taipei Times, July 5, 2019.
cus Taiwan, January 14, 2024; BBC, “Taiwan Election: Tsai Ing-Wen Wins Second
Presidential Term,” January 11, 2020.
26. Bloomberg, “Taiwan Election Live Results,” January 13, 2024.
27. Liu Tzu-hsuan, “KMT Wins 52 Legislative Seats, DPP Bags 51 and TPP Eight,”
Taipei Times, January 14, 2024.
28. Channel News Asia, “As It Happened: Taiwan 2024 Election Results - DPP’s Lai
Secures Presidency but Faces a Hung Parliament after Losing Legislative Majority,”
January 13, 2024.
29. Nathan Batto, “The 2024 Elections and the Politics of Divided Government,”
Prospect Foundation, January 30, 2024.
30. Mo Yan-chih and Jimmy Chuang, “KMT Agrees to Certain Arms Purchases,”
Taipei Times, December 13, 2007; Voice of America, “Taiwan’s Legislative Yuan Dras-
tically Cuts and Freezes Government Budget” (台湾立法院大幅删减冻结政府预算),
January 13, 2006. Translation.
31. Xinhua, “Taiwan Affairs Office Spokesperson Comments on Taiwan Election
Results” (国务院台办发言人评论台湾地区选举结果), January 13, 2024. Translation.
32. Xinhua, “Xinhua Commentary: Mainstream Public Opinion on the Island Says
‘No’ to the DPP’s Confrontational Line of Seeking ‘Independence’—Commenting on
the Results of Two Elections in Taiwan in 2024” (新华时评丨岛内主流民意对民进党谋“
独”对抗路线说“不”——评2024年台湾地区两项选举结果), January 20, 2024. Transla-
tion.
33. Xinhua, “Xinhua Commentary: Mainstream Public Opinion on the Island Says
‘No’ to the DPP’s Confrontational Line of Seeking ‘Independence’—Commenting on
the Results of Two Elections in Taiwan in 2024” (新华时评丨岛内主流民意对民进党谋“
独”对抗路线说“不”——评2024年台湾地区两项选举结果), January 20, 2024. Transla-
tion.
34. Agence France Presse, “China FM Warns Taiwan Independence Moves Will Be
‘Harshly Punished’ after Poll,” Barron’s, January 14, 2024; Le Monde, “After Taiwan’s
Presidential Election, China Warns Any Independence Move Will Be ‘Harshly Pun-
ished’ ,” January 14, 2024.
35. Huigang News, “Ministry of State Security: Taiwan’s Elections Cannot Change
the Cross-Strait Pattern and Will Attack Taiwan’s Independence Forces Head-On”
(國安部:台選舉改不了兩岸格局必迎頭痛擊台獨勢力), Yahoo News, January 16, 2024.
Translation.
16th-Term President Lai Ching-te, May 20, 2024; Lai Yu-chen and Lee Hsin-Yin, “In-
coming President Vows to Continue Tsai’s Unfinished Work,” Focus Taiwan, May 17,
2024; Office of the President, Republic of China (Taiwan), Inaugural Address of ROC
15th-Term President Tsai Ing-wen, May 20, 2020.
16th-Term President Lai Ching-te, May 20, 2024; Government of the Republic of Chi-
na (Taiwan), Cross-Strait Relations.
16th-Term President Lai Ching-te, May 20, 2024.
16th-term President Lai Ching-te, May 20, 2024.
43. Rush Doshi and David Sacks, “Analyzing Lai Ching-te’s Inaugural Address:
More Continuity than Difference,” Council on Foreign Relations, May 21, 2024; Office
of the President, Republic of China (Taiwan), Inaugural Address of ROC 16th-Term
666
President Lai Ching-te, May 20, 2024; Office of the President, Republic of China (Tai-
wan), Inaugural Address of ROC 15th-Term President Tsai Ing-wen, May 20, 2020.
44. Xinhua, “Mainland Says Lai Takes More Radical ‘Taiwan Independence’
Stance,” State Council Information Office of the People’s Republic of China, May
22, 2024; Xinhua, “Xinhua Commentary: Lai’s Risky Gamble with ‘Taiwan Indepen-
dence,’ ” May 21, 2024.
16th-Term President Lai Ching-te, May 20, 2024; John Dotson, “The CCP Commemo-
rates the 30th Anniversary of the ‘1992 Consensus”—and Seeks to Change Its Mean-
ing,’ ” Global Taiwan Institute, September 21, 2022.
46. Rush Doshi and David Sacks, “Analyzing Lai Ching-te’s Inaugural Address:
More Continuity than Difference,” Council on Foreign Relations, May 21, 2024; Office
of the President, Republic of China (Taiwan), Inaugural Address of ROC 16th-Term
President Lai Ching-te, May 20, 2024; Focus Taiwan, “Beijing Highlights ‘1992 Con-
sensus’ in Response to Tsai’s National Day Address,” October 11, 2023; Najee Woods,
“A False Consensus: The ‘1992 Consensus,’ ” Taiwan Insight, July 24, 2019; Taipei
Times, “DPP Denies Existence of ‘1992 Consensus’ ” December 25, 2010.
14th-Term President Tsai Ing-wen, May 20, 2016.
48. China Daily, “Lai Playing Word Games Shows He’s Blind to the Fact He’s
Building a Castle on Sand,” People’s Daily Online, May 23, 2024; Xinhua, “Mainland
Says Lai Sends ‘Dangerous Signal’ in Speech as Taiwan’s New Leader,” May 20, 2024.
49. Xinhua, “Those Who Play with Fire Will Get Burned——Comment on the ‘May
20’ Speech by the Leader of the Taiwan Region” (玩火者必自焚——评台湾地区领导
人“5·20”讲话), China’s Ministry of National Defense, May 21, 2024. Translation.
50. Xinhua, “ ‘Taiwan Independence’ Separatist Activities Most Destructive Ele-
ments to Peace across Taiwan Strait: Chinese FM,” May 22, 2024; Xinhua, “One-Chi-
na Principle Anchor of Peace across Taiwan Strait: Chinese FM,” May 20, 2024.
51. Xinhua, “Song Tao Issues New Year’s Message: Stand Firm in Our Direction,
Open Up a Path Forward” (宋涛发表新年寄语: 坚定方向开拓前行), January 2, 2024.
Translation; U.S.-China Economic and Security Review Commission, 2023 Annual
Report to Congress, November 2023, 583–585; China’s Embassy in the United States
of America, “White Paper: The Taiwan Question and China’s Reunification in the New
Era,” August 10, 2022.
52. Xinhua, “The 16th Straits Forum Was Held in Xiamen. Wang Huning Attended
and Delivered a Speech” (第十六届海峡论坛大会在厦门举行王沪宁出席并致), Taiwan
Work Office of the CCP Central Committee, Taiwan Affairs Office of the State Council
of the People’s Republic of China, June 15, 2024. Translation; Nils Peterson, Matthew
Sperzel, and Daniel Shats, “China-Taiwan Weekly Update, March 7, 2024,” Institute
for the Study of War, March 7, 2024; Li Qiang, Government Work Report Delivered at
the Second Session of the 14th National People’s Congress on March 5, 2024, March
53. Xinhua, “Xi Jinping Meets with Ma Ying-jeou and His Delegation” (习近平会
见马英九一行), People’s Government of the People’s Republic of China, April 10, 2024.
Translation.
54. Consul General of the People’s Republic of China in Osaka, Consul General
Xue Jian’s Keynote Speech at the Seminar on “Looking Back to the Original Intention,
Looking Forward to the Future - Upholding the One-China Principle” (Full Text) (薛
剑总领事在“回首初心,展望未来——坚持一个中国原则”专题研讨会上的主旨演讲 (全文)),
May 22, 2024. Translation.
55. Xinhua, “China Urges U.S. to Stop Arming Taiwan in Any Form,” June 21, 2024;
Demitri Sevastopulo and Joe Leahy, “Xi Jinping Claimed US Wants China to Attack
Taiwan,” Financial Times, June 15, 2024; Global Times, “Outgoing US Lawmaker’s
Taiwan Trip Instigates Separatism, for Personal Gain: Expert,” February 22, 2024.
56. Cui Tiankai, Asia Spotlight 2024: Geopolitical Outlook - A Decade of Living
Dangerously, Video, 0:45:05–0:45:46, January 25, 2024.
57. Aadil Brar, “China Won’t Fall for US Taiwan War ‘Trap,’ Former Ambassador
Says,” Newsweek, February 14, 2024; Cui Tiankai, Asia Spotlight 2024: Geopolitical
Outlook - A Decade of Living Dangerously, Video, 0:45:05–0:45:46, January 25, 2024.
58. Demitri Sevastopulo and Joe Leahy, “Xi Jinping Claimed US Wants China to
Attack Taiwan,” Financial Times, June 15, 2024.
667
62. Xi Jinping, “Completely, Accurately and Comprehensively Implement the Im-
portant Thought on Doing a Good Job in the Party’s United Front Work in the New
Era” (完整,准确,全面贯彻落实关于做好新时代党的统一战线工作的重要思想), Qiushi,
January 15, 2024. Translation; Bloomberg, “Taiwan Election Live Results,” January
13, 2024.
63. William Hetherington, “Beijing Engaging with Legislators: Official,” Taipei
65. Chen Chun-hua, Hsieh Yi-hsuan and Sunny Lai, “Amid Allegations, MOI
Warns against Chinese Influence in Political Parties,” Focus Taiwan, June 17, 2024.
66. Chen Chun-hua, Hsieh Yi-hsuan and Sunny Lai, “Amid Allegations, MOI
67. Ministry of the Interior, Republic of China, (Taiwan), Media Reported That the
CCP Invited Artists to Form a Party, and the Ministry of Interior Urged Not to Break
the Law (媒體報導中共邀約藝人擬組黨內政部呼籲勿違法), June 17, 2024. Translation.
68. Chen Chun-hua, Hsieh Yi-hsuan, and Sunny Lai, “Amid Allegations, MOI
69. Ministry of the Interior, Republic of China, (Taiwan), The Ministry of the Inte-
rior stated that 65 political parties have had their registration canceled for violating
the Political Party Law. Those who violated the Anti-Infiltration Law will apply for
dissolution in accordance with the law (內政部表示已有65個政黨因違反政黨法而廢止備
案另違反反滲透法者將依法聲請解散), June 17, 2024. Translation.
70. Mainland Affairs Council, Republic of China (Taiwan), Explanation of Amend-
ments to the Appendix to the Public Notice Regarding the Provision That Any Indi-
vidual, Juristic Person, Organization, or Other Institution of the Taiwan Area Shall
Not Hold Any Position or Become Any Member of the Agencies, Institutions or Orga-
nizations of the Mainland Area which are Political Parties, the Military, the Adminis-
tration or of Any Political Nature, May 2, 2024; Shelley Shan, “List Banning Work at
Chinese Entities Updated,” Taipei Times, May 3, 2024.
71. Mainland Affairs Council, Republic of China (Taiwan), Explanation of Amend-
ments to the Appendix to the Public Notice Regarding the Provision That Any Individ-
ual, Juristic Person, Organization, or Other Institution of the Taiwan Area Shall Not
Hold Any Position or Become Any Member of the Agencies, Institutions or Organiza-
tions of the Mainland Area Which Are Political Parties, the Military, the Administra-
tion or of Any Political Nature, May 2, 2024; Executive Yuan Gazette Online, Main-
land Affairs Council Notice is hereby given, for the amendment of “Supplementary of
the Notice: Any Individual, Juristic Person, Organization, or Other Institution of the
Taiwan Area Shall Not Hold Any Position or Become Any Member of the Agencies,
Institutions or Organizations of the Mainland Area Which Are Political Parties, the
Military, the Administration or of Any Political Nature (amendment becomes effec-
tive from 2nd, May 2024) (大陸委員會公告:修正[臺灣地區人民,法人,團體或其他機構,禁
止擔任大陸地區黨務,軍事,行政或具政治性機關 (構),團體之職務或為其成員] 之事項附件,
自113年5月2日生效), May 2, 2024. Translation; Chung Li-hua, “MAC Expands List of
Banned China Postings,” Taipei Times, January 9, 2024.
72. Michael Nakhiengchanh, “Taiwan’s Democratic Progressive Party Opposes
Change to Anti-Infiltration Law,” Taiwan News, April 22, 2024; TVBS, “Eric Chu
Urges Amendments to Taiwan’s National Security Laws,” April 16, 2024; Chung Li-
hua and Lee Hsin-fang, “Lawmakers Target Traitorous Parties,” Taipei Times, April
5, 2022.
73. Mainland Affairs Council, Republic of China (Taiwan), Taiwanese Public Sup-
ports Government’s Strengthening of “Anti-Infiltration Act” to Safeguard National
Security, June 6, 2024; Mainland Affairs Council, Republic of China (Taiwan), Per-
centage Distribution of the Questionnaire for the Survey on “Public’s View of Issues
Related to the ‘Anti-Infiltration Act,’ ” June 6, 2024.
75. Wu Jui-chi and Matthew Mazzetta, “Ex-President Ma Departs on Trip of
‘Friendship and Peace’ to China,” Focus Taiwan, April 1, 2024.
76. John Dotson, “Ma Ying-jeou’s Trip to China Further Illustrates the CCP’s Unit-
ed Front Cultivation of Taiwan Youth,” Global Taiwan Institute, April 17, 2024; Yu-
anyue Dang, “Young Taiwanese Urged to ‘Remember the Roots of the Chinese Nation’
by Island’s Former Leader Ma Ying-Jeou,” South China Morning Post, April 4, 2024.
77. Flor Wang, Wang Cheng-chung, and Lu Chia-jung, “Ex-President Ma Asserts
Cross-Strait Peace in Meeting with TAO Chief,” Focus Taiwan, April 1, 2024; Xinhua,
“Ma Ying-jeou and His Taiwanese Youth Arrived in Guangdong for an Exchange Visit
668
and Met with Song Tao in Shenzhen” (马英九率台青抵达广东交流参访宋涛在深圳会见),
78. Xinhua, “Xi Jinping Meets with Ma Ying-jeou and His Delegation” (习近平会见
马英九一行), April 10, 2024. Translation.
79. Xinhua, “Xi Jinping Meets with Ma Ying-jeou and His Delegation” (习近平会见
马英九一行), April 10, 2024. Translation.
80. Bu Xiaoqing, Yuxian Jia, and Zichen Wang, “Ma Ying-jeou’s Latest Speech on
Cross-Taiwan Strait Relations,” Pekingology, August 23, 2024.
83. Chen Zhenglu, “The Blue and White Camp Led a Delegation to Participate
in the Straits Forum. Deputy Director of Taiwan Affairs Office of Mainland Chi-
na Met with the Kuomintang Party Delegation” (藍白陣營率團參加海峽論壇陸國台
辦副主任會見民眾黨一行), UDN, June 15, 2024. Translation; CCTV, “Lian Shengwen,
Vice Chairman of the Kuomintang: In Taiwan, Most People Do Not Support ‘Taiwan
Independence’ ” (中国国民党副主席连胜文:在台湾,多数人不支持 “台独”), June 15, 2024.
Translation; Mainland Affairs Council of the Republic of China (Taiwan), MAC Policy
Position on the CCP’s Straits Forum, June 9, 2023.
84. CCTV, “Lian Shengwen, Vice Chairman of the Kuomintang: In Taiwan, Most
People Do Not Support ‘Taiwan Independence’ ” (中国国民党副主席连胜文：在台湾，多
数人不支持“台独”), June 15, 2024. Translation; Taiwan News, “KMT delegation from
Taiwan meets China’s Wang Huning at Straits Forum,” June 15, 2024.
85. CCTV, “Lian Shengwen, Vice Chairman of the Kuomintang: In Taiwan, Most
People Do Not Support ‘Taiwan Independence’ ” (中国国民党副主席连胜文:在台湾,多数
人不支持”台独”), June 15, 2024. Translation.
86. Hiro Fu, “Understanding the KMT’s Evolving Foreign Policy,” Diplomat, Au-
gust 20, 2024; CNA, “Hou Unveils His ‘Consensus’ View,” Taipei Times, June 6, 2023;
Adrian Chu, “Battle for the KMT: For Election or Ideology?” Taiwan Insight, May 11,
2023; Shih Hsiao-kuang and Jake Chung, “KMT Supports Ma’s ‘1992 Consensus,’ ”
Taipei Times, April 9, 2023; Jasper Roctus, “Between Taiwanese Elections: The KMT’s
Quest for True Blue,” Egmont Institute, March 2, 2023.
87. Taiwan News, “KMT Delegation from Taiwan Meets China’s Wang Huning at
Straits Forum,” June 15, 2024; Sasha Chhabra, “The Non-Consensus Consensus of
Taiwan’s Election,” Diplomat, February 2, 2024; Wang Hung-kuo, Yeh Su-ping, and
Frances Huang, “KMT Presidential Hopeful Opposes ‘One Country, Two Systems,’
Taiwan Independence,” Focus Taiwan, May 9, 2023; Chieh Yen, “Why Taiwan’s Main
Opposition Party Can’t Shake Its Pro-China Stance,” Diplomat, January 18, 2023;
Enescan Lorci, “The KMT’s High-Stakes Gamble: Reaching the Pinnacle or Navigat-
ing a Precipice?” Global Taiwan Institute, October 4, 2023; David G. Brown, “Are DPP
and KMT Views of China Converging?” Global Taiwan Institute, October 21, 2020.
88. Sasha Chhabra, “The Non-Consensus Consensus of Taiwan’s Election,” Diplo-
mat, February 2, 2024; Howard Shen, “Setting the Record Straight: The KMT Defense
Blueprint for Taiwan,” Diplomat, December 14, 2023.
89. Russell Hsiao, “KMT Ramps Up Dialogue with CCP with Vice Chairman’s Sev-
enth China Visit—While DPP Appears to Float Trial Balloons,” March 6, 2024, Global
Taiwan Institute; Dennis Lu Chung Weng, “From Dove to Hawk: KMT’s Transfor-
mation And The Quest For New Guardrails In Cross-Strait Relations,” Brookings
Institution, October 12, 2023; Lin Hsin-han, “DPP China Policy Is Confrontation, Not
Peace: KMT,” Taipei Times, August 21, 2023; David G. Brown, “Are DPP and KMT
Views of China Converging?” Global Taiwan Institute, October 21, 2020.
90. Hsu Chiao-hsin, “KMT Appeal to the Younger Generation,” Jamestown Foun-
dation, February 16, 2024.
91. Kathrin Hille, “China Threatens Death Penalty for Taiwan ‘Separatists,’ ” Fi-
nancial Times, June 21, 2024; Xinhua, “China Focus: China issues judicial guidelines
on imposing criminal punishment on diehard ‘Taiwan independence’ separatists,”
June 21, 2024.
Supporters,” Taiwan News, June 21, 2024; China Supreme People’s Procuratorate,
The Two High Courts and Three Ministries Jointly Issued an Opinion on Punishing
“Taiwan Independence” Diehards for Splitting the Country and Inciting the Crime of
Splitting the Country in Accordance with the Law, June 21, 2024.
Supporters,” Taiwan News, June 21, 2024.
94. Xinhua, “Xinhua Commentary: A Precise, Legal Strike on “Taiwan Indepen-
dence” Separatists,” June 22, 2024.
669
nancial Times, June 21, 2024.
96. Helen Davidson, “China Lists Taiwanese Independence Supporters It Wants
People to Denounce,” Guardian, August 8, 2024; Global Times, “Departments List
Diehard ‘Taiwan Independence’ Secessionists on Websites,” August 7, 2024; China’s
Ministry of Justice, China Issues Judicial Guidelines on Imposing Criminal Punish-
ment on Diehard “Taiwan Independence” Separatists, June 25, 2024.
97. Helen Davidson, “China Lists Taiwanese Independence Supporters It Wants
People to Denounce,” Guardian, August 8, 2024; China’s Ministry of Justice, China
Issues Judicial Guidelines on Imposing Criminal Punishment on Diehard “Taiwan
Independence” Separatists, June 25, 2024.
98. Human Rights Watch, “China: Free Taiwanese Political Activist,” September 10,
2024; Xinhua, “Authorities ‘Strictly Follow Law’ When Trying Case of Yang Chih-Yu-
an: Mainland Spokesperson,” September 6, 2024; China’s Ministry of Justice, China
Issues Judicial Guidelines on Imposing Criminal Punishment on Diehard “Taiwan
Independence” Separatists, June 25, 2024.
nancial Times, June 21, 2024; Hsia Hsiao-hwa and Lee Heung Yeung, “China Threat-
ens Death Penalty for Supporters of Taiwan Independence,” Radio Free Asia, June
21, 2024.
100. Keoni Everington, “Taiwan Warns Citizens of Hong Kong Travel amid New
Security Laws,” Taiwan News, June 14, 2024; William Yang, “Detention of Two Tai-
wanese in China Sparks Concern about Personal Safety,” Voice of America, June 11,
2024.
101. Hayley Wong, “Mainland China Says It Is Still Holding Former Taiwanese
Soldier Who Was Picked Up while Fishing,” South China Morning Post, June 27,
2024.
102. Sunny Lai, “8 Retired Taiwan Military, Police Officers Held in China in Past
Year: MAC,” Focus Taiwan, June 20, 2024.
103. William Yang, “Detention of Two Taiwanese in China Sparks Concern about
Personal Safety,” Voice of America, June 11, 2024.
104. William Yang, “Detention of Two Taiwanese in China Sparks Concern about
Personal Safety,” Voice of America, June 11, 2024.
105. Keoni Everington, “Taiwan Warns Citizens of Hong Kong Travel amid New
Security Laws,” Taiwan News, June 14, 2024.
106. Mainland Affairs Council, Republic of China (Taiwan), Due to Recent Cases
of Inspection of Taiwanese Tourists in Hong Kong, Taiwanese Citizens Reminded to
Observe Local Laws, Carry Personal IDs at All Times, Contact Hong Kong and Macao
MAC Offices in Emergencies, and Register with Online Registration System before
Departure to Ensure Travel Safety, June 11, 2024.
107. Mainland Affairs Council, Republic of China (Taiwan), MAC Raises Travel
Alert to “Orange” for Mainland China, Hong Kong, and Macao Starting June 27;
Citizens Advised to Avoid Unnecessary Travel, June 27, 2024.
108. Xinhua, “PLA Conducts Joint Military Drills Surrounding Taiwan Island,”
May 23, 2024; Bonny Lin and Brian Hart, “How Is China Responding to the Inau-
guration of Taiwan’s President William Lai?” Center for Strategic and International
Studies, 2024.
May 23, 2024.
May 23, 2024.
111. Bonny Lin and Brian Hart, “How Is China Responding to the Inauguration of
Taiwan’s President William Lai?” Center for Strategic and International Studies, May
24, 2024; John Dotson and Jonathan Harman, “The PLA’s Inauguration Gift to Pres-
ident Lai: The Joint Sword 2024A Exercise,” Global Taiwan Institute, June 12, 2024.
112. John Dotson and Jonathan Harman, “The PLA’s Inauguration Gift to Presi-
dent Lai: The Joint Sword 2024A Exercise,” Global Taiwan Institute, June 12, 2024.
113. China’s Ministry of National Defense, The PLA Eastern Theater Command
Conducts ‘Joint Sword-2024B’ Drills (东部战区开展“联合利剑-2024B”演习), October 14,
2024. Translation; David Pierson and Amy Chang Chien, “China Holds War Games
Encircling Taiwan in Warning to Island’s Leader,” New York Times, October 13, 2024;
Bonny Lin and Brian Hart, “How Is China Responding to the Inauguration of Tai-
wan’s President William Lai?” Center for Strategic and International Studies, 2024;
Lee Ya-wen et al., “Chinese Military Drills around Taiwan Could Be First in Series:
Expert,” Focus Taiwan, May 23, 2024; Xinhua, “PLA Drills Serve as Resolute Punish-
ment of ‘Taiwan Independence’ Provocations: Mainland Spokesperson,” May 23, 2024.
670
114. Bonny Lin and Brian Hart, “How Is China Responding to the Inauguration
of Taiwan’s President William Lai?” Center for Strategic and International Studies,
2024; China’s Ministry of National Defense, The Eastern Theater Command Conducts
the “Joint Sword-2024A” Exercise around Taiwan Island (东部战区位台岛周边开展“联
合利剑—2024A”演习), May 23, 2024. Translation.
115. China’s Ministry of National Defense, The Eastern Theater Command Re-
leased a Diagram of the “Joint Sword-2024A” Exercise Area (东部战区发布“联合利
剑—2024A”演习区域示意图), May 23, 2024. Translation.
2024; China’s Ministry of National Defense, The Eastern Theater Command Released
a Diagram of the “Joint Sword-2024A” Exercise Area (东部战区发布“联合利剑—2024A”
演习区域示意图), May 23, 2024. Translation.
117. China’s Ministry of National Defense, The Eastern Theater Command Re-
leased a Diagram of the “Joint Sword-2024A” Exercise Area (东部战区发布“联合利
剑—2024A”演习区域示意图), May 23, 2024. Translation; Liu Xuanzun, Guo Yuandan
and Fan Wei, “PLA Holds Joint Drills Surrounding Taiwan Island to Punish Seces-
sionist Forces,” Global Times, May 23, 2024.
2024; Fan Wei, “Unprecedented CCG-PLA Joint Operation around Taiwan ‘Clear In-
tent to Deter,’ ” Global Times, May 23, 2024; Pan Hsin-tung and Evelyn Yang, “Taiwan
Expels China Coast Guard Boats near Matsu, Kinmen,” Focus Taiwan, May 23, 2024.
119. Bonny Lin et al., “How China Could Quarantine Taiwan: Mapping Out Two
Possible Scenarios,” Center for Strategic and International Studies, June 5, 2024; Fan
Wei, “Unprecedented CCG-PLA Joint Operation around Taiwan ‘Clear Intent to De-
ter,’ ” Global Times, May 23, 2024.
120. Joseph Yeh, “No PLA Live-Fire Exercises Detected in Taiwan Strait” Taiwan
Military,” Focus Taiwan, May 23, 2024; Bonny Lin and Brian Hart, “How Is China
Responding to the Inauguration of Taiwan’s President William Lai?” Center for Stra-
tegic and International Studies, 2024.
2024; Gerald C. Brown and Ben Lewis, “Taiwan ADIZ Violations,” PLA Tracker, Oc-
tober 10, 2024.
dent Lai: The Joint Sword 2024A Exercise,” Global Taiwan Institute, June 12, 2024;
Christopher B. Johnstone and Bonny Lin, “Responding to a More Coercive Chinese
Coast Guard and a Potential PRC Quarantine of Taiwan,” Center for Strategic and
International Studies, June 7, 2024; Bonny Lin and Brian Hart, “How Is China Re-
sponding to the Inauguration of Taiwan’s President William Lai?” Center for Strategic
and International Studies, 2024.
dent Lai: The Joint Sword 2024A Exercise,” Global Taiwan Institute, June 12, 2024;
Dzirhan Mahadzir, “China Kicks Off 2 Days of Military Drills near Taiwan, USS
Ronald Reagan Sails in Philippine Sea,” U.S. Naval Institute, May 23, 2024; China’s
Ministry of National Defense, Aiming at “Taiwan Independence”! Eastern Theater
Command Releases a Combination Poster “Cross-Sea Killer” (剑指“台独”! 东部战区发
布组合海报(越海杀器)), May 23, 2024. Translation.
125. Gerald C. Brown and Ben Lewis, “Taiwan ADIZ Violations,” PLA Tracker, Oc-
tober 10, 2024; John Dotson and Jonathan Harman, “The PLA’s Inauguration Gift to
President Lai: The Joint Sword 2024A Exercise,” Global Taiwan Institute, June 12,
2024; Joseph Yeh, “No PLA Live-Fire Exercises Detected in Taiwan Strait: Taiwan
Military,” Focus Taiwan, May 23, 2024.
tober 10, 2024.
2024.
128. Gerald C. Brown and Ben Lewis, “Taiwan ADIZ Violations: Forces in ‘Sur-
rounding Region,’” PLA Tracker, October 10, 2024; Republic of China (Taiwan) Min-
istry of National Defense, PLA Activities in the Waters and Airspace around Taiwan
(中共解放軍臺海周邊海,空域動態), May 23–25, 2024. Translation.
Conducts “Joint Sword-2024B” Drills (东部战区开展“联合利剑-2024B”演习), Octo-
671
ber 14, 2024. Translation; David Pierson and Amy Chang Chien, “China Holds War
Games Encircling Taiwan in Warning to Island’s Leader,” New York Times, October
13, 2024.
Conducts “Joint Sword-2024B” Drills (东部战区开展“联合利剑-2024B”演习), October
131. China’s Ministry of National Defense, Ministry of National Defense Warns
“Taiwan Independence” Elements: A Sharp Sword Hangs Overhead, Seeking Inde-
pendence Is a Road to Destruction (国防部警示“台独”分子:利剑高悬头顶谋独死路一条),
October 14, 2024. Translation.
132. Taiwan’s Ministry of National Defense, PLA Activities in the Waters and Air-
space around Taiwan (中共解放軍臺海周邊海空域動態), October 15, 2024. Translation;
You Kaixiang, “Chinese Communists’ October 14th Military Drills—ROC Forces De-
tect 153 PLA Aircraft, New Daily Record” (中共14日軍演國軍偵獲153架次共機單日新
高), Central News Agency, October 15, 2024. Translation; Ben Blanchard, “Taiwan
Says China Uses Record Number of Aircraft in War Games,” Reuters, October 15,
2024.
133. China’s Ministry of National Defense, Liaoning Aircraft Carrier Group Par-
ticipates in “Joint Sword-2024B” Drills in Areas to the East of Taiwan Island (辽宁
舰航母编队位台岛以东参加联合利剑-2024B演习), October 14, 2024. Translation; David
Pierson and Amy Chang Chien, “China Holds War Games Encircling Taiwan in Warn-
ing to Island’s Leader,” New York Times, October 13, 2024.
134. Joseph Yeh, “No PLA Live-Fire Exercises Detected in Taiwan Strait” Taiwan
Military,” Focus Taiwan, May 23, 2024; Republic of China (Taiwan) Ministry of Na-
tional Defense, PLA Activities in the Waters and Airspace around Taiwan (中共解放軍
臺海周邊海空域動態), May 23–25, 2024. Translation.
136. Helen Davidson and Amy Hawkins, “How Significant Are China’s Military
Drills around Taiwan?” Guardian, May 23, 2024; Congressional Research Service,
Taiwan: Defense and Military Issues, May 7, 2024, 1.
137. Demetri Sevastopulo, “US Commander Says China Pursuing ‘Boiling Frog’
Strategy,” Financial Review, April 28, 2024.
to Congress, December 2020, 457–462; U.S.-China Economic and Security Review
Commission, 2019 Annual Report to Congress, November 2019, 449–450.
tober 10, 2024.
tober 10, 2024; Matthew Sperzel, Daniel Shats, and Alexis Turek, “China-Taiwan
Weekly Update, July 12, 2024,” Institute for the Study of War, July 12, 2024.
141. Gerald C. Brown and Ben Lewis, “Taiwan ADIZ Violations,” PLA Tracker, last
updated October 14, 2024.
142. Keoni Everington, “Chinese Balloon Crosses Taiwan Strait Median Line,” Tai-
wan News, December 8, 2023; R.O.C. Ministry of National Defense, China’s People’s
Liberation Army’s Taiwan Strait Sea and Airspace Dynamics (December 8, 2023) (中
共解放軍臺海周邊海空域動態 (112年12月8日)), December 8, 2023. Translation.
tober 10, 2024; Jackie Gu and Yimou Lee, “Tracking China’s ‘Grey Zone’ Balloon
Flights over Taiwan,” Reuters, May 16, 2024.
tober 10, 2024; Jackie Gu and Yimou Lee, “Tracking China’s ‘Grey Zone’ Balloon
Flights over Taiwan,” Reuters, May 16, 2024.
145. Jackie Gu and Yimou Lee, “Tracking China’s ‘Grey Zone’ Balloon Flights over
Taiwan,” Reuters, May 16, 2024.
146. China’s Ministry of National Defense, The DPP Authorities’ Hype about the
So-Called “Mainland-Mediated Election” Is Nothing but an Election Tactic (民进党当
局炒作所谓大陆介选不过是选举套路), December 28, 2023. Translation.
150. Chiang Chin-yeh and Evelyn Yang, “U.S. State Department Critical of China’s
Modified M503 Flight Path,” Focus Taiwan, February 2, 2024; Ben Blanchard, “Tai-
wan Angered at ‘Unilateral’ China Change to Taiwan Strait Flight Path,” Reuters,
672
January 31, 2024; Civil Aviation Administration of China, Civil Aviation Administra-
tion Optimizes the Operation of M503 Route (民航局优化M503航线运行), January 30,
2024. Translation.
Modified M503 Flight Path,” Focus Taiwan, February 2, 2024; Kelvin Chen, “Taiwan
Raises Safety Concerns Following Altered Chinese Flight Routes,” Taiwan News, Jan-
uary 31, 2024.
Modified M503 Flight Path,” Focus Taiwan, February 2, 2024; Civil Aviation Admin-
istration of China, Civil Aviation Administration Optimizes the Operation of M503
Route (民航局优化M503航线运行), January 30, 2024. Translation; Wen Kuei-hsiang
and Sean Lin, “Faced with China Flight Path Moves, Taiwan to Stay the Course:
Source,” Focus Taiwan, April 20, 2024.
153. Xinhua, “Mainland Says Flight Route Adjustment Benefits Both Sides of Tai-
wan Strait,” April 19, 2024; Ben Blanchard, “Taiwan Angered at ‘Unilateral’ China
Change to Taiwan Strait Flight Path,” Reuters, January 31, 2024.
154. William Yang, “China Ups Pressure On Taiwan, Opens New Air Routes,” Voice
of America, April 22, 2024; Jake Chung, “China’s Flight Path Move about Pressure:
Experts,” Taipei Times, February 1, 2023; Lee Ya-wen, Henry Wu, and Sean Lin,
“Flight Path Adjustments Shows China Rejects Strait Median Line: Experts,” Focus
Taiwan, January 31, 2024.
155. U.S. Indo-Pacific Command, Topic: The PRC’s Modification of Civilian Flight
Routes in the Taiwan Strait, March 8, 2024.
156. U.S. Indo-Pacific Command, Topic: The PRC’s Modification of Civilian Flight
Routes in the Taiwan Strait, March 8, 2024, 2–3.
tober 10, 2024.
158. Andrew Orchard, “China’s Navy Patrols near Japan and Taiwan,” Diplomat,
February 1, 2024.
159. Matthew P. Funaiole, Aidan Powers-Riggs, and Brian Hart, “Skirting the
Shores: China’s New High-Tech Research Ship Probes the Waters around Taiwan,”
Center for Strategic and International Studies, February 26, 2024.
160. Katherin Hille and Chris Cook, “Chinese Research Ships Increase Activity
near Taiwan,” Financial Times, February 26, 2024.
Possible Scenarios,” Center for Strategic and International Studies, June 5, 2024.
163. Alyssa Chen, “Mainland Chinese Coastguard Keeps Up Pressure on Taiwan
with Latest ‘Regular’ Patrol near Quemoy,” South China Morning Post, May 3, 2024.
164. Taiwan Coast Guard Administration, Regarding the Report on February 14th,
‘Cross-Border Fishing on The Fifth Day of the Lunar New Year! A Mainland Regis-
teredFishing Boat Refused Inspection and Capsized, 4 People Fell into the Sea, and 2
People Died.’ The Branch Office’s Explanation Is as Follows: (有關2月14日報載初五開
工日越界捕魚陸籍漁船拒檢追逐翻覆 4人落海釀2死本分署說明如下), February 14, 2024.
Translation.
165. Brian Hioe, “China-Taiwan Boat Collision near Kinmen Continues to Rever-
berate in Taiwanese Politics,” Diplomat, March 2, 2024; China’s Taiwan Affairs Office
of the State Council, “Taiwan Affairs Office of the State Council: We Strongly Con-
demn Taiwan for Driving Away a Fujian Fishing Boat, Resulting in the Death of Two
People (国台办强烈谴责台方驱离福建渔船致两人遇难),” February 14, 2024. Translation.
166. Reuters, “China to Send Coast Guard Ships as Tensions Rise over Taiwanese
Islands,” February 18, 2024.
167. Reuters, “China Coast Guard Boarded Taiwanese Boat near Frontline Islands,
Taiwan Says,” February 19, 2024.
168. Mike Firn and Taejun Kang, “Record Number of Chinese Ships Enter Taiwan
Waters near Kinmen Island,” Radio Free Asia, May 10, 2024.
169. Taiwan’s Coast Guard Administration, In Response to the Chinese Coast
Guard and Official Vessel Fleet Sailing into Kinmen Waters, the Coast Guard Called
on Mainland China to Immediately Stop Irrational Behavior and Jointly Safeguard
Cross-Strait Peace and Navigation Safety (針對中國海警及公務船編隊航行進入金門水
域海巡署呼籲中國大陸立即停止不理性行為共同維護兩岸和平與航行安全), May 9, 2024.
Translation.
170. Taiwan’s Coast Guard Administration, In Response to the Chinese Coast
Guard and Official Vessel Fleet Sailing into Kinmen Waters, the Coast Guard Called
on Mainland China to Immediately Stop Irrational Behavior and Jointly Safeguard
Cross-Strait Peace and Navigation Safety (針對中國海警及公務船編隊航行進入金門水
673
域海巡署呼籲中國大陸立即停止不理性行為共同維護兩岸和平與航行安全), May 9, 2024.
Translation.
171. China Daily, “ ‘Kinmen Model’ Can Be Expanded to Taiwan Strait,” May 14,
2024.
173. China Coast Guard, Provisions on Administrative Enforcement Procedures
of Coast Guard Agencies (2024), ((2024年) 海警机构行政执法程序规定) May 16, 2024.
Translation.
174. Taipei Times, “Boat Seizure Linked to New Rule: CGA,” July 4, 2024.
175. Taipei Times, “Boat Seizure Linked to New Rule: CGA,” July 4, 2024.
176. Pan Hsin-tung and Evelyn Yang, “Taiwan Expels China Coast Guard Boats
near Matsu, Kinmen,” Focus Taiwan, May 23, 2024.
177. Joseph Yeh, “Taiwan Launches Newest 600-Ton Coast Guard Vessel Yong
Kang,” Focus Taiwan, June 2, 2024; Overseas Community Affairs Council, R.O.C.
(Taiwan), Tsai Oversees Ceremonial Launch of Taiwan-Built Offshore Patrol Vessel,
March 11, 2024.
178. Joseph Yeh, “Taiwan Launches Newest 600-Ton Coast Guard Vessel Yong
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179. International Institute for Strategic Studies, “Military Balance: Asia,” 263–
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180. Christopher B. Johnstone and Bonny Lin, “Responding to a More Coercive
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181. Chad de Guzman, “Tensions Rise as Taiwan Drives Away Chinese Coast
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182. Keoni Everington, “US State Department Closely Monitoring Chinese Seizure
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183. Lawrence Chung, “ ‘US Shadow’: Taiwan’s New Defence Chief Wellington Koo
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184. Mercy A. Kuo, “Taiwan’s New National Security Leadership,” Diplomat, May
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185. Lawrence Chung, “Fresh Faces for Taiwan’s Next Cabinet but Security Left
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186. Kathrin Hille, “Taiwan’s Military Drills Turn Serious as China Threat Esca-
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187. Joseph Yeh, et al., “First Civilian Defense Chief in a Decade, Wellington Koo
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188. Office of the President, Republic of China (Taiwan), President Lai Holds Press
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191. Jane Rickards, “Taiwan Mobilises Civil Society To Bolster Civil Defence,”
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192. Spirit of America, “Taiwan Citizens Showcase Their Disaster Response Skills
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193. Scott W. Harold, “How Would China Weaponize Disinformation against Tai-
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194. Scott W. Harold, “How Would China Weaponize Disinformation against Tai-
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195. Damien Cave and Amy Chang Chien, “Taiwan’s Doubts about America Are
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196. Kuan-chen Lee, Christina Chen, and Ying-Hsuan Chen, “Core Public Atti-
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197. Kuan-chen Lee, Christina Chen, and Ying-Hsuan Chen, “Core Public Atti-
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198. Lev Nachman, Hannah June Kim, and Wei-Ting Yen, “How Taiwan and South
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199. Kuan-chen Lee, Christina Chen, Ying-Hsuan Chen, “Core Public Attitudes to-
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200. Kuan-chen Lee, “Taiwanese Support for National Defense: Insights from Pub-
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201. Lai Yuzhen, “Institute for National Defense and Security Research Survey:
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203. Matt Yu, Wu Shu-wei, and Joseph Yeh, “Civilian Defense Chief Ends De-
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204. John Dotson, “The 2024 Han Kuang Exercise—a Small Step towards More
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Fire Rescheduling to Avoid Typhoons,” Focus Taiwan, July 28, 2024; Matt Yu and
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205. Matt Yu and Joseph Yeh, “Han Kuang Drills to Test Supply Line Resiliency in
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206. Matt Yu and Joseph Yeh, “Focus on Defense Cited for Dropping of Live-Fire
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207. Wu Su-wei and Jonathan Chin, “Armed Forces Lack Volunteers: Report,” Tai-
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208. Wu Su-wei and Jonathan Chin, “Armed Forces Lack Volunteers: Report,” Tai-
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209. John Dotson, “Taiwan Initiates Its New One-Year Military Conscription Pro-
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210. Davina Tham, “Taiwan Votes 2024: Longer Military Conscription Sees Rare
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212. Po Horng-Huei (Alex), “Force Structure Adjustment for Enhancing All-Out
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213. Focus Taiwan, “Taiwan’s Military Revives NBC Gas Chamber Training for
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12.
216. Christian Shepherd and Vic Chiang, “Taiwan Is Readying Citizens for a Chi-
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675
218. Executive Yuan of the Republic of China (Taiwan), House Meeting Bill (院會議
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219. Matt Yu, Wu Shu-wei and Joseph Yeh, “Refresher Shooting Program for Tai-
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220. Matt Yu, Wu Shu-wei and Joseph Yeh, “Refresher Shooting Program for Tai-
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wan’s New Defence Chief Wellington Koo Sets Out Policy Direction,” South China
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Soldiers For The First Time In Its History,” NPR, May 11, 2023.
221. Michael A. Hunzeker, Enoch Wu, and Kobi Marom, “A New Military Culture
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224. Michael A. Hunzeker, Enoch Wu, and Kobi Marom, “A New Military Culture
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227. Tsukasa Hadano, “Taiwan Builds Up Mobile Defenses to Fight Off Possible
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228. Tsukasa Hadano, “Taiwan Builds Up Mobile Defenses to Fight Off Possible
Chinese Landing,” Nikkei Asia, March 29, 2024.
229. Lawrence Chung, “Taiwan Races to Catch Up with Mainland China’s Military
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230. Gordon Arthur, “Amid Faltering Domestic Program, Taiwan Orders More MQ-
9B Drones,” Defense News, March 27, 2024.
231. Joe Saballa, “Taiwan Completes Fielding of New Anti-Drone Weapons,” De-
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232. Matt Yu and Joseph Yeh, “Taiwan to Form Defense Innovation United: New
Defense Chief” Focus Taiwan, June 3, 2024.
235. Liu Zhen, “Ukraine’s Unconventional Drone Tactics Offer Taiwan Defense
Hope, but Has It Been Too Slow to Adapt?” South China Morning Post, April 6, 2024.
236. Jon Grevatt and Andrew MacDonald, “Taiwan Proposes USD20 Billion De-
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Spending to Reach NT$647 Billion, 2.45% of GDP in 2025,” Focus Taiwan, August 22,
2024; Reuters, “Taiwan’s Defence Budget Will Hit New Record Next Year, President
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676
240. Ben Blanchard, “Ukraine war gives Taiwan’s military reservist reform new
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242. Republic of China (Taiwan) Ministry of National Defense, National Defense
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245. Kathrin Hille, “Taiwan plans domestic satellite champion to resist any China
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246. Kathrin Hille, “Taiwan plans domestic satellite champion to resist any China
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247. Eric Cheung, “Developing Taiwan’s Own ‘Starlink’ Crucial for Island-Wide
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248. Sean Scanlan, “MODA Announces Low Earth Orbit Satellite Coverage across
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249. Sean Scanlan, “MODA Announces Low Earth Orbit Satellite Coverage Across
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251. Matt Yu and Joseph Yeh, “Taiwan to Get All 1,700 TOW 2B Anti-Tank Mis-
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252. Wu Shu-wei and Lee Hsin-Yin, “U.S. Arms Sales to Boost Taiwan’s Asymmet-
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253. Tayfun Ozberk, “Taiwan Commissions ROC Navy’s Largest Vessel: LPD ‘Yu
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254. Eric Gomez and Benjamin Giltner, “Taiwan Arms Backlog, May 2024 Update,”
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257. Kayleigh Madjar, Lo Tien-pin and Jake Chung, “Taiwan to Acquire US Drones
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263. Cynthia Cook, “Reviving the Arsenal of Democracy: Steps for Surging Defense
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677
Jennifer Kavanagh and Jordan Cohen, “The Real Reasons for Taiwan’s Arms Back-
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264. Shih Hsiu-chuan and Sean Lin, “Taiwan Urges U.S. To Include It In Joint
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Launch Sites as PLA Incursions Persist,” Indo-Pacific Defense Forum, January 3,
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266. Shi Xiujuan, “Hsiao Bi-Khim Makes Video Appearance at Washington Forum,
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身華府論壇爭取台灣入美國防供應鏈), Central News Agency, May 2, 2024. Translation;
Wu Shenghong, “Hsiao Bi-khim Hopes for Taiwan’s Incorporation into U.S. Defense
Supply Chains, Joseph Wu: Beneficial to Taiwan and the United States” (蕭美琴盼台
灣入美國防供應鏈吳釗燮:對台美都有利), Central News Agency, May 2, 2024. Transla-
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267. Assistant Secretary of Defense for Industrial Base Policy, “Security of Supply.”
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277. Central News Agency, “Nauru’s Financial Demands Key to Breaking Ties with
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280. Steven M. Goldstein, “Understanding the One China Policy,” Brookings Insti-
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284. Paul Hosford and Tadgh McNally, “Leo Varadkar Dismisses Claim He Said
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285. Paul Hosford and Tadgh McNally, “Leo Varadkar Dismisses Claim He Said
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286. Ken Moriyasu, “China Presses Global South Leaders to Support Taiwan ‘Re-
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295. Bonnie Glaser, “Exposing the PRC’s Distortion of UN General Assembly Reso-
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297. Ben Blanchard, “US Decries Nauru’s ‘Unfortunate’ Ditching of Taiwan, Warns
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298. Bonnie Glaser, “Exposing the PRC’s Distortion of UN General Assembly Reso-
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299. Reuters, “China Warns Philippines Not to ‘Play with Fire’ over President’s
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300. Xinhua, “China Deplores, Opposes Relevant Countries Issuing Statements,
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301. NHK, “Chinese Embassy in Tokyo Criticizes Japan’s Message to Taiwanese
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302. Focus Taiwan, “IPAC Condemns Chinese Pressure over Upcoming Taipei
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303. Helen Davidson, “China Used ‘Shocking’ Bullying Tactics ahead of Taiwan
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304. Inter-Parliamentary Alliance on China, “IPAC Taipei 2024: Taiwan Joins
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305. Inter-Parliamentary Alliance on China, “IPAC Taipei 2024: Taiwan Joins
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679
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308. Chong Ja Ian, “The Many ‘One Chinas’: Multiple Approaches to Taiwan and
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310. Taiwan International Trade Administration, “Taiwan-EU Economic Rela-
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311. Alicja Bachulska, “In the Same Boat: Why Taiwan Is Strengthening Ties with
Central and Eastern Europe,” European Council on Foreign Relations, May 17, 2024;
Taiwan Ministry of Foreign Affairs, Vice President-Elect Hsiao Bi-khim Meets with
Czech and Lithuanian Parliamentary Leaders and Visits Poland, Deepening Relations
between Taiwan and Central and Eastern European Allies (副總統當選人蕭美琴會晤
捷克及立陶宛國會議長並順訪L波蘭,深化我國與中東歐國家友好情誼), March 24, 2024.
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312. William Yang, “Taiwan’s VP-Elect Reaffirms Ties with Europe in Diplomatic
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313. Helen Davidson, “China Tells UK to Stop Using Trade to Improve Taiwan
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314. Michael Malinconi, “The European Union Crushes Taiwan’s Hopes for a Bilat-
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315. Kamil Kowalcze, “TSMC Breaks Ground on €10 Billion German Plant in Chip
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316. Alicja Bachulska, “In the Same Boat: Why Taiwan Is Strengthening Ties with
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317. Joseph Yeh, “Taiwan Stands Firm on Name of Representative Office in Lithu-
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318. Rhyannon Bartlett-Imadegawa, “Taiwan-Backed Fund Invests in Central,
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319. NHK, “Chinese Embassy in Tokyo Criticizes Japan’s Message to Taiwanese
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320. Mainichi Japan, “Taiwan Leader Affirms Bond with Japan Ruling Party Law-
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321. Madoka Fukuda, “Prospects for Taiwan-Japan Relations after the 2024 Elec-
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322. Jiji and Reuters, “Japanese and Taiwanese Coast Guards Hold Joint Drill off
Chiba,” Japan Times, July 20, 2024.
323. Jiji and Reuters, “Japanese and Taiwanese Coast Guards Hold Joint Drill off
Chiba,” Japan Times, July 20, 2024.
324. Liu Zhen, “Beijing Protests over Japan-Taiwan Coastguard Joint Rescue Ex-
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325. Jane Rickards, “Lacking: Japanese Security Cooperation with Taiwan,” Aus-
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326. Taipei Times, “Taiwan, Japan Hold Maritime Talks in Taipei,” August 27,
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327. Jane Rickards, “Lacking: Japanese Security Cooperation with Taiwan,” Aus-
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328. Australia Department of Defence, “Joint Statement on Strengthening the
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329. U.S. Mission Korea, United States-Japan-Republic of Korea Trilateral Minis-
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330. Reuters, “Philippines, Japan, U.S. Hold First Trilateral Coast Guard Manoeu-
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385. Ethan Zack, “Here’s Where Acer Products Are Made Today,” Slash Gear, April
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389. Taiwan’s Ministry of Economic Affairs, Energy Administration, Energy Statis-
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390. Taiwan’s Ministry of Economic Affairs, Energy Administration, Energy Statis-
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391. Emily Feng, “In Taiwan’s Elections, Nuclear Energy Is a Major Campaign
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392. Min-Shen Ouyang, “Nuclear Power Development in Taiwan: Operational Per-
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393. Kwangyin Liu, “A Charged Debate: Taiwan’s Nuclear Energy Conundrum,”
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394. Alison Hsiao, “ANALYSIS/Despite Hints of Softening, DPP Sticking to Nucle-
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397. Sing Yee Ong, “Chip Hub Taiwan to Raise Power Prices from Mid-October,”
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398. Jordan McGillis, “Taiwan’s Electrical Grid and the Need for Greater System
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399. Gavin Maguire, “Taiwan Aims to Shed Dirty Power Reputation with Big Wind
Push,” Reuters, September 28, 2023.
400. Taiwan’s Ministry of Economic Affairs, Energy Administration, Energy Sta-
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401. Taiwan’s Ministry of Economic Affairs, Energy Administration, Oil and Gas,
February 21, 2023.
402. Eric Yep, “Taiwan Vulnerable to LNG Supply Risks in the Event of a Maritime
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407. Tim McDonald, “China and Taiwan Face Off in Pineapple War,” BBC, March
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683
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411. Ralph Jennings and Kinling Lo, “Taiwan Trade in Spotlight as Mainland
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‘Flashpoint’ Taiwan with Peace Mission for Island’s Next President,” South China
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416. Ken Moriyasu, Cheng Ting-Fang, and Lauly Li, “TSMC Expands U.S. Invest-
ment to $65bn after Securing $6.6bn Grant,” Nikkei Asia, April 8, 2024; Akhil Tha-
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Role of the Indo-Pacific Region,” Center for Strategic and International Studies, May
30, 2023.
417. Michael Martina and David Brunnstrom, “China Bid to ‘Cheat’ Its Way to
Chip Prominence Failing - Taiwan’s US Envoy,” Reuters, February 8, 2024.
418. Yimou Lee and Sarah Wu, “ ‘Tip of the Iceberg’: Taiwan’s Spy Catchers Hunt
Chinese Poachers of Chip Talent,” Reuters, April 8, 2022; Hsieh Chun-lin and Liu
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423. Allison Schwartz and Ben Noon, “An Operation Paperclip for Taiwan,” Ameri-
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429. U.S. Bureau of Economic Analysis, International Trade in Goods and Services.
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435. Riley Walters, “Towards a Second Agreement of the US-Taiwan 21st Century
Trade Initiative,” Global Taiwan Institute, May 15, 2024; Office of the United States
684
Trade Representative, United States and Taiwan to Hold Negotiating Round for the
U.S.-Taiwan Initiative on 21st Century Trade, April 26, 2024.
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437. Meredith Broadbent, “USTR Upends U.S. Negotiating Position on Cross-Bor-
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原则 and 一个中国的原则) for the Years 1949–2022. https://books.google.com/ngrams/
graph?content=%E4%B8%80%E4%B8%AA%E4%B8%AD%E5%9B%BD%E5%8E%9F
%E5%88%99%2C%E4%B8%80%E4%B8%AA%E4%B8%AD%E5%9B%BD%E7%9A%
84%E5%8E%9F%E5%88%99&year_start=1949&year_end=2022&corpus=zh&smooth
ing=3&case_insensitive=false.
443. China’s Taiwan Affairs Office and Information Office of the State Council,
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445. China’s Taiwan Affairs Office of the State Council and the State Council In-
formation Office, The Taiwan Question and China’s Reunification in the New Era (台
湾问题与新时代中国统一事业), August 2022.
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February 2000. Translation.
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Is the Goal and Force Is an Option,” New York Times, January 1, 2019; Adela Suli-
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450. Frank S.T. Hsiao and Lawrence R. Sullivan, “The Politics of Reunification:
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Ngram Viewer Search for the Terms “peaceful reunification” (和平统一) and “national
reunification” (国家统一) for the years 1949–2022. https://books.google.com/ngrams/
graph?content=%E5%92%8C%E5%B9%B3%E7%BB%9F%E4%B8%80%2C+%E5%9B
%BD%E5%AE%B6%E7%BB%9F%E4%B8%80&year_start=1949&year_end=2022&c
orpus=en&smoothing=3&case_insensitive=false.
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9, 1979).
湾问题与新时代中国统一事业), August 2022. Translation.
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685
454. U.S. Department of State Bureau of East Asian and Pacific Affairs, U.S. Rela-
tions with Taiwan: Bilateral Fact Sheet, May 28, 2022.
455. American Institute in Taiwan, U.S.-PRC Joint Communique (1972), Published
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on the Establishment of Diplomatic Relations between the United States of America
and the People’s Republic of China, December 15, 1978.
456. Jessica Drun, “One China, Multiple Interpretations,” Center for Advanced Chi-
na Research, December 28, 2017.
457. Jessica Drun, “One China, Multiple Interpretations,” Center for Advanced Chi-
na Research, December 28, 2017.
460. U.S. Defense Security Cooperation Agency, Taipei Economic and Cultural Rep-
resentative Office in the United States (TECRO)—Command, Control, Communica-
tions, and Computers (C4) Life Cycle Support, December 15, 2023.
resentative Office in the United States (TECRO)—Taiwan Advanced Tactical Data
Link System Upgrade Planning, February 21, 2024.
resentative Office in the United States (TECRO)—F-16 Standard Spare and Repair
Parts, June 5, 2024.
463. U.S. Defense Security Cooperation Agency, Taipei Economic and Cultural
Representative Office in the United States (TECRO)—F-16 Non-Standard Spare and
Repair Parts, June 5, 2024.
resentative Office in the United States (TECRO)—Altius 600M-V Unmanned Aerial
Vehicles, June 18, 2024.
resentative Office in the United States (TECRO)—Switchblade 300 Anti-Personnel and
Anti-Armor Loitering Missile System, June 18, 2024.
resentative Office in the United States (TECRO)- Return, Repair, and Reshipment of
Spare Parts, September 16, 2024.
CHAPTER 10: HONG KONG
Abstract
Under the influence of China’s central government, Hong Kong
has installed General Secretary of the Chinese Communist Party
(CCP) Xi Jinping’s view of “holistic” national security, weakening
the city’s once vibrant institutions, civil society, and business envi-
ronment. Hong Kong has experienced a serious erosion in its au-
tonomy from the Mainland, although the manifestation of this ero-
sion to date has been far more prominent in civil rights compared
with the business environment. Hong Kong’s new national security
legislation, often called the Article 23 Ordinance, introduces new
and ambiguous offenses that target all remnants of resistance to
Beijing’s control over the city’s political, religious, and civil society
organizations. The continued implementation of the mainland Na-
tional Security Law (NSL) and the imposition of the Article 23 Or-
dinance, which has already been invoked to make new arrests, have
diminished the former distinctiveness of Hong Kong. The vaguely
defined offenses in both national security laws create an atmosphere
of fear and uncertainty, intended to coerce Hong Kongers to self-cen-
sor or face legal repercussions. Beijing’s heavy-handed control over
the city has led many Hong Kongers, including activists, families,
and business professionals, to leave. Consequently, Hong Kong’s
status as an international business hub has deteriorated, and its
economy has lost significant ground since the passage of the NSL
in 2020. The seven million residents of Hong Kong continue to enjoy
greater freedoms than those living on the Mainland—including a
freely convertible currency and comparatively uncensored internet
and media—but only so far as they refrain from violating the CCP’s
broad and opaque conceptions of political dissent. Although notable
pockets of society, including the business community, remain san-
guine about Hong Kong’s status as a regional financial and trade
hub, that status was based on a set of freedoms and the rule of law,
which Beijing is actively eroding.
Key Findings
• Imposition of the Article 23 Ordinance further equips Hong
Kong’s government with legal tools to oppress any vestiges of
dissent. Hong Kong’s robust civil society, which once set it apart
from the Mainland, is being eroded and replaced with a society
where individuals, religious organizations, and the press must
censor themselves or face possible criminal prosecution for ac-
tivities that were previously protected by law.
• The rule of law in Hong Kong is under threat. Hong Kong’s
courts no longer maintain clear independence from the govern-
ment and are being weaponized as the Article 23 Ordinance is
(686)
687
enforced. The court’s verdict in more than a dozen of the Hong

Kong 47 cases to convict pro-democracy advocates for offens-
es that allegedly threatened national security, and subsequent
resignations by international jurists in protest, illustrate the
degradation of the city’s judicial integrity.
• Imposition of the Article 23 Ordinance introduces uncertainty
for businesses in Hong Kong. Firms and business professionals
could potentially face criminal conviction for conducting normal
business activity, including research, international collabora-
tion, and due diligence.
• Hong Kong’s repressive new security regime not only threatens
Hong Kong residents but also can endanger foreign business
professionals in Hong Kong and be wielded as a cudgel to re-
press the overseas activist community, including in the United
States, through its extraterritorial application.
• Chinese nationals and businesses have flooded Hong Kong’s la-
bor force and economy, advancing Beijing’s ambitions to inte-
grate Hong Kong along with Macau and nine nearby mainland
Chinese cities into the Greater Bay Area (GBA) economic hub.
• Hong Kong has become a key transshipment node in a global
network that assists Russia and other adversaries in evading
sanctions and circumventing export controls. This diminishes
the efficacy of U.S. and allied government efforts to advance
important national security interests, and it exposes Western
investors, financial institutions, and firms to financial and rep-
utational risks when they do business in Hong Kong.
Recommendations
• Congress require the Administration to produce a determina-
tion whether reasonable grounds exist for concluding that the
Hong Kong Special Administrative Region should be designated
as a Primary Money Laundering Concern (PMLC) jurisdiction
under Section 311 of the Patriot Act due to its growing role as
the central sanctions evasion hub and transshipment center for
illicit finance and technology to Russia, Iran, and North Korea.
• Congress direct the U.S. Department of the Treasury, in coor-
dination with the U.S. Departments of State and Commerce,
to provide the relevant congressional committees a report as-
sessing the ability of U.S. and foreign financial institutions
operating in Hong Kong to identify and prevent transactions
that facilitate the transfer of products, technology, and money
to Russia, Iran, and other sanctioned countries and entities in
violation of U.S. export controls, financial sanctions, and related
rules. The report should:
○ Evaluate the extent of Hong Kong’s role in facilitating the
transfer of products and technologies to Russia, Iran, other
adversary countries, and the Mainland, which are prohibited
by export controls from being transferred to such countries;
688
○ Evaluate Hong Kong’s role in facilitating trade and financial

transactions that violate U.S. sanctions on Russia, Iran, and
other countries and entities subject to U.S. financial sanctions;
○ Examine whether Hong Kong’s National Security Law has
limited the ability of financial institutions to adhere to global
standards for anti-money laundering and know-your-custom-
er procedures; and
○ Describe the level of cooperation between Hong Kong and U.S.
authorities in enforcing export controls and sanctions regimes.
Introduction
The people of Hong Kong experienced another dire year under the
control of China’s central government. What was once a thriving civ-
il society with independent institutions and an international busi-
ness hub continues its transformation into another mainland-style
city. Beijing continues to accelerate its takeover of the city. Despite
promising Hong Kong a “high degree of autonomy” in the Sino-Brit-
ish Joint Declaration through 2047, under General Secretary Xi’s
leadership Beijing has accelerated its erosion of that commitment.1
China has betrayed its promise of “one country, two systems” by roll-
ing back longstanding policies, basic freedoms, and privileges that
made the city distinct from the Mainland.2 Through the imposition
of the Article 23 Ordinance, officially titled the Safeguarding Na-
tional Security Ordinance,* the Hong Kong government has sent an-
other clear warning signal to activists in Hong Kong and dissidents
outside of the city that any behavior it deems a threat to national
security is a violation of criminal law. Along with the 2020 NSL
passed by China’s central government, the Article 23 Ordinance has
again moved the red lines on what the government will permit, and
it has expanded the definitions of criminal offenses in ways that
pose an extraterritorial threat. Hong Kong’s legal system provides
increasingly fewer protections for civil liberties—like freedoms of ex-
pression, assembly, and religion—that were once the bedrock of the
city and distinguished it from the Mainland. The intervention into
Hong Kong’s elections, judiciary, and education systems and attacks
on its civil society illustrate the lengths to which Beijing will go to
tighten its control over the city.
Hong Kong’s businesses also face a vague and contradictory legal
environment under the Article 23 Ordinance, which may severely
inhibit the ability of firms to conduct normal business operations,
including pursuing needed research and due diligence. At the same
time, Hong Kong’s broader economy faces headwinds, including slow
economic growth and a sluggish market, while a steady flight of
multinational firms scale back their operations or leave the city
altogether. In their place, Hong Kong government initiatives en-
couraged by the Mainland have infused Hong Kong with an influx
of mainland businesses and workers and enhanced links between
* The Safeguarding National Security Ordinance is the fulfillment of requirements under
Article 23 of Hong Kong’s Basic Law, essentially its mini constitution. In the vernacular, the
Article 23 Ordinance is sometimes just referred to as Article 23, which was the provision of
the Basic Law that required Hong Kong to pass national security rules. Ricardo Barrios, “Hong
Kong Adopts New National Security Ordinance: Article 23,” Congressional Research Service CRS
IN12341, April 1, 2024; Greg Torode and Jessie Pang, “Article 23: What You Need to Know about
Hong Kong’s New National Security Laws,” Reuters, March 19, 2024.
689
Hong Kong and the surrounding Greater Bay Area (GBA).* Hong
Kong’s dwindling international status is also reflected in its slipping
role as a shipping hub, which continues to decline compared to peer
Asian neighbors and increasingly serves Beijing’s goals in sanctions
evasion. This chapter details Hong Kong’s recent political and eco-
nomic developments, attacks on its rule of law and basic freedoms,
and the implications for the United States. It is based on consulta-
tions with U.S. and foreign nongovernmental experts as well as open
source research and analysis.
Hong Kong’s Safeguarding National Security
Ordinance (Article 23 Ordinance)
Overview of the Article 23 Ordinance
Hong Kong’s Article 23 legislation went into effect on March 23,
2024, and introduced severe measures that will further target dis-
sidents, undermine civil liberties, and minimize Hong Kong’s dis-
tinctiveness from the Mainland.3 While already eroded by the 2020
NSL, the vestiges of Hong Kong’s independent institutions and open
business environment deteriorate even further under the Article 23
Ordinance.4 The Article 23 Ordinance also threatens to further re-
press dissidents overseas, and it creates more uncertainty among
civil society and the business community regarding their future in
Hong Kong.5
Background
Under Article 23 of Hong Kong’s Basic Law, the Hong Kong gov-
ernment is required to introduce legislation to “prohibit any act of
treason, secession, sedition, subversion against the Central People’s
Government, or theft of state secrets, to prohibit foreign political
organizations or bodies from conducting political activities in the
Region, and to prohibit political organizations or bodies of the Re-
gion from establishing ties with foreign political organizations or
bodies.” 6 The Hong Kong government first tried to introduce Article
23 legislation in 2003. At that time, Hong Kong, only a few years
removed from British rule, still had vocal independent institutions
and civil society.7 That attempt to introduce a local national security
law was met by 500,000 protestors, which ultimately led the govern-
ment to abandon its proposal.8
In 2020, the central government in Beijing introduced the NSL,†
directly applying it to Hong Kong and subjecting Hong Kong—for
the first time since the handover from British rule—to legal limita-
tions on political activity similar to the Mainland.9 Four years of
NSL implementation has significantly narrowed political freedom in
Hong Kong, transforming Hong Kong’s civil society, gutting electoral
opposition, and paving the way for passing the Article 23 Ordinance
in Hong Kong’s own law.10
* The cities in the GBA are linked by transportation networks and common business policies.
China considers the cities within the GBA to be industry leaders in high technology, advanced
manufacturing, logistics, and financial services. Guilherme Campos, “Greater Bay Area–China’s
Booming Southern Mega Region,” China Briefing.
† For more on the mainland National Security Law imposed in 2020, see U.S.-China Economic
and Security Review Commission, Chapter 5, “Hong Kong,” in 2020 Annual Report to Congress,
December 2020.
690
The NSL required Article 23 legislation to be completed as soon

as possible.11 On January 30, 2024, Hong Kong’s government be-
gan a consultation period for the Article 23 Ordinance that lasted
one month.12 The government claims that 99 percent of submissions
during this period were supportive of the proposed legislation, and
“anti-China” foreign groups were attempting to smear the legisla-
tion and provoke discontent.13 During the National People’s Con-
gress in March in Beijing, Hong Kong officials were instructed by
Politburo member and head of the Central Leading Group on Hong
Kong and Macau Ding Xuexiang to pass the legislation as quickly
as possible.14 Lawmakers moved to pass the legislation within two
weeks.15
New Offenses under the Article 23 Ordinance
The Article 23 Ordinance introduces a series of new offenses that
undermine the civil and legal rights of individuals, businesses, jour-
nalists, civil society groups, and international organizations in Hong
Kong and overseas, reflecting the wide reach of Xi’s vision for “holis-
tic” national security.* 16 These include:
• Broadly defining acts of seditious intention: Expanding upon
the NSL, the Article 23 Ordinance defines a “seditious inten-
tion” offense to include intentionally causing “hatred or enmity
amongst different classes of residents of the [Hong Kong Spe-
cial Administrative Region] or amongst residents of different
regions of China.” 17 Maximum penalties for having “seditious
publication[s]” were also increased to three years.18
• New crimes to prevent coordinated activity: Concealment of oth-
ers’ activities deemed treasonous under the national security
law, also referred to as misprision of treason, was codified as
a crime in the Article 23 Ordinance.19 Failure to report some-
one who is planning to commit treason could result in up to 14
years in jail.20
• Expanding the definition of espionage to erode free speech and
association: The Article 23 Ordinance expands the definition
of espionage to include “collusion with ‘external forces’ to pub-
lish false or misleading statements” with intent to endanger
national security.† 21 External forces could refer to any foreign
government, agency, individual, political party, or international
organization.22 Under this definition, “collusion with external
* On April 15, 2014, General Secretary Xi Jinping introduced his concept of “holistic” national
security. The concept emphasizes “mega security” encompassed in 20 different sectors, including
political, military, economic, cultural, and data security, among others. The Government of Hong
Kong translates the Chinese term “总体” as “holistic,” while the Commission translates this as
“comprehensive” national security. For more on Xi’s comprehensive national security concept,
see Chapter 7, “China’s New Measures for Control, Mobilization, and Resilience.” Government
of Hong Kong, A Holistic Approach to National Security (总体国家安全观), April 15, 2024. Trans-
lation.
† Certain provisions of the National Security Law contain a mens rea element that the prohib-
ited act must be performed “with intent to endanger national security” to constitute an offence.
In practice, this intent element may not offer much protection to alleged violators given the
broad scope of “national security” and that trials will be before judges especially appointed by
the Beijing-friendly Hong Kong chief executive to oversee NSL cases. Eric Y.H. Lai, “Implications
of Article 23 Legislation on the Future of Hong Kong, Jamestown Foundation, March 1, 2024;
Safeguarding National Security Ordinance (Hong Kong Special Administrative Region), 2024;
The Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong
Special Administrative Region, 2020.
691
forces” could potentially be applied to a broad variety of conduct

that otherwise would generally not be considered criminal or
even harmful.23 For example, this could be applied to a Hong
Kong resident who spoke to a foreign journalist, exchanged in-
formation with a foreign researcher, or posted on social media
a foreign think tank’s report critiquing Hong Kong’s technology
sector.24
• Supporting external “intelligence organizations”: The Article
23 Ordinance expands the definition of espionage to include
the new offense of “participating in or supporting external
intelligence organizations or accepting advantages from
them.” 25 Under the Article 23 Ordinance, an “external intelli-
gence organization” may include “an organization established
by an external force.” 26 The ambiguity of the term leaves
China’s National Administration for the Protection of State
Secrets to determine whether an organization is considered
a foreign intelligence organization.27 Potentially, a foreign
nongovernmental organization (NGO) might be deemed an
intelligence organization.28
• Broadening the scope of “external interference” to cover routine
political activity: The Article 23 Ordinance introduces “exter-
nal interference” as a new criminal offense and defines it as
the intent, in collaboration with an external force, to bring
about an interference effect, which refers to any attempts to
influence mainland or Hong Kong government officials, elec-
tion outcomes, judicial procedures, or the Hong Kong-Main-
land relationship.29 This criminalizes a broad range of polit-
ical activity.
• “Endangering national security” through an electronic system
or computer: This new offense expands the broad definition of
an “offense endangering national security” to include activities
related to computers or other electronic systems.30 This vague
definition could potentially encompass Hong Kongers using a
foreign virtual private network or electronic communication
apps, for instance, to share content that allegedly endangers
national security.31
• Expanding the scope of state secrets: The Article 23 Ordinance
imports Beijing’s vague definition of state secrets, which can
be broadly applied to information relating to a variety of sec-
tors, like scientific research, the external affairs of Hong Kong,
and economic development.32 According to analysis by the Chi-
na Strategic Risks Institute, a global policy think tank, the ar-
bitrarily defined scope of state secrets could apply to “normal
business activities, including auditing, economic and financial
analyses, and due diligence.” 33
The first conviction under the Article 23 Ordinance came in Sep-
tember 2024, when a Hong Kong man pled guilty to sedition for
wearing a shirt with the slogan “Liberate Hong Kong; revolution of
our times.” 34
692
Hong Kong’s Political and Judicial Systems

Subjugated by Authoritarian Overreach
Blurring Political Lines between Beijing and Hong Kong’s
Electoral Systems
China promised that Hong Kong could maintain its distinctive-
ness for at least 50 years under the model of “one country, two
systems” after returning to mainland control.35 Contrary to these
commitments, the Chinese government’s overhaul and politiciza-
tion of Hong Kong’s electoral system has weakened its legitimacy,
resulting in a significant decline in political participation.36 In
2023, Hong Kong reduced the number of directly elected district
council seats by 80 percent * and implemented new rules requir-
ing candidates to prove their patriotism and be screened by gov-
ernment committees, mostly composed of pro-Beijing appointees,
in order to secure nominations.37 Hong Kong’s district council
elections in December 2023 reflected the government’s changes,
which resulted in low turnout and the arrests of members of one
of the only pro-democracy parties in the city.38 Only 27.5 percent
of Hong Kong voters participated in the district council elections,
marking the lowest turnout in these polls since 1997 when Bei-
jing took control of the city.† 39 Despite the record low turnout,
Hong Kong Chief Executive John Lee Ka-chiu claimed the elec-
tions demonstrated voters’ support for the process and referred
to previous district councils as “destructive” before the change in
rules.40 Members of the League of Social Democrats (LSD), one
of Hong Kong’s only remaining pro-democracy parties, were also
arrested ahead of the December elections for their plans to stage
a protest to the electoral rule changes.41 Hong Kong police arrest-
ed three LSD members for inciting others to disrupt or intervene
in the district council elections.42 Thomas Kellogg, executive di-
rector of Georgetown University’s Center for Asian Law, empha-
sizes the dire state of Hong Kong’s political environment, saying
“pro-democratic political activity in Hong Kong is over and likely
will remain off-limits for years to come.” 43 Others, like former U.S.
Consul General in Hong Kong and Macau Hanscom Smith, argue
that a delineation can still be made between the Mainland and
Hong Kong. Mr. Smith suggests that “despite an erosion in auton-
omy, [Hong Kong] is not the Mainland.” 44 A May 2024 report by
the Center for Strategic and International Studies suggests more
broadly that some vestiges of autonomy remain in Hong Kong.45
The report also notes that while Hong Kong is “qualitatively dif-
ferent than in other mainland Chinese jurisdictions,” the overall
trend is “clearly in the direction of further erosion of autonomy
across nearly all domains—the legal and political system and civ-
il society, as well as the climate for companies and investors.” 46
* As of 2024, only 88 out of 470 district council seats are directly elected. Nectar Gan, “Hong
Kong Voters Turn Their Backs on ‘Patriots Only’ Election with Record Low Turnout,” CNN, De-
cember 11, 2023.
† Following months of protest in 2019, there was a historic turnout of 71 percent in Hong
Kong’s elections. Nectar Gan, “Hong Kong Voters Turn Their Backs on ‘Patriots Only’ Election
with Record Low Turnout,” CNN, December 11, 2023.
693
Hong Kong’s Judicial Independence Undermined

Judicial independence in Hong Kong continues to be undermined
by government overreach. Prolonged national security cases, such
as the trials of Jimmy Lai and the Hong Kong 47,* illustrate the
lack of judicial integrity in Hong Kong’s courts, where trial hearings
can be delayed by months and bail can be arbitrarily denied.47 Pro-
cedural delays in the legal process meant that many of the Hong
Kong 47 were held for over two years awaiting trial.48 On May 30,
2024, a Hong Kong court finally announced its verdict in 16 cases
of the Hong Kong 47 trial, the landmark national security case that
began in February 2023, bringing the total time since their initial
arrest to nearly three and a half years.49 The court found 14 of the
defendants guilty and acquitted two—although the prosecution has
announced plans to appeal the acquittals.† 50 Many of the 47 advo-
cates have been detained for more than three years due to severe
bail thresholds, during which time 31 of the accused pled guilty.51
The 16 that pled not guilty could face up to life in prison.52 Jean-
Pierre Cabestan, senior research fellow at the Asia Centre, suggests
that the major message from the trials to Hong Kong’s society is
“either you toe the line, you support the Communist party, or you
are excluded from political life.” 53
The Article 23 Ordinance further erodes the legal rights of defen-
dants, allowing detention for up to 16 days (previously two days)
without charges, restricting access to certain lawyers, and tightening
national security trials, bail, and parole.54 More specifically, in the
first 48 hours after someone is arrested, they can be blocked from
consulting any lawyer and then denied a chosen lawyer while they
remain in detention.55 In addition, the Article 23 Ordinance also
grants discretionary powers to the chief executive to issue binding
certificates to courts and make subsidiary legislation at any time if
it is related to “safeguarding national security.” 56 Due to the broad
scope of the Article 23 Ordinance offenses, Hong Kong’s Beijing-ap-
pointed chief executive has ample opportunity to introduce arbitrary
laws.57
* Known as the “Hong Kong 47,” the group comprises activists, politicians, legislators, and civ-
il society leaders who were opposed to the central government’s overreach into Hong Kong’s
electoral process. They were arrested and accused of holding primary elections in 2021, a his-
torically common event ahead of elections, in order to help elect candidates who could challenge
pro-Beijing candidates in the main election. Helen Davidson and Verna Yu, “Hong Kong 47: Trial
of Dozens in Pro-Democracy Movement Set to Begin under National Security Laws,” Guardian,
February 4, 2023.
† Prior to the NSL, the trial would have been before a jury, not judges picked by the Hong
Kong chief executive, and prosecutors would not have been able to appeal an acquittal. The NSL
allowed national security cases to be tried by a panel of three national security judges instead
of a jury. The NSL also directed the chief executive to appoint certain judges to handle national
security cases. In 2023, the Hong Kong Department of Justice proposed an amendment that
would break from prior practice, allowing prosecutors to appeal an acquittal under the NSL by
High Court judges on the basis of legal error. The amendment was ultimately adopted. These
new judicial processes were implemented in the case of the Hong Kong 47. Jessie Yeung, Nectar
Gan, and Chris Lau, “Hong Kong Democracy Leaders Convicted in Most Significant Verdicts
since Beijing’s National Security Crackdown,” CNN, May 30, 2024; China Strategic Risks In-
stitute, “Analysis of the Business and Legal Risks Associated with the HKSAR Safeguarding
National Security Ordinance (Article 23),” April 2024, 3, 7; Hong Kong Special Administrative
Region Criminal Procedure (Amendment) Ordinance 2023, July 14, 2023; Lydia Wong, Thomas E.
Kellogg, and Eric Hanho Lai, “Hong Kong’s National Security Law and the Right to a Fair Trial:
A GCAL Briefing Paper,” Georgetown Law Center for Asian Law, June 28, 2021; Jeffie Lam, “Hong
Kong Prosecutors Will be Allowed to Appeal against Acquittals in Some National Security Cases
in Court of First Instance under Proposed Change,” South China Morning Post, April 21, 2023.
The Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong
Special Administrative Region, 2020.
694
The Hong Kong government has also been slow to fill open ju-
dicial positions within the Hong Kong courts system, further pro-
longing some trials and undermining the integrity of the courts.58
Consequently, the number of people held in Hong Kong jails con-
tinues to increase and their futures remain unclear given the back-
log in cases being heard.* 59 Alvin Cheung with the U.S.-Asia Law
Institute explains that “this shortage is plainly appalling in terms
of how it prolongs legal limbo for defendants.” 60 Amid the lack of
appointments, the number of filled judicial positions in the first half
of 2024 hovered at just over 160 out of 211 total positions, includ-
ing national security judges, with the High Court having a higher
vacancy rate than other Hong Kong courts.61 Despite the shortage,
no new judges have been appointed to the High Court since 2021.62
Underscoring the impact of the NSL and increasing role of Beijing
in the process, Chief Executive Lee only appointed three out of the
six potential High Court judges nominated by the Judicial Officers
Recommendation Commission (JORC) in 2021.63 Of the other three
put forward by the JORC, one failed to pass a national security
background check and another candidate backed out of the process
over concerns around the impact of the 2020 NSL on Hong Kong’s
legal landscape.64 Additionally, the JORC has not made any new
recommendations for full-time judges in the last three years.65
Legal professionals have been hesitant to risk reputational and
career damage by serving as a judge on the Hong Kong courts.66
In June 2024, after the prior month’s verdict convicting 14 Hong
Kong activists and politicians of national security violations, three
non-permanent foreign judges announced their resignations from
positions on Hong Kong’s Court of Final Appeal.67 Jonathan Sump-
tion, one of the former judges and a British citizen, published an
opinion piece in the Financial Times identifying a “growing malaise
in the Hong Kong judiciary” and claiming that Hong Kong “is slowly
becoming a totalitarian state.” 68 An additional two foreign non-per-
manent judges have declined to renew their appointments to the
Court of Final Appeal as well this year.69
To deter civil servants and judges from helping implement Hong
Kong’s national security laws, some U.S. lawmakers have introduced
legislation calling for sanctions on members of the Hong Kong le-
gal system involved in enforcement of the NSL.70 Some Hong Kong
dissidents and activists applaud these sanctions, arguing that they
stand to have a deterrent effect on judges and prosecutors in the
city.71 Sanctions on these individuals would prevent them from in-
teracting with a range of financial institutions and severely con-
strict the ability of these individuals to make international pay-
ments.72 Former Hong Kong Chief Executive Carrie Lam indicated
that U.S.-led sanctions placed on her for her role in crackdowns on
democratic protests have already caused personal financial hard-
ships.73 As evidence of the sensitivity of individual sanctions, the
Chinese and Hong Kong governments have issued strongly worded
objections whenever sanctions have been imposed, including in 2020
and 2021.74
* As of September 2023, the number of people held in jail has reached a ten-year high, causing
one Hong Kong detention center to operate at around 104 percent capacity. Siyan Cheung, “Hong
Kong Detention Center Overflowing as Thousands Serve Time for Protests,” Radio Free Asia,
September 6, 2023.
695
Hong Kong’s Extraterritorial Application of the National

Security Law
The Hong Kong government continues to extend its reach by
adopting an extraterritorial approach to enforcement of its na-
tional security laws. Since July 2023, Hong Kong’s National Se-
curity Police have placed bounties on 13 overseas pro-democra-
cy activists, questioned their family members, and attempted to
intimidate them.75 These Hong Kong activists include: Nathan
Law, Elmer Yuen, Dennis Kwok, Kevin Yam, Anna Kwok, Mung
Siu-tat, Finn Lau, Ted Hui, Frances Hui, Joey Siu, Jonny Fok,
Tony Choi, and Simon Cheng.76 All of the activists targeted live
outside of Hong Kong as dissidents in the United States, Aus-
tralia, and the United Kingdom (UK).77 Hong Kong police have
accused these activists of “collusion with foreign country or exter-
nal elements,” “incitement to secession,” and “incitement to sub-
version.” 78 The bounties issued by police are worth approximately
$128,000 (Hong Kong Dollars [HKD] 1 million) for information
that may lead to their arrest; if caught, activists could receive
sentences of up to life in prison.* 79 The family members of Hong
Kong dissidents are also targeted and harassed for their rela-
tives’ pro-democracy work abroad.80 For instance, the mother of
U.S.-based activist Frances Hui was taken to a police station and
questioned in January 2024 after authorities issued a bounty for
her daughter’s arrest.81 The Article 23 Ordinance also provides
a legal basis for requiring financial institutions to deny overseas
activists access to their bank accounts.82
Draconian Laws Threaten Civil Liberties

Academic Freedom
Four years into implementation of the NSL, academic freedom
in Hong Kong has dwindled as educators face pressure to politicize
their curriculum and abide by national security requirements, in-
cluding the Article 23 Ordinance.83 The Patriotic Education Law †
officially took effect on January 1, 2024, and, according to the Hong
Kong government, aims to “strengthen patriotic education . . . [and]
inherit and promote the spirit of patriotism.” 84 The government also
established a new Working Group on Patriotic Education to inte-
grate patriotic education, national security education, and Chinese
culture education.85 Ahead of Hong Kong’s National Security Edu-
cation Day (April 15),‡ primary and secondary school teachers were
provided a script to read to students that explains General Sec-
retary Xi’s approach to national security and describes the Article
23 Ordinance as creating a “safety barrier” for the city.86 Teachers
* Unless noted otherwise, this section uses the following exchange rate throughout: $1 = HKD
7.79 as of September 17, 2024.
† The Patriotic Education Law, passed in October 2023, sets requirements for patriotic emphasis
in areas of education including ideology and politics, history and culture, constitution and law,
and national security. Reuters, “China Passes Patriotic Education Law for Children, Families
-State Media,” October 24, 2023; Government of Hong Kong Special Administrative Region News,
Patriotic Education Law Welcomed, October 24, 2023.
‡ April 15 is also National Security Education Day in mainland China. Arran Hope, “Learning
from National Security Education Day,” Jamestown Foundation, April 26, 2024.
696
were instructed to host activities for students to teach them how to

protect national security in their daily lives.87 Hong Kong is also
sending secondary school principals, teachers, and students to main-
land China for “national security education study tour[s].” 88 For ex-
ample, in April 2024, more than 70 educators and students traveled
to Beijing, Shanghai, and Hangzhou, where they visited sites like
the Museum of the Communist Party of China and the National
Security Education Exhibition Hall.89
University leadership also faces pressure to make their institu-
tions conform not to standards of academic freedom but to stan-
dards of thought approved by Beijing. According to Carsten Holz,
a social science professor at Hong Kong University of Science and
Technology, the Hong Kong government expects professors and ac-
ademic leadership to police their institutions, so “it is no surprise
that at least four vice-chancellors of Hong Kong’s seven [publicly
funded] universities recently resigned.” 90 After facing years of crit-
icism by pro-Beijing policymakers and news outlets, vice-chancel-
lor of the Chinese University of Hong Kong (CUHK) Rocky Tuan
announced that he would resign from his post effective January
2025.91 Mr. Tuan has been targeted by pro-Beijing lawmakers and
others since 2019 for his support of student protestors.92 Since then,
CUHK has been singled out for the first audit of a university in
Hong Kong by the city’s Audit Commission, which was described as
“a form of harassment” by one CUHK academic.93 Former CUHK
council member Tik Chi-yuen also argued that CUHK was targeted
by the Hong Kong legislature, and Tuan’s management of the uni-
versity was scrutinized politically.94 The university should remain
free from political interference, Tik Chi-yuen said.95
Hong Kong’s schools are also politicizing their curriculum and
struggling to maintain enrollment numbers among local students.
As enrollment from Hong Kong’s local students declines, some Hong
Kong institutions are replacing them with mainland and interna-
tional students.96 Chief Executive Lee announced in an October
2023 speech that the quota of overseas and mainland students at
Hong Kong’s public universities was set to increase from 20 percent
to 40 percent as a part of the government’s push to make the city
an “international hub for education and a center for innovation.” 97
CUHK, for instance, increased its annual enrollment quota for
mainland students from 300 to 400 students for this year.98 In 2018,
mainland students accounted for 50 percent of nonlocal students
at Hong Kong’s universities, but that number has risen to more
than 70 percent in the last six years.* 99 According to Hong Kong’s
University Grants Committee, at the city’s main public universities,
there are 14,756 nonlocal undergraduate students, of which 10,358
are from the Mainland.100 In an effort to attract more international
students to Hong Kong, the grants committee is giving nearly $4
million to eight of Hong Kong’s top public universities to promote
their programs overseas and attract new students.101
As a result of the emigration wave and declining birthrates, ap-
plications for Hong Kong kindergartens decreased by a third from
* In the 1996–1997 school year, there were just five mainland Chinese enrolled in Hong Kong
undergraduate programs. South China Morning Post, “Public Universities in Hong Kong Target
Foreign Students as Mainland Chinese Numbers among Undergrads Soar,” February 11, 2024.
697
last year’s numbers.102 Vice-chair of the Hong Kong Federation of

Education Workers Nancy Lam Chui-ling does not expect the emi-
gration wave to stop and notes in an interview that the application
numbers are likely even lower than those that are reported because
parents will typically submit multiple applications before choosing
a school in which to enroll their child.103
Freedom of Press
Despite being enshrined in Hong Kong’s Basic Law, freedom of the
press * continues to be limited by the imposition of Hong Kong’s dra-
conian security laws. The 2020 NSL is used to suppress journalists
on claims of combating “subversion,” “secession,” and “collusion with
foreign forces.” 104 The ambiguous definitions of these terms in the
NSL allow it to be applied broadly to independent voices residing
inside and outside of Hong Kong.105 Similar to the NSL, the Article
23 Ordinance is vaguely worded, allowing judges to apply the law
arbitrarily.106 As discussed above, the Article 23 Ordinance intro-
duces new crime categories, including “theft of state secrets,” “ex-
ternal interference,” and “espionage,” which have been weaponized
in the Mainland against press freedom.107 The Article 23 Ordinance
also extends the penalty for “sedition” from a maximum of two years
to up to ten years in prison.108 Merely possessing publications, such
as old copies of the independent newspaper Apple Daily, founded
by pro-democracy advocate Jimmy Lai, is also punishable under
the new law and can carry a three-year jail term.† 109 In August
2024, two editors from the now shuttered pro-democracy media out-
let Stand News were found guilty of sedition.110 The editors were
charged before the imposition of the Article 23 Ordinance under a
colonial-era sedition law that has been used in recent years to crack
down on press viewed as critical of the Hong Kong government.111
In an atmosphere of worsening press freedom, the Article 23 Ordi-
nance gives Hong Kong and mainland authorities even greater pow-
ers to punish members of the media viewed as supporting pro-de-
mocracy activities.
As Hong Kong’s press freedom is further repressed, more news
outlets and journalists are leaving the city, and others are blocked
from even entering. After almost three decades of operating in Hong
Kong, and shortly after the Article 23 Ordinance was enacted, Radio
Free Asia (RFA), a U.S. government-funded private nonprofit news
corporation, closed its bureau in the city and will no longer have
full-time personnel in Hong Kong due to concerns with the worsen-
ing press freedom landscape.112 RFA president Bay Fang noted that
Hong Kong authorities’ reference to RFA as a “foreign force” has
raised “serious questions about [RFA’s] ability to operate in safety
with the enactment of Article 23.” 113 Several weeks after RFA’s de-
* Hong Kong is ranked 135 out of 180 countries in the Reporters Without Borders (RS) 2024
World Press Freedom Index. As of July 9, 2024, ten journalists are detained in Hong Kong.
Reporters Without Borders, “2024 World Press Freedom Index—Journalism under Political Pres-
sure,” 2024.
† The crackdown on press deepens the threat to free speech. In 2020, Hong Kong passed a law
criminalizing insulting the Chinese national anthem. In July 2024, a man was found guilty of
this crime from an incident in 2023 where he covered his ears during the anthem at a sports
match and instead sang “Do You Hear the People Sing” from the musical Les Miserables. Hillary
Leung, “Hong Kong Man Found Guilty of Insulting Chinese Anthem at Volleyball Game,” Hong
Kong Free Press, July 22, 2024.
698
parture, on April 10, 2024, a Reporters Without Borders (RSF) rep-

resentative was detained and deported out of Hong Kong because of
plans to meet with journalists and monitor a hearing in Jimmy Lai’s
national security trial.114 In a statement about the incident, RSF
described it as “a new decline in the already poor press freedom cli-
mate in the territory.” 115 In April 2024, the Hong Kong-based South
China Morning Post (SCMP), which is owned by Chinese technology
giant Alibaba, joined its mainland counterparts in withdrawing its
membership from the Society of Publishers in Asia (SOPA) and lim-
ited its submissions for the society’s regional journalism awards.116
Among the SCMP’s finalist SOPA entries this year is an entrant for
“excellence in photography.” 117 The SCMP, like many other Chinese
publications, had faced criticism from the Mainland for its investi-
gations and research in the Mainland, including investigations crit-
ical of the Chinese government.118
The Wall Street Journal also announced it would move its region-
al headquarters to Singapore, and it laid off editors and reporters at
its Hong Kong bureau in May 2024.119 Selina Cheng, one of the re-
maining staff reporters after the Wall Street Journal’s initial round
of layoffs, claims the Wall Street Journal reversed course and fired
her in July after she was elected chair of the Hong Kong Journalists
Association (HKJA).120 HKJA advocates for press freedom, includ-
ing releasing an annual report on the state of freedom of expression
in Hong Kong and raising concerns during the Article 23 Ordinance
public consultation period.121 Chinese state media has denigrated
HKJA and its members for “badmouthing” China.122 This incident
highlights the pressures on foreign media to self-censor in line with
the CCP’s requirements on media, and it calls into question claims
that foreign businesses have been unaffected by the new atmosphere
following the passage of the NSL and Article 23 Ordinance.
Growth of the Surveillance State in Hong Kong

As Hong Kong’s governance continues to converge with the
Mainland, the city is increasingly adopting the methods of a sur-
veillance state. In February 2024, the Hong Kong government
announced plans to install 2,000* more cameras across the city
in partnership with the Hong Kong police, raising privacy con-
cerns among the public about how the technology may be used to
surveil Hong Kongers.123 Hong Kong Police Commissioner Ray-
mond Siu Chak-yee claimed the cameras would be used to combat
crimes and ensure residents’ safety, but he also noted that the
police force would not rule out using facial recognition technolo-
gy in its surveillance system.124 In addition to the new cameras,
last year Hong Kong’s police force requested funding to upgrade
bodycams and related technologies by building a new 5G sys-
tem.125 While police bodycams have garnered support from civil
* The government of Hong Kong does not maintain a count of the number of public surveillance
cameras deployed in the city by various government agencies, although the police force claims
that these 2,000 cameras are the total amount of cameras they will have deployed. Estimates
from Comparitech put the total number of CCTV cameras in Hong Kong at just below 55,000.
Hong Kong Police Force, Territory-Wide CCTV Installation Scheme; Irene Chan, “Hong Kong to
Install 2,000 More CCTV Cameras in 2024, Top Official Says Total Number in City ‘Relatively
Small,’ ” Hong Kong Free Press, January 19, 2024; Paul Bischoff, “Surveillance Camera Statistics:
Which Are the Most Surveilled Cities?” Comparitech, May 23, 2023.
699
Growth of the Surveillance State in Hong Kong—Continued

society under certain conditions in free countries like the United
States, against an increasingly authoritarian trend in Hong Kong,
this effort raised concerns that Hong Kong’s digital surveillance
network may become more like China’s facial recognition system
Skynet, which is used to squash political opposition.126 Executive
Director of the Japan Hong Kong Democracy Alliance Alric Lee
notes that the combination of new surveillance cameras with the
“suite of new ‘national security’ offenses” in the Article 23 Ordi-
nance could enable Hong Kong’s police to monitor people remote-
ly.127 Mr. Lee further explains that “used in conjunction with the
Article 23 legislation, [surveillance cameras] could become a new
tool for prosecutions.” 128 Additionally, the Hong Kong police bud-
get for fiscal year 2024–2025 will reach $3.6 billion (HKD 27.8
billion), up 9.2 percent over the prior year.129 The budget includes
a 16.7 percent increase for “rewards and special services” that
will cover bounties and payments to informers.130
Freedom of Assembly and Association

Freedoms of assembly and association face further assault in
Hong Kong this year. Under the Article 23 Ordinance, exercising
freedoms of assembly and association can be criminalized. Peace-
ful civil society activism can be subject to heavy-handed penalties,
including long prison sentences.131 Protests in 2019 involved occu-
pying roads and stalling traffic, which under the new law could re-
sult in up to 20-year prison sentences for activities that “weaken”
public transportation, infrastructure, or offices.132 The Article 23
Ordinance may also place constraints on civil society organizations
by criminalizing “external interference,” including “improper means”
to collaborate with external political organizations or international
organizations that are seen as “bring[ing] about an interference ef-
fect.” 133 In practice, this could criminalize actions such as criticizing
the Hong Kong government’s human rights record or calling on for-
eign governments to hold the Hong Kong government accountable
for protecting human rights.134 Additionally, the Article 23 Ordi-
nance imposes severe sentences for peaceful civil society activities,
such as up to a 14-year prison sentence and a maximum fine of
$130,000 for managing a prohibited organization or up to ten years
in prison and a fine of $32,000 for participating in a meeting with
a banned organization.135 Amnesty International’s China Director
Sarah Brooks explains that this legislation “could lead to the prose-
cution of activists for their exchanges with foreign actors, framed as
‘endangering national security.’ ” 136
Hong Kong police conducted their first arrests under the Article
23 Ordinance in May 2024 for alleged acts of “seditious intent” to
incite people to unlawfully assemble on a “sensitive date.” 137 One
of the individuals arrested, Chow Hang-tung, was already serving
a more than 30-month jail sentence for charges of “unauthorized
assembly” for organizing a vigil to commemorate the Tiananmen
Square massacre.138 According to several news reports, her most
recent arrest in May 2024 was linked to a Facebook group page ti-
700
tled “Chow Hang-tung Club” that had asked members to share their
experiences with past Tiananmen vigils.139
Freedom of Religion
International experts on freedom of religion have also expressed
concerns with how the Article 23 Ordinance will impact religious
freedom in Hong Kong. While Hong Kong’s religious communities do
not yet face the same degree of persecution as those in the Main-
land, religious leaders face pressure to promote Beijing’s priorities,
including the sinicization of religion.140 Those who do not comply
face legal consequences. Cardinal Joseph Zen, a senior Roman Cath-
olic cleric in Hong Kong and a critic of the CCP and outspoken
advocate for human rights, was arrested and fined in 2022 for fail-
ing to register a humanitarian fund that provided financial aid to
those arrested in the 2019 pro-democracy protests.141 Then United
States Commission on International Religious Freedom * Commis-
sioner Frank R. Wolf cited this as another example of how Hong
Kong is “devolving into an increasingly repressive society where no
one resisting government tyranny is safe, including religious leaders
and communities.” 142 A January 2024 report by the Committee for
Freedom in Hong Kong Foundation describes the deterioration of re-
ligious freedom in Hong Kong and “warning signs of what’s to come,”
including the intimidation of clergy, self-censorship, and direct at-
tacks on religious practices.143 Hong Kong’s religious leaders are
increasingly making visits to the Mainland to meet with religious
and other leaders approved by Beijing. For instance, in August 2023,
a delegation of Islamic leaders from Hong Kong visited Xinjiang,
where they met with the Islamic Association of China and at least
one voiced support for the situation there, which includes harsh
measures restricting the practice of Islam.144 During the visit, the
chairman of the Islamic Union of Hong Kong contributed to Party
propaganda in an interview with Chinese state media by claiming
that his “compatriots living in Xinjiang are very happy and joyful,
fully enjoying religious freedom and are well-respected.” 145 In April
2024, Catholic Cardinal Stephen Chow visited the Mainland for the
second time since Beijing and the Vatican jointly appointed him a
bishop of Hong Kong in 2020.† 146 During his visit, he met with dio-
ceses in Guangzhou and Shantou—cities in Southern China in fairly
close proximity to Hong Kong—which both have bishops approved
by Beijing and the Vatican.147 Cardinal Chow’s remarks during his
engagements reportedly emphasized respect for different customs
and cultures.148 Comparing the church in Guangdong to the church
in Vietnam, Cardinal Chow even noted that both churches have re-
mained under communist rule for many years and are functioning
well.149
In March 2024, more than a dozen activists and religious freedom
experts expressed “profound and grave concerns” about the effects
* The United States Commission on International Religious Freedom stated in its 2024 Annual
Report that increased political pressure after the imposition of the NSL has led to self-censorship
among religious leaders in Hong Kong. United States Commission on International Religious
Freedom, 2024 Annual Report, May 2024, 23.
† In 2018, China signed an agreement with the Vatican to allow Beijing a role in the appoint-
ment of Catholic bishops. Aleteia, “Cardinal Stephen Chow, a Bridge between Beijing and Rome,”
September 29, 2023; Jason Horowitz and Ian Johnson, “China and Vatican Reach Deal on Ap-
pointment of Bishops,” New York Times, September 22, 2018.
701
of the Article 23 Ordinance, specifically how it will impact the Sac-

rament of Penance, also known as Confession.150 According to Hong
Kong’s Secretary for Justice Paul Lam Ting-kwok, under the Article
23 Ordinance, a person can receive up to 14 years in prison for fail-
ing to disclose the commission of treason by others.151 This means
that under the law, a priest could be forced to share what has been
disclosed to them during Confession, a direct violation of the Uni-
versal Declaration of Human Rights.152 As the statement made by
a group of advocacy organizations notes, the Article 23 Ordinance
has “grave implications for the confidentiality of Confession in the
Catholic Church and other Christian traditions.” 153
Economics and Trade
Beijing’s influence over Hong Kong’s economic, trade, and finan-
cial sectors has intensified. The Hong Kong government’s implemen-
tation of the Article 23 Ordinance has called into question many
of the distinctive features that allowed Hong Kong to flourish as a
regional business hub. Under the provisions of the Article 23 Ordi-
nance, foreign businesses in Hong Kong could be severely limited in
routine business activities such as accessing data, contacting over-
seas counterparts, and conducting due diligence.154 Some businesses
have begun proactively separating their Hong Kong operations from
other global offices or asking staff to use burner phones as a pre-
cautionary measure while visiting the city.155 This is the latest step
in Hong Kong’s forced integration with the Mainland, as the Hong
Kong business environment increasingly resembles other large Chi-
nese cities.156 Cross-border commerce and migration boost these ties,
as Hong Kong is now a central node in China’s Greater Bay Area
(GBA), an initiative by China to combine Hong Kong with surround-
ing Chinese cities to form a single economic and business hub.157
Faced with Hong Kong’s dwindling international stature, slumping
markets, and constrictive legal environment, some U.S. firms and
other multinationals continue to depart the city, while those that re-
main face an uncertain business environment.158 Meanwhile, Hong
Kong aids China in utilizing Hong Kong’s port to evade sanctions
and serves as a key node in a transshipment network of illicit goods
to Russia, while the Hong Kong Economics and Trade Offices act as
a conduit of mainland interests.159
Hong Kong Economy, Markets Remain Sluggish
Hong Kong’s economy has been sluggish in recent years as it
emerged from a period of social unrest and COVID-19 lockdowns,
which contributed to the city’s contracting gross domestic product
(GDP) in three of the four years from 2019 to 2022.160 Natixis esti-
mates that the city’s strict COVID-19 measures alone, which lasted
into early 2023, cost the city $27 billion in growth.161 Hong Kong
experienced weak cumulative GDP growth of only 5 percent over the
five years from 2019 to 2023.* 162 In contrast, the five-year period
from 2014 to 2018 saw GDP grow over 24 percent.163 Although the
Hong Kong economy grew moderately in 2023 and the first half of
2024, posting growth rates of 3.2 percent and 3.0 percent, respec-
* Hong Kong’s real GDP contracted during this time period. World Bank, “GDP (Constant 2015
US$)–Hong Kong SAR, China.”
702
tively, compared with the same periods in the prior year, weakness
persists in some segments.164 Youth labor force participation rates
fell from 40 percent in 2018 to 30 percent in 2023, while young peo-
ple face uncertainty about their futures in Hong Kong.165 (For more
on youth unemployment in China, see Chapter 1, “Economics and
Trade (Year in Review).”) Businesses are not flocking to Hong Kong
as they once were. While Hong Kong attracted 497 foreign compa-
nies in 2019, it drew in only 255 overseas companies in 2023.166
Meanwhile, regional competitor Singapore, which once had a GDP
per capita equal to Hong Kong’s in the early 2000s, surpassed Hong
Kong’s GDP in real terms in 2016 and now has a GDP per capita
about 70 percent higher than Hong Kong’s as of 2023.167
Amid its slowing economy, Hong Kong faces a budget shortfall of
$13 billion (HKD 101.6 billion) for the 2023–2024 fiscal year, nearly
double the government’s initial projections.168 This is the second year
in a row the Hong Kong government is facing a sizeable deficit.169
Despite this shortfall, the Department of Finance continues to use
fiscal policy and subsidies to try to stimulate demand, particularly
in the housing market.170 There has been a steady rise in unsold
housing in Hong Kong, an issue that emerged in part due to a wave
of departures from Hong Kong following the introduction of nation-
al security legislation.* 171 Compared with pre-COVID, Hong Kong’s
labor force was 4 percent lower at the end of 2023, and the num-
ber of foreign firms had declined by 5.2 percent as of mid-2023.172
As of June 2024, 150,400 Hong Kongers, or about 2 percent of the
population, had left the city for the UK alone under the British Na-
tional (Overseas) visa scheme.† 173 Data from Jones Lang LaSalle
now show that residential units available in the primary market
increased 6 percent to 91,300 units in the fourth quarter of 2023.174
This is a 74 percent increase in empty Hong Kong apartments since
2020.175 As of the end of 2023, Hong Kong housing prices were down
20 percent from their 2021 peak, with financial services company
UBS projecting another 10 percent decline in 2024.176 Burgeoning
difficulty in the housing market poses particular problems for the
Hong Kong government, as land sales contribute around one-fifth
of its fiscal revenue.177 In his budget rollout speech, Finance Secre-
tary Paul Chan announced measures to address the housing market
slump, including the removal of longstanding real estate restrictions
aimed at curbing speculation and preventing property bubbles.178 In
February 2024, Hong Kong eliminated a 7.5 percent stamp tax on
second home purchases, a 7.5 percent stamp tax on nonpermanent
residents buying property, and a 10–20 percent stamp tax on those
selling their homes within two years of purchase.179 The govern-
ment also relaxed lending policies and introduced further stimulus
to boost housing demand.180 While the efficacy of these stimulus
* Although Hong Kong’s population rose 0.4 percent in 2023, some of the increase was due to
mainland Chinese entering Hong Kong on a variety of government schemes to attract new talent.
Reuters, “Hong Kong’s Population Edges up to 7.5 Mln, Second Year of Post-COVID Growth,”
February 20, 2024.
† Hong Kongers born before the 1997 handover can apply for a British National (Overseas)
(BNO) passport, which grants them the ability to move to the UK. For more on the BNO pass-
port scheme and efforts by the Hong Kong government to restrict it, see U.S.-China Economic
and Security Review Commission, Chapter 5, Section 3, “Hong Kong,” in 2023 Annual Report to
Congress, November 2023, 660–661. Claire Ballentine, “Hong Kongers Fleeing to UK Leave $3.8
Billion Trapped Behind,” Bloomberg, July 18, 2024.
703
efforts has yet to be borne out, these efforts also face market imped-
iments, including elevated interest rates in Hong Kong.181
China’s actions to undermine Hong Kong’s autonomy, including
the passing of the Article 23 Ordinance, have eroded Hong Kong’s
status as a global financial center. Hong Kong’s Hang Seng Index
has plunged under tighter mainland rule, falling below 15,000 on
January 22, 2024, marking less than half of its peak of 33,154.1 in
January 2018 before the introduction of the Beijing-backed national
security legislation.182 Illustrating the stark economic reality since
mainland China assumed control of Hong Kong, the Hang Seng
Index in January 2024 declined below 16,365 points, lower than
its value on July 1, 1997, the day China took over Hong Kong.183
During the same time period, Hong Kong’s GDP more than doubled
from $177 billion to $382 billion, while investors in the S&P 500
saw their stock investments grow more than four times.184
The decline of Hong Kong’s stock markets in recent years is ad-
mittedly difficult to disentangle from their close alignment with
mainland markets and Hong Kong’s stringent COVID restric-
tions. Hong Kong’s COVID pandemic controls included mandatory
testing and quarantines for positive cases and international trav-
elers.* 185 Hong Kong relaxed its strict travel controls in 2022 in
attempts to boost economic growth and attract foreign business
back to the city, but the economy still contracted that year.186
In recent years, the close integration between financial markets
in Hong Kong and the Mainland has been detrimental due to
broader challenges in the Chinese economy. (For more on China’s
economic challenges, see Chapter 1, “Economics and Trade (Year
in Review).”) Since China’s opening to foreign trade and invest-
ment in the late 1970s, Hong Kong’s markets have been closely
aligned with the Mainland economy as part of China’s strategy to
attract foreign capital.187 Mainland Chinese companies by 2023
accounted for 76 percent of the index’s market capitalization.188
Many major firms are dual-listed on both Hong Kong and main-
land exchanges.† 189 These dual listings align with Beijing’s ob-
jective of integrating Hong Kong’s markets with the Mainland
and are complimented by Beijing’s promotion of the Connect
programs.‡ 190 The first of these, the Stock Connect, linked Hong
Kong to mainland stock exchanges beginning in 2014.191 The
program enabled overseas investors to participate in mainland
stock and, starting in 2022, exchange-traded fund (ETF) markets
via Hong Kong and allowed mainland investors to participate in
Hong Kong’s market.192 In 2017, the Bond Connect was intro-
duced, expanding the program to fixed income products.193 The
* Hong Kong’s strict COVID controls were reportedly used as a form of political repression.
Business owners with vocal pro-democracy viewpoints claimed their businesses were unfairly
targeted for violating COVID safety measures. Emergency lockdowns in 2020 were also extended
one day past the anniversary of the June 4, 1989 Tiananmen Square massacre despite low case
levels in Hong Kong at that time. Lok-kei Sum, “Hong Kong’s ‘Yellow’ Companies See Persecution
in COVID Crackdown,” Al Jazeera, August 31, 2022; Marc A. Thiessen, “Opinion: China Is Using
Covid-19 to Throttle Hong Kong’s Pro-Democracy Movement,” Washington Post, May 21, 2020.
† For more on dual listings on the Hong Kong and Chinese market, see U.S.-China Economic
and Security Review Commission, Chapter 5, Section 3, “Hong Kong,” in 2023 Annual Report to
Congress, November 2023, 669–670.
‡ For more on the Hong Kong-China Swap Connect programs, see U.S.-China Economic and
Security Review Commission, Chapter 5, Section 3, “Hong Kong,” in 2023 Annual Report to Con-
gress, November 2023, 668–669.
704
latest program, Swap Connect, launched in 2023, enables over-

seas investors to participate in the Mainland’s financial deriva-
tives market through interest rate swaps.194 An announcement
in 2024 by the China Securities Regulatory Commission (CSRC)
seeks to further broaden the Stock Connect program to include
real estate investment trusts and yuan-denominated stocks list-
ed in Hong Kong while expanding access to ETFs between Hong
Kong and the Mainland.195
Analysts have attributed Hong Kong’s market downturn to Chi-
na’s increased control over Hong Kong. Stephen Roach, senior fellow
at the Paul Tsai China Center at Yale Law School and former chair
of Morgan Stanley Asia, indicates that a major catalyst of Hong
Kong’s prolonged market slump was the city’s political crackdowns
of 2019–2020, which “shredded any remaining semblance of local
political autonomy. The 50-year transition period to full takeover by
the People’s Republic of China had been effectively cut in half.” 196
Victoria Tin-bor Hui, a political science professor at the University of
Notre Dame, also implicates the recent national security measures
in Hong Kong’s diminished status, saying, “Beijing’s ideal scenario
is to keep Hong Kong as a financial center without all the freedom.
But it seems that you really cannot maintain Hong Kong’s inter-
national financial standing while stifling its freedom.” 197 Analysts
estimate that Chinese and Hong Kong markets collectively lost a
staggering $6 trillion since 2021.198 While the top 300 companies in
the Shanghai and Shenzhen stock exchanges declined by more than
40 percent from January 2021 to January 2024, shares of Chinese
stocks listed in Hong Kong fared even worse, plummeting by over 50
percent during the same period.199 The Hang Seng Index declined
by 44–45 percent as well.200 This decline has harmed business op-
erations in Hong Kong, including among law firms, which have sold
off office space amid a lack of initial public offerings (IPOs), merg-
ers, and acquisitions these firms typically work on.201 (For more on
foreign businesses in Hong Kong, see “Foreign Businesses Limit Ac-
tivity, Take Protective Steps” in this chapter.)
Hong Kong Nascent Cryptocurrency Sector Faces

Mainland Prohibitions
Hong Kong is pushing to become a hub for digital assets
and cryptocurrency, viewed as a means to attract both capi-
tal and financial firms back to the city.* 202 In 2022, the Hong
Kong government formalized a process to license cryptocurren-
cy platforms to operate in Hong Kong.203 Two crypto exchang-
es were licensed under a previous voluntary licensing process
and hold full permits to operate in Hong Kong.204 Eleven more
firms were “deemed to be licensed” as of June 2024, meaning
they can operate while the Hong Kong Securities and Futures
Commission performs an ongoing review of their compliance
procedures.205 The city aims to be a “global hub” for the cryp-
tocurrency sector, according to the chief executive of the city’s
* For more on Hong Kong’s approach to cryptocurrency, see U.S.-China Economic and Security
Review Commission, Chapter 5, Section 3, “Hong Kong,” in 2023 Annual Report to Congress,
November 2023, 671.
705
Hong Kong Nascent Cryptocurrency Sector Faces

Mainland Prohibitions—Continued
financial regulatory agency, the Hong Kong Monetary Authori-
ty (HKMA).206 Previously, the HKMA has reportedly pressured
lenders—including HSBC and Standard Chartered—to take on
crypto exchanges as clients.207
Hong Kong’s ambitions to become a global cryptocurrency hub
are tempered, however, by mainland restrictions, where trading
in cryptocurrency is strictly prohibited.208 China outlawed cryp-
tocurrency trading and payments in 2013, but it intensified its
crackdown on the industry in 2021, targeting domestic mining
operations and foreign firms that were providing services to
mainland Chinese.209 Mainland regulators appear to be intent on
keeping Hong Kong’s burgeoning cryptocurrency ambitions away
from mainland users; a June notice from financial regulators
in Shenzhen, just north of Hong Kong, offered stern warnings
to overseas crypto platforms and Chinese residents, reiterating
that cryptocurrency-related activities remain illegal in mainland
China.210 New regulations in Hong Kong require cryptocurrency
exchanges licensed in the city to commit to not serving Chinese
nationals—not only those trading in China but trading in any
region.211 This regulation was criticized by Legislative Council
(LegCo) member Duncan Chiu as “impossible for traditional off-
shore exchanges to meet” and for having “shaken the confidence
of market participants.” 212 In light of these restrictions barring
Mainlanders from accessing cryptocurrency platforms, an addi-
tional 11 crypto firms withdrew their applications to operate in
Hong Kong, some of which were originally affiliated with oper-
ations in mainland China that departed after the 2021 crack-
down.213 Bybit, a crypto firm headquartered in Dubai and one of
the firms that withdrew its application, later announced it would
allow Chinese citizens who live outside of the country to trade
crypto on its platform.214
Beijing in the past has appeared to quietly back Hong Kong’s
cryptocurrency ambitions, with representatives from the central
government’s Liaison Office attending several Hong Kong confer-
ences on cryptocurrency in the city.215 Although the People’s Re-
public of China has not publicly voiced support for Hong Kong’s
experimentation with cryptocurrency, according to one industry
participant, it may view Hong Kong as a way to test the func-
tionality of digital assets in a limited fashion.216 However, as
Beijing still tightly restricts mainland Chinese from trading or
using cryptocurrency, Beijing’s motives for allowing Hong Kong
to play a key role in cryptocurrency networks may also be related
to crypto’s role in sanctions evasion. Settlements for illicit Rus-
sian commodities trade made in cryptocurrency have been routed
through Hong Kong.217 (For more on Hong Kong’s role in sanc-
tions evasion and transshipment, see the textbox “Hong Kong
Serves as Key Hub for Transshipments and Support to Russia”
in this chapter).
706
The Article 23 Ordinance Continues to Weigh on International

Business
Due to the imposition of the Article 23 Ordinance and the broad-
er NSL, U.S. firms operating in Hong Kong are now grappling
with a complex and unsettling regulatory environment. Thomas
Kellogg, executive director of Georgetown University’s Center for
Asian Law, cautioned in an interview with Bloomberg News that
these laws introduced uncertainty for Hong Kong business and
the city’s status as a financial hub.218 This includes provisions
in the Article 23 Ordinance that could significantly restrict the
ability of chambers of commerce, think tanks, and economic ana-
lysts to freely discuss and share information.219 Dennis Kwok, a
lawyer and past member of the Hong Kong LegCo, echoed these
concerns, emphasizing that the broad language in the Article 23
Ordinance regarding “external forces” and “external interference”
could be applied against a wide range of business activity, includ-
ing “against the normal advocacy, lobbying, academic research
and reporting activities of any foreign business headquartered
overseas, as well as [against] NGOs that engage with foreign gov-
ernments.” 220 A local barrister warned that the vague definition
of state secrets means people risk violating the law by merely
commenting on the state of Hong Kong’s economy.221
The ability of investors to conduct due diligence on Chinese and
Hong Kong firms also risks being restricted under the Article 23
Ordinance.222 The ordinance’s strict language on data flows and co-
operating with “foreign forces” may block due diligence firms from
accessing needed business information and making disclosures re-
garding Hong Kong and Chinese companies.223 The Chinese govern-
ment had already raided the operations of U.S.-based due diligence
and consulting firms on the Mainland before expanding the defini-
tion of espionage under a parallel legal authority.224 Legal experts
have raised concerns that the rules under the Article 23 Ordinance
could impact an existing agreement between China and the United
States that allows the U.S. Public Company Accounting Oversight
Board (PCAOB) to conduct inspections in Hong Kong of Chinese ac-
counting firms that have audited firms publicly traded in the United
States.225
Reflecting the unprecedented scope of the Article 23 Ordinance, in
September 2024 the U.S. Departments of State, Treasury, Agricul-
ture, Commerce, and Homeland Security jointly released an updat-
ed Hong Kong Business Advisory highlighting potential reputation-
al, regulatory, financial, and legal risks to U.S. companies in Hong
Kong.* 226 These new risks are a result of the erosion of Hong Kong’s
autonomy from the Mainland and the criminalization of many activ-
ities that were previously considered routine business activities.227
The advisory also calls out Hong Kong’s growing role in sanctions
and export control evasion.228 (For more on Hong Kong’s role in
sanctions and export control evasion, see “Hong Kong Serves as Key
Hub for Transshipments and Support to Russia” in this chapter.)
* This business advisory updated a 2021 Hong Kong Business Advisory jointly issued by the
U.S. Departments of State, Treasury, Commerce, and Homeland Security in the wake of the im-
position of the NSL. The 2021 business advisory highlighted risks associated with the NSL, data
privacy, access to information, and exposure to sanctioned entities or individuals. U.S. Depart-
ment of State, Risks and Considerations for Businesses Operating in Hong Kong, July 16, 2021.
707
Foreign Businesses Limit Activity, Take Protective Steps

The Article 23 Ordinance poses significant practical challenges
for business and legal activity that is routine in a market economy
under the rule of law. As an example, after the implementation of
the Article 23 Ordinance, which includes restrictions on database
access, law firm Latham & Watkins reportedly took measures to
safeguard its data from Hong Kong’s authorities.229 The move by
Latham & Watkins, the world’s second-highest-grossing law firm,
is viewed as aligning the firm’s Hong Kong data security regula-
tions with those of its operations on the Mainland.230 Under the
new changes reportedly announced in February 2024, Latham &
Watkins’ Hong Kong-based staff would require specific permis-
sion to access international databases.231 This decision effectively
severs unrestricted access for its Hong Kong-based lawyers to
international databases in the United States, Europe, and the
rest of Asia.232 Instead, under Hong Kong’s increasingly strict
data regime, the firm is reportedly combining its Hong Kong da-
tabase with the Mainland under the umbrella of “Greater China,”
a segment of Latham & Watkins operations that will be siloed
off from the rest of the firm’s global research.233 In an interview
with the Financial Times, two individuals familiar with Latham
& Watkins’ decision explained that this action aims to limit data
access in the event of a raid by Hong Kong authorities under the
NSL.234 During such a raid, Hong Kong authorities would only
be able to access the firm’s China and Hong Kong databases.235
Meanwhile, a wave of U.S.-based firms in the legal sector contin-
ues to pull back from Hong Kong, with several citing the city’s
diminishing role as a major legal market among other challeng-
es; as of August 2024, law firms that have pulled back from or
closed their Hong Kong offices include Mayer Brown; Addleshaw
Goddard; Winston & Strawn; Orrick, Herrington & Sutcliffe; DLA
Piper; Dechert; and Baker Botts.236 Through May 2024, overall
mergers and acquisitions activity in Hong Kong was at its low-
est level since 2012, which has contributed to the exodus of law
firms, as they earn high fees from this activity.237 Law firms have
also been wary of working on deals involving Chinese state-owned
companies because of due diligence or security concerns.238 The
net number of new members joining Hong Kong’s Law Society
in 2023 declined 83 percent compared with 2020, while new law
school graduates have reportedly experienced difficulty securing
jobs.239
Hong Kong’s focus on national security continues to be panned
more generally by the U.S. business community in Hong Kong.240
According to the American Chamber of Commerce (AmCham) in
Hong Kong’s Business Sentiment Survey 2024, 67 percent of Am-
Cham members identified “reduced rhetoric on national security”
as the most effective measure to enhance U.S.-Hong Kong rela-
tions, making it the top choice among all survey participants.241
The same survey, which was conducted prior to the passage of
the Article 23 Ordinance, found that 31 percent of recipients felt
operations had been negatively impacted by the NSL, mostly in-
directly but some through departures of employees, lower staff
morale, or extra resources spent on compliance.242
708
Erosion of the Rule of Law: Legal Rulings Target Foreign Firms

Hong Kong’s LegCo introduced the Article 23 Ordinance within
two months of the effective date of legislation permitting the en-
forcement of mainland Chinese court rulings in Hong Kong for civil
and commercial disputes.* 243 This development underscores con-
cerns about the erosion of Hong Kong’s independent legal system,
which has long been valued by international businesses.244 It fur-
ther exacerbates fears of the diminishing distinction between Bei-
jing’s and Hong Kong’s legal frameworks, raising apprehensions that
Hong Kong’s common law tradition firmly grounded in the “rule of
law” concept is increasingly being overshadowed by the Mainland’s
“rule by law” system, which treats law as an instrument of Party
control.† 245 The U.S. Department of State’s 2023 Investment Climate
Statements: Hong Kong echoes this view, warning that “while Hong
Kong’s legal system had been traditionally viewed as a bastion of
judicial independence, authorities have over the past year continued
to place pressure on the judiciary in some cases. Rule of law risks
that were formerly limited to mainland China have now increasing-
ly become a potential concern in Hong Kong.” 246
Already, politically charged legal rulings in Hong Kong are weigh-
ing on the activities of foreign tech companies. In May 2024, the
Hong Kong Court of Appeals sided with the Hong Kong government
in ruling that the protest anthem “Glory to Hong Kong” should be
removed from digital platforms, including those from U.S.-based
firms Alphabet (Google and YouTube), Apple, Meta (Facebook and
Instagram), and Spotify.247 This is the latest push by the Hong
Kong government to influence the activity of U.S. digital platforms
in the city, inflaming tensions that date back to 2020, when most
major U.S. companies announced they would pause processing data
requests from the Hong Kong government while they assessed the
NSL.248 Since that announcement, some U.S. firms have resumed
processing requests from the Hong Kong government on a case-by-
case basis.249 In the last six months of 2023, Meta received 29 re-
quests from the Hong Kong government to obtain user data, and it
answered one.250 In the first six months of 2023, Google complied
with 82 of the Hong Kong government’s requests to remove items
from their services out of 162 filings, although Google specified that
it chose not to remove two YouTube videos and one Google Drive
file related to “Glory to Hong Kong.” 251 However, under a court or-
der granted in May 2024, some platforms have begun to comply,
including YouTube, which promptly blocked access to “Glory to Hong
Kong” for its Hong Kong users.252
Foreign Firms Continue to Pull Back
While the full impact of the Article 23 Ordinance on business in
Hong Kong is yet to be determined, businesses continue to depart
Hong Kong, with the city’s sluggish economy increasingly subsumed
under the Mainland’s authoritarian government.253 Business oper-
* The ruling allows for reciprocal recognition and enforcement between mainland China and
Hong Kong rulings, ostensibly to reduce the need for parallel litigation through both court sys-
tems.
† For more on China’s rule by law legal system, see U.S.-China Economic and Security Review
Commission, Chapter 2, Section 1, “Rule by Law,” in 2023 Annual Report to Congress, November
2023, 175–206.
709
ations in Hong Kong used to be “a fairly risk-free matter,” Simon

Cartledge, a research and publishing executive, told the Wall Street
Journal, but now “there are question marks over everything.” 254 The
number of global companies with regional headquarters in Hong
Kong has fallen 8.4 percent from 2019 to 2023, according to govern-
ment data, while the number of staff retained by these global firms
in Hong Kong has dropped 30 percent.255 During the immediate
months preceding the implementation of the Article 23 Ordinance,
several global entities that were weighing Hong Kong for their Asia
headquarters—including Canadian pension fund manager Alberta
Investment Management Corp. (AIMCo), U.S. tech company Vantage
Data Centers, and the Cayman Islands government—all announced
their intention to instead place their Asia headquarters in Singa-
pore.256 AIMCo’s CEO referenced geopolitical risks in an interview
around the decision, while Vantage Data Centers is reportedly look-
ing to sell their data centers in Hong Kong after the imposition of
the Article 23 Ordinance.257 Financial services companies in partic-
ular have looked to other regional finance hubs like Singapore for
a more stable business environment, according to AmCham Hong
Kong.258 The number of European firms has also declined in Hong
Kong, with an increase in the percentage of firms reporting they
have decided to shift or have already shifted existing investments
out of China toward Southeast Asia and other locations.259
Even as some U.S. and international firms avoid Hong Kong,
mainland Chinese companies continue to enter the city.260 In 2022,
Chinese companies for the first time outnumbered U.S. firms with
regional headquarters in Hong Kong.261 InvestHK, the Hong Kong
government’s bureau responsible for attracting foreign direct invest-
ment (FDI), noted in its annual report that of the firms for which
it helped open operations in Hong Kong in 2023, 136 came from
mainland China while only 34 came from the United States.* 262
From 2020 to 2023, the total number of nonlocal firms with regional
headquarters in Hong Kong has now declined by 168, or 11 percent,
with U.S. firms declining the most.263
Hong Kong remains the largest source of FDI into mainland
China. However, a large portion of FDI that appears to flow from
Hong Kong to mainland China actually originates in mainland Chi-
na itself.264 Mainland Chinese firms take advantage of tax breaks
and other financial incentives to set up offices in Hong Kong that
manage their investments in the Mainland.265 As firms from oth-
er countries pull back from investing in China, the share of FDI
roundtripped through Hong Kong has increased.266
Tourists Avoid Hong Kong
Once a vibrant international tourist destination, Hong Kong is
failing to attract visitors, having yet to attain pre-COVID levels.
Hong Kong eased its COVID restrictions early in 2023, allowing a
total of 34 million tourists to visit throughout the year; however,
by December, monthly tourist numbers had reached just 65 per-
* This included the launch of businesses like the Hong Kong office of FTI Capital Advisors, a
boutique investment bank focusing on mergers and acquisitions, capital raising, and financial ad-
visory services. Government of Hong Kong Special Administrative Region of the People’s Republic
of China, InvestHK Annual Report 2023, February 1, 2024, 15; FTI Consulting, “FTI Capital Advi-
sors Strengthens Positioning in Asia with Hong Kong Expansion,” March 8, 2023.
710
cent of pre-COVID levels.267 As of the most recent data through

July 2024, total year-to-date visitors were still only at 70 percent
of pre-COVID levels.* 268 The number of mainland tourists, who
make up the bulk of total arrivals, was around 69 percent of the
pre-pandemic level as of year-to-date July 2024.269 Tourism from
the United States and Europe also lags significantly.270 The num-
ber of U.S. tourists visiting Hong Kong as of year-to-date July
2024 was only 67 percent of the comparable figure for 2018, while
the number of UK tourists was only 49 percent.271 Tourism from
these countries is unlikely to rise in the near term, as the United
States has joined other democracies like Canada and Australia
in issuing travel advisories characterizing Hong Kong’s ongoing
implementation of its national security laws as “broad” and “ar-
bitrary.” 272 Following the passage of the Article 23 Ordinance,
the Australian government expanded its advisory to warn that
Australians in Hong Kong “could be detained without charge for
up to 16 days and denied access to a lawyer for up to 48 hours”
should they violate the ordinance’s broadly defined national secu-
rity offenses.273 With the drop in Western tourists to Hong Kong,
the Hong Kong tourism office is doubling down on efforts to draw
in mainland tourists in a bid to boost retail and consumption.274
The 2024–2025 Hong Kong budget included $141 million (HKD
1.1 billion) for tourism promotion activities.275 Hong Kong busi-
nesses are adapting as well, promoting their stores on Chinese
social media apps and ensuring websites are available in Manda-
rin to appeal to mainland tourists.276
Hong Kong Increasingly Integrated with Mainland
Increasingly, people move between Hong Kong and mainland
China. These changes reflect, in part, economic incentives. Rising
living costs continue to burden working-class Hong Kongers, who
increasingly seek economic opportunities in mainland China.277 As
Hong Kongers shop and travel more frequently across the border,
mainland Chinese talent continues to flow into Hong Kong.278 The
movement of individuals between Hong Kong and the Mainland
is facilitated by the completion of cross-border infrastructure, in-
cluding a high-speed train system, which has halved travel time
between Hong Kong and some Chinese cities.279 Additionally, con-
sumer goods are generally cheaper across the border than in Hong
Kong.280 In February 2024, more Hong Kongers traveled to neigh-
boring Shenzhen than any prior February since recordkeeping be-
gan in 1984.281 Economists at Natixis estimate that Hong Kongers
will spend approximately $10.8 billion (HKD 84 billion) in Guang-
dong Province this year, with a significant portion allocated to food,
retail sales, and other commercial activities.282 Moreover, accord-
ing to an annual survey performed by the Hong Kong Institute of
Asia-Pacific Studies at the Chinese University of Hong Kong, the
percentage of Hong Kongers who would emigrate to the Mainland
if given the opportunity has risen from 9.5 percent in 2020 to 20.3
percent in 2023.283
* The year 2018 is used as the pre-COVID year of comparison, as 2019 tourism figures were
negatively impacted by pro-democracy protests. BBC, “Hong Kong Protests: How Badly Has Tour-
ism Been Affected?” August 12, 2019.
711
Mainland Chinese talent also continues to pour into Hong Kong,

dominating a new government visa program intended to attract for-
eign workers.284 The Top Talent Pass Scheme, launched in 2022,
offers visas of up to two years to foreign workers earning more than
$320,000 (HKD 2.5 million) or graduates of the world’s top uni-
versities.* 285 Despite Hong Kong authorities promoting openness
to a wide range of foreigners, approximately 95 percent of appli-
cants have been mainland Chinese.286 Since the scheme’s inception,
roughly 55,000 mainland Chinese individuals have been granted ex-
tended visas in Hong Kong, many of whom have secured positions in
finance, IT, and commercial services.287 Workers entering under the
scheme earn a median income over twice that of the average Hong
Kong worker, adding many highly skilled Chinese workers to the
Hong Kong labor force.288 Moreover, the Hong Kong government has
taken steps to further boost short-term business from the Mainland.
In April 2024, government authorities announced that the limit for
stays for visa holders from mainland China visiting Hong Kong
would double to 14 days.289 This move complements the expansion
of another talent program in 2024, which now permits residents of
Beijing, Shanghai, and the Greater Bay Area to apply for multi-en-
try visas to Hong Kong that allow stays of up to 30 days if the ap-
plicant specializes in certain sought-after industries.290 This inflow
of Chinese workers is also important to Hong Kong’s demograph-
ic makeup, which continues to shed young people, declining from
21.3 percent of the population to 16.3 percent between 2014 and
2023.291 The Hong Kong population, which fell in the years after
protests rocked the city in 2019, finally grew in 2022 and 2023.292
However, growth in 2023 was fueled by a special permit issued to
40,800 mainland Chinese allowing them to reside in Hong Kong
permanently.293
Recruitment efforts by the Hong Kong government to attract low-
er-skilled laborers from the Mainland have encountered more mixed
success and faced pushback from working-class Hong Kongers.294
The low-skilled labor market in Hong Kong currently faces a short-
age of approximately 30,000 workers, particularly in roles such as
cooks and warehouse workers, as highlighted by LegCo member
Peter Shiu.295 However, Hong Kong companies find it expensive to
sponsor foreign low-skilled workers due to requirements mandating
that these workers be housed either in Hong Kong or mainland Chi-
na at the company’s expense.296 To address the workforce gaps, the
Hong Kong government is taking steps to attract mainland Chinese
individuals to take up positions in certain blue-collar industries
in Hong Kong, eliciting resistance from local communities.297 For
instance, CityBus, a transit company grappling with a shortage of
drivers, announced plans to recruit 20 mainland Chinese drivers at
salaries less than two-thirds of their Hong Kong counterparts.298
This decision drew criticism from the CityBus Union, which raised
concerns not only that the influx of mainland workers would de-
press the salary prospects of local Hong Kong drivers but also that
* The program does not require applicants to have received a local job offer prior to applying
for the visa. Applications for the visa are made directly to the Hong Kong government. As long
as the applicant meets the eligibility requirements, they can stay up to two years while they
search for work in Hong Kong. Hong Kong Immigration Department, Top Talent Pass Scheme,
June 18, 2024.
712
it would threaten safety due to mainland drivers being accustomed

to driving on the opposite side of the road and adhering to different
traffic regulations.299
Views toward Mainland China
Despite these growing links, most Hong Kongers still perceive
mainland China with distrust, as evidenced by a December 2023
Pew poll revealing that nearly half of Hong Kong adults per-
ceive Chinese power and influence in Hong Kong as a significant
threat.300 Notably, this sentiment surpasses concerns about the
United States by 11 percent.301 However, a substantial majority of
Hong Kongers, 74 percent, express emotional attachment to China,
underscoring a complex relationship.302 While persistent tensions
remain over Beijing’s political crackdown and economic domination
of Hong Kong, a majority of adults surveyed identify themselves as
both Hong Konger and Chinese.303 However, this sentiment varies
across demographics, dissipating among the younger generation.304
Among individuals under 35 years old, who were a driving force
behind the 2019 Hong Kong protests, skepticism toward Chinese
influence is pronounced, with 57 percent considering China a major
threat.305 Notably, less than half of this demographic group claims
any Chinese identity, highlighting a growing disconnect between
young Hong Kongers and China despite a growing number of this
demographic being born in Hong Kong after its 1997 handover to
China.306
Hong Kong Investment Fund Furthers China’s Innovation and
Military Aims
Hong Kong takes advantage of its historical reputation as an ad-
herent to international norms and rule of law to attract investment
that furthers China’s security aims.307 The Hong Kong Investment
Corporation (HKIC) sovereign wealth fund, created in October 2022,
will oversee the allocation of almost $8 billion to promote industrial
and economic development in four target areas, including fintech,
artificial intelligence, biotechnology, and high-end manufacturing.308
Hong Kong’s role in the GBA is to serve as a bridge between the
nine mainland Chinese cities in the GBA and the world, attracting
talent, capital, and innovation.309 Given China’s military-civil fu-
sion strategy, however, these efforts will inevitably support China’s
military.310 For example, semiconductors are one of the technologies
the GBA has emphasized through the establishment of government
innovation zones.311 This is an area where the United States and
allies are actively working to prevent China’s advancement because
of the military implications.312 Despite this, the zone has attracted
investment from a leading Swiss semiconductor company.313 Hong
Kong’s ability to attract Western investment is particularly concern-
ing given the larger military connotations of the GBA. According
to China’s official policy, the nine GBA cities should promote “the
innovative development of civil-military integration.” 314 Smart-
More, a company dual-headquartered in Hong Kong and Shenzhen
and developing artificial intelligence solutions for manufacturing,
and Shanghai-based GeneSense, an artificial intelligence-enabled
gene sequencing company, both received investments from HKIC
713
in 2024.315 HKIC has announced plans for additional investments

in biotechnology to support industrial, environmental, agricultural,
and medical applications.316 HKIC also recently announced an in-
vestment in a Beijing-based humanoid robot company in another
example of how Hong Kong’s investment efforts serve mainland Chi-
na’s innovation aims.317 (For more on China’s mission to develop ad-
vanced humanoid and quadruped robots, see Chapter 3, “U.S.-China
Competition in Emerging Technologies.”)
Hong Kong Slips as International Shipping Hub
While Hong Kong’s infrastructure integration with the broader
GBA has deepened through expanded infrastructure projects and
people-to-people exchanges, its status as an international shipping
hub continues to diminish.318 The total container volume passing
through Hong Kong’s port plummeted to 14.3 million twenty-foot
equivalent units (TEUs) in 2023, marking a significant 21.6 percent
decline from 2019.319 Even after the city lifted its COVID-19 lock-
downs and resumed international travel, data for the fourth quar-
ter of 2023 reveals a further contraction in container transit, with
port cargo throughput decreasing by 8.8 percent compared to that
quarter the previous year.320 Hong Kong fell out of the world’s top
ten busiest container ports in 2023 for the first time, exemplify-
ing the city’s waning stature in international business.321 Mean-
while, several mainland Chinese ports continue to outrank Hong
Kong as shippers bypass Hong Kong and ship directly into and out
of the Mainland.322 The ports of Shanghai, Ningbo, Qingdao, Shen-
zhen, Guangzhou, and Tianjin now outrank Hong Kong in terms of
container throughput as of 2024.323 This decline emphasizes Hong
Kong’s diminishing advantages over other mainland cities compared
to its historical prominence as the world’s leading container port for
the majority of the years between 1987 and 2004.324
Hong Kong Serves as Key Hub for Transshipments and

Support to Russia
Despite its diminished status as a central shipping hub, Hong
Kong continues to play a crucial role as a node for illicit trans-
shipments to Russia in violation of U.S. and allied sanctions,
with cryptocurrency payments facilitating this illicit trade.325
Bad actors are taking advantage of Hong Kong’s robust busi-
ness environment to evade sanctions by quickly dissolving
firms targeted by Western export controls and reforming new
firms just days later.326 According to the Silverado Policy Ac-
celerator, a bipartisan think tank, exporters from China and
Hong Kong shipped 85 percent of the semiconductors imported
by Russia between March 2022 and September 2023, a trend
that appears to have continued in 2024.327 In 2022 alone, Hong
Kong ranked as Russia’s second-largest semiconductor import
partner, shipping approximately $400 million worth of semicon-
ductors during the first year of Russia’s invasion of Ukraine.328
Exporters in Hong Kong play a key role in shipping many oth-
er components to Russia as well, including other small elec-
714
Hong Kong Serves as Key Hub for Transshipments and

Support to Russia—Continued
tronic components that are used by the Russian military to
manufacture weapons and communication systems.329
A 2023 report from the Carnegie Endowment for International
Peace identifies Hong Kong as a “transshipment hub for diverting
Western-made microelectronic components to companies affiliated
with the Russian military.” 330 This includes the diversion of chips
from top U.S. chipmakers such as Intel, Advanced Micro Devices,
and Texas Instruments to Russia.331 Hong Kong-based companies
have also been implicated as suppliers of these high-end tech-
nologies to Russia.332 For instance, Pixel Devices, based in Hong
Kong, shipped at least $210 million in electronics to Russia from
April 2022 to May 2024, according to the U.S. Department of the
Treasury.333 U.S. Secretary of State Antony Blinken in May 2024
expressed significant concerns about Chinese support for Russia,
emphasizing that “Russia would struggle to sustain its assault on
Ukraine without China’s support.” 334
In response to these transshipment activities, Hong Kong com-
panies, including Pixel Devices, were among the 20 additional
Chinese and Hong Kong companies named in U.S. sanctions for
aiding the development of Russia’s industrial and military base
in May 2024.335 Other Hong Kong-based firms also sanctioned for
supplying high-end technologies to Russia include Tulun Interna-
tional Holdings, which is involved in procuring unmanned aerial
vehicles, and CFU Shipping, a logistics firm that is alleged to
have delivered liquefied natural gas modules to support Russia’s
leading natural gas company.336
Hong Kong Organizations Lobby Overseas

Hong Kong’s international representative offices, outposts found-
ed before China’s takeover of Hong Kong, promote the goals of the
Mainland and the Beijing-backed Hong Kong government abroad.337
Central to these efforts are the Hong Kong Economics and Trade
Offices (HKETOs), identified by the Hong Kong Democracy Council
(HKDC), a Washington, DC-based activist group, as a pivotal player
in influencing U.S. policy toward Hong Kong and China through
an extensive lobbying campaign.338 Importantly, the HKETOs are
not official diplomatic outposts of the Chinese government.339 The
HKETOs were established before the handover of Hong Kong to
China and granted immunities and diplomatic protections in June
1997, a time when political agreements between the UK and Chi-
na guaranteed that the HKETOs and broader Hong Kong interest
groups would maintain autonomy from the Chinese government’s
goals.340 The HKETOs have conducted public and private engage-
ments in Washington, DC, and other U.S. cities that echo Beijing’s
positions on Hong Kong’s political and legal systems.* 341 The ac-
* In 2022, the Commission recommended that Congress, pursuant to the Hong Kong Human
Rights and Democracy Act, amend the International Organization Immunities Act to remove
Hong Kong Economic and Trade Offices as a covered organization, thereby eliminating diplomatic
privileges enjoyed by such offices and their employees in the United States. This amendment
715
tions of the HKETOs have further faced scrutiny globally, including

in the UK, where a staffer of the London HKETO was arrested for
allegedly violating the UK National Security Act and assisting for-
eign intelligence services between December 2023 and May 2024.342
The HKETO allegedly made bank payments from HKETO accounts
to individuals to help track Hong Kong activists who are living in
the UK.343 In Germany, a former employee of the local chapter of
the Hong Kong Trade Development Council, a separate Hong Kong
trade promotion body, was also arrested and accused of carrying out
industrial espionage for Chinese intelligence services.344
Under Beijing’s authoritarian control, the freedoms of press,
speech, and assembly that differentiated Hong Kong from mainland
cities are being eroded. Robust enforcement of the National Securi-
ty Law and the promulgation of the new Article 23 Ordinance are
intended to coerce the public, instill uncertainty and fear, and cre-
ate an environment of self-censorship, which serves as a form of
lawfare. Local and foreign tourists, students, and residents in Hong
Kong can no longer be certain that their freedoms and rights will be
upheld by Hong Kong’s legal system or law enforcement.
The extraterritorial application of Hong Kong’s national security
laws also stands to threaten dissidents, naturalized citizens living
abroad, and other foreigners who sympathize with Hong Kong, in-
cluding those in the United States. These individuals face harass-
ment and coercion despite residing in open democracies. Specifically,
the Article 23 Ordinance targets activists overseas by denying them
access to their financial assets and allowing for the revocation of
passports and professional licenses, among other things. The Ar-
ticle 23 Ordinance’s new offense of “external interference,” paired
with the threat of extreme sentencing, also intends to punish Hong
Kongers and dissidents abroad for their interactions with foreign-
ers. The Hong Kong government also targets the families of Hong
Kong dissidents who still reside in the city. This relational repres-
sion, along with the transnational repression of Hong Kongers over-
seas, will continue to worsen as the Article 23 Ordinance is enforced,
and it creates a potential legal conflict between the United States
and Hong Kong.
Amid the atmosphere of oppression created under the Article 23
Ordinance and Beijing’s sustained crackdown, firms operating in
Hong Kong face an increasingly restrictive business environment
that is reflective of conditions on the Mainland. This includes the
possibility of restrictions on research and due diligence and the
looming threat that standard business operations by foreign firms
in Hong Kong will risk accusations of collaboration with “external
could be reversed under one of the following conditions: China negotiates an agreement with the
United States to have Hong Kong Economic and Trade Offices considered an official part of the
People’s Republic of China’s mission to the United States and subject to the same requirements;
or China alters its treatment of Hong Kong to allow for sufficient autonomy and abides by “one
country, two systems,” as enumerated by the Hong Kong Policy Act. In September 2024, the U.S.
House of Representatives passed the Hong Kong Economic and Trade Office (HKETO) Certifica-
tion Act, which would allow the U.S. president to remove HKETO privileges if Hong Kong does
not maintain a significant degree of autonomy from China. Hong Kong Economic and Trade Office
(HKETO) Certification Act, H.R.1103, February 17, 2023; U.S.-China Economic and Security Re-
view Commission, 2022 Annual Report to Congress, November 2022, 735–736.
716
forces,” involve “state secrets,” or otherwise violate the Article 23

Ordinance and the NSL. Even if the Hong Kong government does
not explicitly punish fact-based reporting of Hong Kong’s economic
conditions seen as “harmful” to China, self-censorship and a lack
of transparency among auditors, press, firms, and other industry
participants pose risks to investors. These risks are compounded by
Hong Kong’s increasingly apparent role as a regional hub for sanc-
tions and export control evasion. Meanwhile, Hong Kong continues
to see its international status dwindle, with the city slipping as a
shipping hub and its markets increasingly dominated by mainland
rather than international firms. As the city continues to draw closer
to its mainland neighbors both politically and economically, it re-
mains unclear how much distinctiveness and autonomy Hong Kong
can truly maintain.
717
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Launch a Cognitive Warfare against Hong Kong, Demonize Article 23 Legislation,”
Global Times, April 7, 2024.
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安全观), April 15, 2024. Translation; Human Rights Watch, “Hong Kong: New Security
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April 2024, 8–9.
April 2024, 10.
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718
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Politics and Rights Review, July 17, 2024; China Strategic Risks Institute, “Analysis
of the Business and Legal Risks Associated with the HKSAR Safeguarding National
Security Ordinance (Article 23),” April 2024, 14; Bloomberg, “Hong Kong Says City
Won’t Prohibit Popular Messaging Apps,” March 6, 2024.
April 2024, 3, 6.
April 2024, 3.
34. Alan Wong, “HK Convicts Man for Seditious T-Shirt in First under New Law,”
Bloomberg, September 16, 2024.
35. Lindsay Maizland and Clara Fong, “Hong Kong’s Freedoms: What China Prom-
ised and How It’s Cracking Down,” Council on Foreign Relations, March 19, 2024.
36. Lindsay Maizland and Clara Fong, “Hong Kong’s Freedoms: What China Prom-
ised and How It’s Cracking Down,” Council on Foreign Relations, March 19, 2024.
37. Nectar Gan, “Hong Kong Voters Turn Their Backs on ‘Patriots Only’ Election
with Record Low Turnout,” CNN, December 11, 2023; Cindy Sui, “Record Low Turn-
out, Detentions Mark Hong Kong Elections,” VOA News, December 10, 2023.
38. Kanis Leung, “Hong Kong Holds First Council Elections under New Rules That
Shut Out Pro-Democracy Candidates,” AP News, December 10, 2023.
39. Nectar Gan, “Hong Kong Voters Turn Their Backs on ‘Patriots Only’ Election
with Record Low Turnout,” CNN, December 11, 2023.
40. Zen Soo, “Hong Kong Leader Praises Election Turnout as Voter Numbers Hit
Record Low,” AP News, December 12, 2023.
41. Kanis Leung, “Hong Kong Holds First Council Elections under New Rules That
Shut Out Pro-Democracy Candidates,” AP News, December 10, 2023.
42. Hillary Leung, “Members of Hong Kong’s League of Social Democrats Arrest-
ed over Protest against ‘Patriots’ Election as Polls Open,” Hong Kong Free Press,
December 10, 2023; Kanis Leung, “Hong Kong Holds First Council Elections under
New Rules That Shut Out Pro-Democracy Candidates,” AP News, December 10, 2023.
43. Chan Ho-him and William Langley, “Hong Kong Set for Verdict in Landmark
Security Trial,” Financial Times, May 28, 2024.
44. Hanscom Smith, former Consul General in Hong Kong, briefing to Commission,
Washington, DC, May 30, 2024.
45. Scott Kennedy et al., “The Erosion of Hong Kong’s Autonomy since 2020,” Cen-
ter for Strategic and International Studies, May 2024.
46. Scott Kennedy et al., “The Erosion of Hong Kong’s Autonomy since 2020,” Cen-
ter for Strategic and International Studies, May 2024, 3.
47. Simone McCarthy, “Two Major National Security Trials Are Putting the Spot-
light Back on Civil Rights in Hong Kong. Here’s What to Know,” CNN, December 20,
2023.
719
48. Tiffany May, “Hong Kong Convicts Democracy Activists in Largest National
Security Trial,” New York Times, May 29, 2024; Chan Ho-him, “Hong Kong Pro-De-
mocracy Activists Go on Trial in Landmark National Security Case,” Financial Times,
February 6, 2023.
49. Kanis Leung and Zen Soo, “14 Pro-Democracy Activists Convicted, 2 Acquitted
in Hong Kong’s Biggest National Security Case,” AP News, May 30, 2024; Jessie Pang
and James Pomfret, “Hong Kong 47 Trial: 14 Democrats Found Guilty in Landmark
Subversion Case,” Reuters, May 30, 2024; Nicholas Yong, “Hong Kong: Trial for Larg-
est National Security Case Begins,” BBC, February 6, 2023; Amnesty International,
“Hong Kong: Case Against 47 Pro-Democracy Figures Must be Dropped as Politically
Motivated Trial Begins,” February 6, 2023.
50. Kanis Leung and Zen Soo, “14 Pro-Democracy Activists Convicted, 2 Acquitted
in Hong Kong’s Biggest National Security Case,” AP News, May 30, 2024; Jessie Pang
and James Pomfret, “Hong Kong 47 Trial: 14 Democrats Found Guilty in Landmark
Subversion Case,” Reuters, May 30, 2024.
Security Trial,” Financial Times, May 28, 2024; Nicholas Yong, “Hong Kong: Trial for
Largest National Security Case Begins,” BBC News, February 6, 2023; Amnesty In-
ternational, “Hong Kong: Case against 47 Pro-Democracy Figures Must Be Dropped
as Politically Motivated Trial Begins,” February 6, 2023.
52. Helen Davidson, “ ‘We Refuse to Disappear’: The Hong Kong 47 Facing Life in
Jail after Crackdown,” Guardian, June 1, 2024; Chan Ho-him and William Langley,
“Hong Kong Set for Verdict in Landmark Security Trial,” Financial Times, May 28,
2024; Nicholas Yong, “Hong Kong: Trial for Largest National Security Case Begins,”
BBC News, February 6, 2023; Amnesty International, “Hong Kong: Case against 47
Pro-Democracy Figures Must be Dropped as Politically Motivated Trial Begins,” Feb-
ruary 6, 2023.
Security Trial,” Financial Times, May 28, 2024; Amnesty International, “What Is
Hong Kong’s Article 23 Law? 10 Things You Need to Know,” March 22, 2024.
April 2024, 23–24.
April 2024; Amnesty International, “What Is Hong Kong’s Article 23 Law? 10 Things
You Need to Know,” March 22, 2024.
58. Pak Yiu, “Hong Kong Neglects Judicial Nominations despite Case Backlog,”
Nikkei Asia, February 19, 2024.
59. Pak Yiu, “Hong Kong Neglects Judicial Nominations Despite Case Backlog,”
Nikkei Asia, February 19, 2024; Siyan Cheung, “Hong Kong Detention Center Over-
flowing as Thousands Serve Time for Protests,” Radio Free Asia, September 6, 2023;
Chris Lau, “Number of People on Remand in Hong Kong Jails Pending Trial Hits
Decade High, but Figures for New Prisoners and Detained Suspects Drop,” South
China Morning Post, February 24, 2023.
61. James Pomfret, Scott Murdoch, and Jessie Pang, “Hong Kong Commercial Law
Hub Allure Damaged by Foreign Judges Row, Lawyers Say,” Reuters, July 2, 2024;
Hong Kong Judiciary, The Judiciary Administrator’s Speaking Notes at the Special
Meeting of Finance Committee on 15 April 2024, April 15, 2024; Standard, “Nomina-
tion Process for Judges Defended amid Quit Claim over Security Concerns,” February
21, 2024; Pak Yiu, “Hong Kong Neglects Judicial Nominations despite Case Backlog,”
720
67. Reuters, “Canadian Judge to Quit Hong Kong Top Appeals Court Next Month,”
June 10, 2024.
68. Jonathan Sumption, “The Rule of Law in Hong Kong Is in Grave Danger,”
Financial Times, June 10, 2024.
69. Agence France-Presse, “Senior UK Judge Becomes Fifth to Leave Top Hong
Kong Court,” Voice of America, September 30, 2024.
70. Jessie Pang and James Pomfret, “Hong Kong Condemns U.S. Bill Calling for
Sanctions on Officials,” Reuters, November 3, 2023.
71. James Lee, “Ex-Prosecutor Resigned before Being Named as US Sanctions Tar-
get, Hong Kong Justice Department Says,” Hong Kong Free Press, March 4, 2024.
72. Marcio Cipriani, Linda S. Goldberg, and Gabriele La Spada, “Financial Sanc-
tions, SWIFT, and the Architecture of the International Payments System,” Federal
Reserve Bank of New York, January 2023.
73. Laura He, “Hong Kong Leader Carrie Lam Is Getting Paid in Cash because
Banks Won’t Deal with Her,” CNN, November 30, 2020.
74. Government of Hong Kong Office of the Financial Secretary, Prevent Exter-
nal Intervention to Protect Hong Kong’s Prosperity, September 26, 2021; Ministry of
Foreign Affairs of the People’s Republic of China, Foreign Ministry Spokesperson’s
Remarks on U.S. Issuance of the So-Called “Hong Kong Business Advisory” and Sanc-
tions on Officials of the Liaison Office of the Central People’s Government in Hong
Kong, July 17, 2021; Ministry of Foreign Affairs of the People’s Republic of China,
Foreign Ministry Spokesperson Zhao Lijian’s Regular Press Conference on August 10,
2020, August 10, 2020; Government of Hong Kong Office of the Financial Secretary,
Striving to Become Stronger amid Threats, August 9, 2020.
75. Hong Kong Free Press, “Hong Kong Police Take Mother of Wanted US-Based
Activist Frances Hui Away for Questioning,” January 11, 2024; Committee for Free-
dom in Hong Kong Foundation, “Frances Hui from the CFHK Foundation Wanted by
Hong Kong Authorities, HK$1 Million Bounty Placed,” December 14, 2023; Clifford
Lo and Natalie Wong, “Hong Kong National Security Law: Police Offer HK$1 Million
Rewards for Arrest of 8 People, Including 3 Ex-Lawmakers,” South China Morning
Post, July 3, 2023.
76. Committee for Freedom in Hong Kong Foundation, “Frances Hui from the
CFHK Foundation Wanted by Hong Kong Authorities, HK$1 Million Bounty Placed,”
December 14, 2023; Clifford Lo and Natalie Wong, “Hong Kong National Security
Law: Police Offer HK$1 Million Rewards for Arrest of 8 People, Including 3 Ex-Law-
makers,” South China Morning Post, July 3, 2023.
77. Henry Austin, “What’s It Like to Have a Bounty on Your Head for Supporting
Democracy?” NBC News, July 8, 2023; Tiffany May, “Hong Kong Offers Bounties as
It Pursues Dissidents Overseas,” New York Times, July 4, 2023.
78. Committee for Freedom in Hong Kong Foundation, “Frances Hui from the
CFHK Foundation Wanted by Hong Kong Authorities, HK$1 Million Bounty Placed,”
December 14, 2023; Clifford Lo and Natalie Wong, “Hong Kong National Security
Law: Police Offer HK$1 Million Rewards for Arrest of 8 People, Including 3 Ex-Law-
makers,” South China Morning Post, July 3, 2023.
79. Ewelina U. Ochab, “Wanted: Overseas-Based Hong Kong Human Rights De-
fenders Accused of National Security Law Offenses,” Forbes, July 7, 2023.
Activist Frances Hui Away for Questioning,” January 11, 2024.
Activist Frances Hui Away for Questioning,” January 11, 2024.
April 2024, 23.
83. Yojana Sharma, “Academic Freedom a Top Concern as New Security Law
Looms,” University World News, March 8, 2024.
84. Government of Hong Kong, Patriotic Education Law Welcomed, October 24,
2023.
85. Government of Hong Kong, Government Establishes Working Group of Patriotic
Education, April 8, 2024.
86. William Yiu, “Hong Kong’s National Security Education Day: Pupils to be
Briefed on Xi Jinping’s Focus on Protecting Country, Article 23 Law ‘Safety Barrier,’ ”
South China Morning Post, March 28, 2024.
87. William Yiu, “Hong Kong’s National Security Education Day: Pupils to be
Briefed on Xi Jinping’s Focus on Protecting Country, Article 23 Law ‘Safety Barrier,’ ”
South China Morning Post, March 28, 2024.
721
88. James Lee, “Hong Kong Students Return ‘Moved and Inspired’ after National
Security Study Trip to Mainland China,” Hong Kong Free Press, April 5, 2024.
89. Stephy Zhang, “Mainland Tour Inspires HK Youths to Guard National Securi-
ty,” China Daily, April 5, 2024; James Lee, “Hong Kong Students Return ‘Moved and
Inspired’ after National Security Study Trip to Mainland China,” Hong Kong Free
Press, April 5, 2024.
90. Yojana Sharma, “Vice-Chancellor, Targeted by Pro-Beijing Factions, to Quit,”
University World News, January 10, 2024.
96. Shanghai Municipal People’s Government, Hong Kong Universities Open to
More Mainland Students, December 19, 2023.
99. South China Morning Post, “Public Universities in Hong Kong Target Foreign
Students as Mainland Chinese Numbers among Undergrads Soar,” February 11, 2024.
100. South China Morning Post, “Public Universities in Hong Kong Target For-
eign Students as Mainland Chinese Numbers among Undergrads Soar,” February
11, 2024.
101. South China Morning Post, “Public Universities in Hong Kong Target For-
eign Students as Mainland Chinese Numbers among Undergrads Soar,” February
11, 2024.
102. South China Morning Post, “Hong Kong Kindergarten Applications Fall by
a Third Versus Last Year; Falling Birth Rate and Emigration Wave Key Factors,”
January 7, 2024.
103. South China Morning Post, “Hong Kong Kindergarten Applications Fall by
a Third Versus Last Year; Falling Birth Rate and Emigration Wave Key Factors,”
January 7, 2024.
104. Reporters Without Borders, Hong Kong Country Profile,” 2024.
105. Reporters Without Borders, Hong Kong Country Profile,” 2024.
106. Reporters Without Borders, “Hong Kong: Why Journalists Should Fear ‘Article
23,’ a Domestic Sequel of Beijing-Imposed National Security Law,” March 14, 2024.
109. Jessie Pang and Edward Cho, “National Security Trial of Hong Kong Me-
dia Tycoon Jimmy Lai: What’s Happened So Far,” Reuters, April 10, 2024; Reporters
Without Borders, “Hong Kong: Why Journalists Should Fear ‘Article 23,’ a Domestic
Sequel of Beijing-Imposed National Security Law,” March 14, 2024.
110. Rebecca Choong Wilkins, “Hong Kong Convicts Editors over Articles on De-
mocracy Activists,” Bloomberg, August 30, 2024.
111. Rebecca Choong Wilkins, “Hong Kong Convicts Editors over Articles on De-
mocracy Activists,” Bloomberg, August 30, 2024; Kari Soo Lindberg and Linda Lew,
“Hong Kong Jails Activist for 40 Months in First Sedition Case,” Bloomberg, April
19, 2022.
112. Liam Scott, “RFA Departs Hong Kong, Citing Press Freedom Concerns,” VOA
News, March 29, 2024.
113. Liam Scott, “RFA Departs Hong Kong, Citing Press Freedom Concerns,” VOA
News, March 29, 2024.
114. Reporters Without Borders, “Press Freedom Is Not Fully Protected in Hong
Kong: RSF Debunks China’s Claims in 10 Points,” April 22, 2024; Reporters With-
out Borders, “Hong Kong: RSF Representative Detained and Deported on Attempt to
Monitor Jimmy Lai’s National Security Trial,” April 10, 2024.
115. Reuters, “Hong Kong Detains and Deports Press Freedom Group Staffer from
City,” April 10, 2024.
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116. Nikkei Asia, “Chinese Media Withdraw from Regional Journalism Competi-
tion,” May 3, 2024.
tion,” May 3, 2024.
tion,” May 3, 2024.
119. Tiffany May, “Wall St. Journal Reporter Says She Was Fired over Hong Kong
Union Role,” New York Times, July 17, 2024; Agence France-Presse, “Wall St Journal
to Move Asia HQ from Hong Kong to Singapore,” Hong Kong Free Press, May 3, 2024.
120. Selina Cheng, “I Pushed for Press Freedom in Hong Kong. The Wall Street
Journal Fired Me,” Columbia Journalism Review, July 20, 2024.
121. Hong Kong Journalists Association, “The Hong Kong Journalists Association
to Lodge Submission to the Security Bureau on Basic Law Article 23 Legislation,”
February 24, 2024; Hong Kong Journalists Association, “Objectives.”
122. Andrew Fung Wai-kwong, “Don’t Expect Much with China-Bashers Calling
Shots at HKJA,” China Daily, June 25, 2024.
123. Edith Lin, “Hong Kong Police Chief Raymond Siu Backs Government Plan
to Install 2,000 Surveillance Cameras by End of Year,” South China Morning Post,
February 12, 2024.
124. Edith Lin, “Hong Kong Police Chief Raymond Siu Backs Government Plan
to Install 2,000 Surveillance Cameras by End of Year,” South China Morning Post,
February 12, 2024.
125. Chen Zifei, “Hong Kong Police Ask for Billions to Fund Digital Network
Linked to Bodycams,” Radio Free Asia, March 31, 2023; Ezra Cheung, “Hong Kong
Police Seek HK$5.2 Billion for New 5G System to Handle ‘Massive Amount’ of Data
Gathered by Frontline Officers,” South China Morning Post, March 30, 2023.
126. Mercy A. Kuo, “ ‘The Sentinel State’: China’s Pervasive Surveillance Appara-
tus,” Diplomat, May 20, 2024; Chen Zifei, “Hong Kong Adds Hundreds of Surveillance
Cameras in Public Places,” Radio Free Asia, February 13, 2024; Chen Zifei, “Hong
Kong Police Ask for Billions to Fund Digital Network Linked to Bodycams,” Radio
Free Asia, March 31, 2023; Martin Beraja et al., “AI-tocracy,” Quarterly Journal of
Economics 138:3 (August 2023): 1349–1402; Paul Mozur, Claire Fu, and Amy Chang
Chien, “How China’s Police Used Phones and Faces to Track Protesters,” New York
Times, December 4, 2022.
127. Chen Zifei, “Hong Kong Adds Hundreds of Surveillance Cameras in Public
Places,” Radio Free Asia, February 13, 2024.
128. Chen Zifei, “Hong Kong Adds Hundreds of Surveillance Cameras in Public
Places,” Radio Free Asia, February 13, 2024.
129. Irene Chan, “Record HK$27 Billion Allocated to Hong Kong Police for 2024
amid over HK$100 Billion Deficit,” Hong Kong Free Press, March 2, 2024.
130. Jess Ma, “Hong Kong Police Pot for Informer Payments and Confidential Op-
erations Hit HK$165 Million for 2024–25; Total Budget Goes Up to HK$27.8 Billion,”
South China Morning Post, February 29, 2024.
131. Human Rights Watch, “Hong Kong: New Security Law Full-Scale Assault on
Rights,” March 19, 2024.
136. Amnesty International, “Hong Kong: Article 23 Legislation Takes Repression
to ‘Next Level,’ ” March 8, 2024.
137. Holmes Chan and Xinqi Su, “Hong Kong Arrests 7th Person under New Se-
curity Law for Tiananmen Posts,” Barron’s, May 29, 2024; Edward Li and Chen Zifei,
“Hong Kong Police Arrest Six People for ‘Seditious’ Facebook Posts,” Radio Free Asia,
May 28, 2024; Kanis Leung, “Hong Kong Police Arrest 6 People Accused of Violating
the City’s New National Security Law,” AP News, May 28, 2024.
138. Alan Wong and Siuming Ho, “HK’s First Use of Security Law Targets Tian-
anmen Activist,” Bloomberg, May 28, 2024; Holmes Chan and Xinqi Su, “Hong Kong
Arrests 7th Person under New Security Law for Tiananmen Posts,” Barron’s, May 29,
2024; Edward Li and Chen Zifei, “Hong Kong Police Arrest Six People for ‘Seditious’
Facebook Posts,” Radio Free Asia, May 28, 2024; Kanis Leung, “Hong Kong Police Ar-
rest 6 People Accused of Violating the City’s New National Security Law,” AP News,
May 28, 2024.
723
139. Holmes Chan and Xinqi Su, “Hong Kong Arrests 7th Person under New Se-
curity Law for Tiananmen Posts,” Barron’s, May 29, 2024; Edward Li and Chen Zifei,
“Hong Kong Police Arrest Six People for ‘Seditious’ Facebook Posts,” Radio Free Asia,
May 28, 2024; Kanis Leung, “Hong Kong Police Arrest 6 People Accused of Violating
the City’s New National Security Law,” AP News, May 28, 2024.
140. United States Commission on International Religious Freedom, 2024 Annual
Report, May 2024, 22; Francis Hui, “Hostile Takeover: The CCP and Hong Kong’s
Religious Communities,” Committee for Freedom in Hong Kong Foundation, January
2024, 6.
141. Theodora Yu, “Outspoken Hong Kong Cardinal Found Guilty for Work with
Humanitarian Fund,” Washington Post, November 25, 2022.
142. Frank Wolf, “China Arrests Cardinal Zen and Religious Freedom Now Faces a
Grim Future in Hong Kong,” Fox News, August 21, 2022.
143. Frances Hui, “Hostile Takeover: The CCP and Hong Kong’s Religious Commu-
nities,” Committee for Freedom in Hong Kong Foundation, January 2024, 6.
144. Frances Hui, “Hostile Takeover: The CCP and Hong Kong’s Religious Com-
munities,” Committee for Freedom in Hong Kong Foundation, January 2024, 27–29.
145. Frances Hui, “Hostile Takeover: The CCP and Hong Kong’s Religious Commu-
nities,” Committee for Freedom in Hong Kong Foundation, January 2024, 28; China
Central Television, “[Xinjiang News Broadcast] Hong Kong Islamic Group Delegation
Visits Xinjiang” ([新疆新闻联播] 香港伊斯兰教团体代表团参访新疆), 2023, video, 2:21.
Translation.
146. Sunday Examiner, “Diocese of Hong Kong on Bridge-Building Trip to Guang-
dong,” May 3, 2024; Aleteia, “Cardinal Stephen Chow, a Bridge between Beijing and
Rome,” September 29, 2023.
147. Courtney Mares, “A Look at the Bishop of Hong Kong’s Recent Visit to Main-
land China,” Catholic News Agency, May 15, 2024; Sunday Examiner, “Diocese of
Hong Kong on Bridge-Building Trip to Guangdong,” May 3, 2024; New York Times,
“China: Vatican-Backed Bishop Installed,” December 5, 2007.
148. Union of Catholic Asian News, “HK Cardinal Makes Another Trip to Main-
land China,” May 3, 2024.
149. Union of Catholic Asian News, “HK Cardinal Makes Another Trip to Main-
land China,” May 3, 2024.
150. Freedom House, “Sixteen International Experts Express ‘Profound and Grave
Concerns’ about Looming Threat to Religious Freedom and Sacrament of Penance in
Hong Kong,” March 13, 2024.
154. China Strategic Risks Institute, “Analysis of the Business and Legal Risks
Associated with the HKSAR Safeguarding National Security Ordinance (Article
23),” April 2024; Karishma Vaswani, “Hong Kong’s New Security Law Is Worrying-
ly Vague,” Bloomberg, March 11, 2024; Rebecca Choong Wilkins, “Hong Kong’s New
Security Law Brings Fresh Anxiety to Finance Hub,” Bloomberg, February 1, 2024.
155. Chan Ho-him, Kaye Wiggins, and Suzi Ring, “Latham & Watkins Bars Hong
Kong Lawyers from International Databases,” Australian Financial Review, February
15, 2024; Kaye Wiggins, Leo Lewis, and Joe Leahy, “Deloitte and KPMG Ask Staff
to Use Burner Phones for Hong Kong Trips,” Financial Times, November 27, 2023.
156. Kaye Wiggins, Leo Lewis, and Joe Leahy, “Deloitte and KPMG Ask Staff to
Use Burner Phones for Hong Kong Trips,” Financial Times, November 27, 2023;
gress, November 2023, 660.
157. Giulia Interesse, “China’s Three-Years Action Plan to Boost the Business En-
vironment in the Greater Bay Area,” China Briefing, December 29, 2023; Alfonso Bal-
lesteros, “The Greater Bay Area: China’s ‘Next Big Thing,’ ” Real Instituto El Canto,
July 28, 2022.
158. Elaine Yu, “The Corporate Retreat from Hong Kong Is Accelerating,” Wall
Street Journal, October 24, 2023.
159. Brian Chun Hey Kot, “Hong Kong’s Technology Lifeline to Russia,” Carnegie
Endowment for International Peace, May 17, 2023; Hong Kong Democracy Council,
724
“The Counter-Lobby Confidential: How Beltway Insiders Do the Hong Kong Govern-
ment’s Bidding,” July 2023.
160. Jill Disis, “Hong Kong’s Isolation Estimated to Cost Economy $27 Billion,”
Bloomberg, January 4, 2023; Hannah Dormido et al., “Here’s How Hard the Protests
Are Slamming Hong Kong’s Economy,” Bloomberg, August 14, 2019.
161. Jill Disis, “Hong Kong’s Isolation Estimated to Cost Economy $27 Billion,”
Bloomberg, January 4, 2023.
162. World Bank, “GDP (Current US$)–Hong Kong SAR, China.”
163. World Bank, “GDP (Current US$)–Hong Kong SAR, China.”
164. Connor Mycroft, “Hong Kong Economy Grows by 3.3% in Second Quarter, but
Analysts Caution against Optimism,” South China Morning Post, July 31, 2024.
165. Hong Kong Census and Statistics Department, Labour Force and Labour
Force Participation Rate by Age and Sex [2018–2023], August 16, 2024; Kelly Fung,
“Hong Kong Think Tank Warns Youth Face Employment Challenges under ‘Gig Econ-
omy,’ ” South China Morning Post, May 24, 2024; Lo Hoi-ying, “80% of Hong Kong
Secondary Students Unsure about Life Path, with Some Opting to ‘Lie Flat,’ ” South
China Morning Post, April 8, 2024.
166. Irene Chan, “Almost 400 Companies Arrived or Expanded in Hong Kong Last
Year, Government Says,” Hong Kong Free Press, February 2, 2024.
167. Donald Low, “Hong Kong’s Economy Needs Reinvention to Become More than
Just China’s Superconnector after Lost Half Decade,” South China Morning Post,
February 18, 2024; World Bank, “GDP (Constant 2015 US$)–Hong Kong SAR, China,
Singapore.”
168. KPMG, “Hong Kong Budget Summary 2024–2025,” February 2024.
169. James Pomfret and Clare Jim, “Hong Kong under Pressure to Ease Property
Curbs, Plug Deficit in Budget,” Reuters, February 27, 2024.
170. Shawna Kwan, “Hong Kong’s Apartment Glut Is Set to Keep Prices Down
after Tax Cut,” Bloomberg, March 12, 2024; Arendse Huld, “Hong Kong Budget
2024–2025–Government Implements New Tax Arrangements and Extends Funding
Schemes,” China Briefing, March 1, 2024.
171. Shawna Kwan, “Hong Kong’s Apartment Glut Is Set to Keep Prices Down
after Tax Cut,” Bloomberg, March 13, 2024; Pearl Liu, “Number of Vacant Homes in
Hong Kong May Surge to 18-Year-High as Families Head to UK under BN(O) Visa
Scheme, Bloomberg Forecasts,” South China Morning Post, April 21, 2021.
172. European Union’s High Representative of the Union for Foreign Affairs and
Security Policy, Joint Report to the European Parliament and the Council—Hong
Kong Special Administrative Region: Annual Report for 2023, June 13, 2024, 16, 19.
173. William Yiu, “150,400 Hongkongers Have Moved to UK Using BN(O) Path-
way,” South China Morning Post, August 22, 2024; Government of Hong Kong Census
and Statistics Department, Mid-Year Population for 2024, August 15, 2024.
174. Shawna Kwan, “Hong Kong Homebuyers Flock to New Projects, Shunning
Used Flats,” Bloomberg, March 26, 2024.
175. Shawna Kwan, “Hong Kong Homebuyers Flock to New Projects, Shunning
Used Flats,” Bloomberg, March 26, 2024; Pearl Liu, “Number of Vacant Homes in
Hong Kong May Surge to 18-Year-High as Families Head to UK under BN(O) Visa
Scheme, Bloomberg Forecasts,” South China Morning Post, April 21, 2021.
176. Salina Li, “Hong Kong Home Prices Down 20% from Historical Peak, Rebound
Hinged on US Interest Rate Cuts,” South China Morning Post, May 30, 2024.
177. Laura He, “Hong Kong to Remove Some Property Restrictions as It Tries to
Boost Its Flagging Economy,” CNN, February 28, 2024.
178. Laura He, “Hong Kong Scraps Decade-Old Property Restrictions to Boost
Flagging Economy,” CNN, February 28, 2024.
181. Katia Dmitrieva, “Hong Kong Makes First Rate Cut since 2020, Boosting
Economy,” Bloomberg, September 19, 2024.
182. Jiaxing Li, “Hang Seng Index Slides below 15,000-Point Psychological Level
to Lowest since October 2022 on Losses in Tencent, AIA,” South China Morning Post,
January 22, 2024.
183. Jiaxing Li, “Hang Seng Index Slides below 15,000-Point Psychological Level
to Lowest Since October 2022 on Losses in Tencent, AIA,” South China Morning Post,
January 22, 2024.
184. Stephen Roach, “It Pains Me to Say Hong Kong Is Over,” Financial Times,
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2023].”
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185. Simone McCarthy and Kathleen Magramo, “Hong Kong Removes Internation-
al Travel Quarantine after More than Two Years,” CNN, September 23, 2022; BBC,
“Hong Kong Orders Compulsory Covid Tests for All Its Citizens,” February 22, 2022;
Alice Fung and David Rising, “ ‘No-COVID’ Policy Drags on Hong Kong Economy as
Cases Surge,” AP News, February 18, 2022.
186. Primrose Riordan and Chan Ho-him, “Hong Kong Reopens with Post-Covid
Charm Offensive,” Financial Times, February 8, 2023; Primrose Riordan and Andy
Lin, “Hong Kong Loosens Covid Rules after Sharp Economic Contraction,” Financial
Times, May 3, 2022.
187. Yuke Xie, “China’s NDRC Urges Firms to Use Hong Kong for Financing Local
Projects, Overseas Plans,” South China Morning Post, September 24, 2024; Michael En-
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188. Daniel Slotta, “Market Cap of Listed Companies from Mainland China at
HKEX in Hong Kong 2015–2023,” Statista, March 25, 2024.
189. Zhang Shidong, “China’s Dual-Listed Companies’ Shares Show Hong Kong
Discount over Yuan Counterparts at 15-Month Lows,” South China Morning Post,
May 21, 2024.
190. Eddie Yue, “Recent Developments in Financial Cooperation between Hong
Kong and the Mainland,” Hong Kong Monetary Authority, June 28, 2024; Reuters,
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191. Hong Kong Exchanges and Clearing Limited, “Our Connect Story: A New
Chapter Begins . . .” October 2022, 1–3.
194. Aileen Chuang, “Hong Kong’s Swap Connect Hailed as ‘Last Important Piece
of the Puzzle for Overseas Investors Entering China,’ ” South China Morning Post,
May 15, 2024; Kensaku Ihara and Noriyuki Doi, “China Debuts Swap Connect Pro-
gram for Onshore Bond Hedging,” Nikkei Asia, May 16, 2023; Bloomberg, “China
Opens New Access to $3 Trillion Swaps Trading Market,” May 15, 2023.
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198. Bloomberg, “Next China: Stock Market Meltdown,” January 25, 2024;
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199. Bloomberg, “Should I Buy China Shares Now? All You Need to Know after $6
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200. Yahoo Finance, “Hang Seng Index.”
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726
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Post, June 3, 2024; James Morales, “Huobi, OKX Withdraw Hong Kong License Appli-
cations: Why Crypto Exchanges Are Backing Out of City,” CCN, June 3, 2024.
214. Ryan Weeks, “Crypto Exchange Bybit Grabs Global Spotlight in Void Left by
FTX,” Bloomberg, June 27, 2024; Xinmei Shen, “Bybit, a Major Cryptocurrency Ex-
change, Opens Up Trading to Chinese Users Living Overseas,” South China Morning
Post, June 7, 2024; Bybit, “Bybit Opens Up Platform for the Overseas Chinese Com-
munity,” June 5, 2024; Matt Haldane and Ben Jiang, “11 Crypto Exchanges in Hong
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China Morning Post, June 3, 2024.
215. Sarah Zheng and Kiuyan Wong, “Hong Kong’s Crypto Hub Ambitions Win
Quiet Backing from Beijing,” Bloomberg, February 20, 2023.
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Finance Hub,” Bloomberg, February 1, 2024.
Associated with the HKSAR Safeguarding National Security Ordinance (Article 23),”
April 2024, 7.
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Kong’s New National Security Laws,” Reuters, March 8, 2024.
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Kong’s New National Security Laws,” Reuters, March 8, 2024.
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727
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236. Sharon Chau, “Hong Kong’s Legal Exodus Leaves Law Students with Few
Places to Go,” Bloomberg, August 23, 2024; Jessica Seah, “Winston & Strawn Becomes
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237. Thomas Hale, Chan Ho-him, and Joe Leahy, “Exodus of US Law Firms from
Shanghai Accelerates,” Financial Times, May 30, 2024.
238. Thomas Hale, Chan Ho-him, and Joe Leahy, “Exodus of US Law Firms from
Shanghai Accelerates,” Financial Times, May 30, 2024.
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Places to Go,” Bloomberg, August 23, 2024.
240. Rebecca Choong Wilkins, “US Firms Want Hong Kong to Stop Talking about
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30, 2024, 13.
243. Baker McKenzie, “Hong Kong: Practical Guide—Enforcing Mainland Judg-
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244. Economist, “Foreign Judges Are Fed Up with Hong Kong’s Political Environ-
ment,” June 13, 2024.
245. Arran Hope, “PRC Law and the Demise of Hong Kong in 2024,” Jamestown
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246. U.S. Department of State, 2023 Investment Climate Statements: Hong Kong,
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247. Zeyi Yang, “Hong Kong Is Targeting Western Big Tech Companies in Its Ban
of a Popular Protest Song,” MIT Technology Review, May 9, 2024.
249. Meta, “Government Requests for User Data –Hong Kong July–December
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252. Tiffany May, “YouTube Blocks Access to Protest Anthem in Hong Kong,,” New
255. Magdalene Feng, “Goodbye HK, Hello S’pore: More Global Firms Shifting
Staff, Operations despite City’s Efforts to Retain Them,” Straits Times, November
10, 2023.
257. Manuel Baigorri and Elffie Chew, “DigitalBridge-Backed Vantage Said to
Weigh HK Data Centers Sale,” Bloomberg, April 25, 2024.
258. AmCham Hong Kong, “2024 Members Business Sentiment Survey,” January
30, 2024, 24.
728
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Business Sentiment Report 2023,” 2024, 12; European Union, “Hong Kong: Annual
EU Report on Political and Economic Developments in 2023,” June 13, 2024.
262. Irene Chan, “Almost 400 Companies Arrived or Expanded in Hong Kong Last
Year, Government Says,” Hong Kong Free Press, February 2, 2024; Government of
Hong Kong Special Administrative Region of the People’s Republic of China, Inves-
tHK Annual Report 2023, February 1, 2024.
263. Brian C.H. Fong, “The Fall of Hong Kong: How China-US Rivalry Ended a
Geopolitical Neutral Zone,” Diplomat, March 16, 2024.
264. Kandy Wong, “China-Hong Kong ‘Round-Tripping Investment’ Remains Vital
as Economy Slows, Foreign Business Confidence Tumbles,” South China Morning
Post, June 3, 2022.
265. Kandy Wong, “China-Hong Kong ‘Round-Tripping Investment’ Remains Vital
as Economy Slows, Foreign Business Confidence Tumbles,” South China Morning
Post, June 3, 2022.
266. Thomas Hale, Ryan McMorrow, and Andy Lin, “China Suffers Plunging For-
eign Direct Investment amid Geopolitical Tensions,” Financial Times, October 29,
2023.
267. Cannix Yau, “Hong Kong Welcomed 34 Million Visitors in 2023, Figure for
December Reached 65% of Pre-Pandemic Levels,” South China Morning Post, Janu-
ary 13, 2024.
268. Hong Kong Tourism Board, “Research and Statistics: Total Visitor Arrivals–
Total [2018–2023],” 2024.
Total, Mainland China, United States, United Kingdom [2018–2023],” 2024.
270. Hillary Leung, “Hong Kong Struggles to Win Back Long-Haul Tourists amid
Fewer Flights and Travel Warnings,” Hong Kong Free Press, April 7, 2024.
Mainland China, United States, United Kingdom [2018–2023],” 2024.
Fewer Flights and Travel Warnings,” Hong Kong Free Press, April 7, 2024.
Fewer Flights and Travel Warnings,” Hong Kong Free Press, April 7, 2024; Govern-
ment of Australia Department of Foreign Affairs and Trade, Smart Traveler Hong
Kong, May 8, 2024.
274. Irene Chan, “Hong Kong Budget 2024: Over HK$1.1 Billion to ‘Soft Sell’ City,
Inc. Monthly Drone and Fireworks Shows,” Hong Kong Free Press, February 28, 2024.
275. Irene Chan, “Hong Kong Budget 2024: Over HK$1.1 Billion to ‘Soft Sell’ City,
Inc. Monthly Drone and Fireworks Shows,” Hong Kong Free Press, February 28, 2024.
276. Shirley Zhao and Krystal Chia, “Hong Kong Businesses Turn to Mandarin,
Xiaohongshu for Survival,” Bloomberg, July 31, 2024.
277. Bloomberg, “Young Hong Kongers Who Defied Xi Are Now Partying in China,”
March 3, 2024.
278. Bloomberg, “Young Hong Kongers Who Defied Xi Are Now Partying in Chi-
na,” March 3, 2024; Joy Dong, “Why Mainland Chinese Flocked to Hong Kong’s New
Global Visa,” New York Times, March 20, 2024.
March 3, 2024; Melissa Cyrill, “Hong Kong High-Speed Rail Connecting with Main-
land China Opens September 23,” China Briefing, September 12, 2018.
March 3, 2024.
March 3, 2024.
March 3, 2024.
283. Chinese University of Hong Kong, “Survey Findings on Views about Emigra-
tion from Hong Kong Released by the Hong Kong Institute of Asia-Pacific Studies at
CUHK,” December 14, 2023, 8.
284. Joy Dong, “Why Mainland Chinese Flocked to Hong Kong’s New Global Visa,”
New York Times, March 20, 2024.
285. Government of Hong Kong Immigration Department, Top Talent Pass Scheme,
June 18, 2024.
729
289. Natalie Wong, “Hong Kong, Macau Business Visa Length Doubled to 2 Weeks
Per Trip for Mainland Chinese Holders, in Boost for 100 Million Firms,” South China
290. Natalie Wong, “Hong Kong, Macau Business Visa Length Doubled to 2 Weeks
Per Trip for Mainland Chinese Holders, in Boost for 100 Million Firms,” South China
291. Mercedes Hutton, “No. of Young Adults in Hong Kong Continues Decline, de-
spite Year-end Population Growth of 0.4% to 7.5 Million,” Hong Kong Free Press,
February 21, 2024.
February 21, 2024.
February 21, 2024.
294. Ng Kang-chung, “New Hong Kong Scheme for Faster Recruitment of Low-
Skilled Staff from Outside City Gets Off to Slow Start with Applications for Just 158
Positions,” South China Morning Post, September 4, 2023.
297. Cannix Yau, “Citybus Union Slams Importation of Mainland Chinese Drivers
into Hong Kong,” South China Morning Post, April 25, 2024.
300. Manolo Corichi and Christine Huang, “How People in Hong Kong View Main-
land China and Their Own Identity,” Pew Research Center, December 5, 2023.
307. China’s Central Committee and State Council, Greater Bay Area Outline De-
velopment Plan (粤港澳大湾区发展规划纲要) February 18, 2019. Translation; Patrick
Yeung, “Hong Kong’s Role in the GBA,” Hong Kong General Chamber of Commerce.
308. Wang Xiaoqing and Denise Jia, “Hong Kong’s Investment Arm Set to Start
Funding Projects by Year-End,” Caixin Global, September 8, 2023.
309. China’s Central Committee and State Council, Greater Bay Area Outline De-
velopment Plan (粤港澳大湾区发展规划纲要) February 18, 2019. Translation; Patrick
Yeung, “Hong Kong’s Role in the GBA,” Hong Kong General Chamber of Commerce.
310. Sunny Cheung, “A Greater Bay Area: China’s Initiative to Build a New Silicon
Valley,” Jamestown Foundation, January 19, 2024, 14.
312. Karen Freifeld and Toby Sterling, “US Wants Netherlands, Japan to Further
Restrict Chipmaking Equipment to China,” Reuters, June 19, 2024; Sunny Cheung,
“A Greater Bay Area: China’s Initiative to Build a New Silicon Valley,” Jamestown
Foundation, January 19, 2024, 15.
730
Valley,” Jamestown Foundation, January 19, 2024, 16; Chinese State Council, Outline
of the Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (粤
港澳大湾区发展规划纲要), February 18, 2019. Translation.
315. Xinyi Wu, “HKIC Invests in Ninenovo, Emaldo, GeneSense to Expand Hong
Kong’s Strategic Portfolio,” South China Morning Post, September 13, 2024; Cissy
Zhou and Peggy Ye, “Hong Kong’s AI Bet through Temasek-style Fund Signals Stra-
tegic Shift,” Nikkei Asia, June 17, 2024.
316. Xinyi Wu, “HKIC Invests in Ninenovo, Emaldo, GeneSense to Expand Hong
Kong’s Strategic Portfolio,” South China Morning Post, September 13, 2024; Yulu Ao,
“Hong Kong Investment Fund Plans New Spending on Gene-Related Project, CEO
Says,” South China Morning Post, September 11, 2024.
317. Xinmei Shen, “Hong Kong Fund Strikes Another AI Deal with Beijing Robot
Maker Galbot to Boost Industry,” South China Morning Post, July 19, 2024.
March 3, 2024; Sophie Chew, “Sinking Fortunes: Hong Kong Falls Out of World’s Top
10 Busiest Ports Ranking for First Time as Volumes Slump,” South China Morning
319. Sophie Chew, “Sinking Fortunes: Hong Kong Falls Out of World’s Top 10 Bus-
iest Ports Ranking for First Time as Volumes Slump,” South China Morning Post,
April 18, 2024.
320. Hong Kong Census and Statistics Department, Hong Kong Shipping Statis-
tics, March 4, 2024.
April 18, 2024.
April 18, 2024; Mette Grube Condrup, “Port of Hong Kong Loses Ground to Chinese
Ports,” Shipping Watch, April 2, 2024.
April 18, 2024.
April 18, 2024.
325. Bloomberg, “Russian Firms Turn to Crypto for China Commodities Trade,”
May 28, 2024; Brian Chun Hey Kot, “Hong Kong’s Technology Lifeline to Russia,”
Carnegie Endowment for International Peace, May 17, 2023.
326. Samuel Bickett, “Beneath the Harbor: Hong Kong’s Leading Role in Sanctions
Evasion,” Committee for Freedom in Hong Kong Foundation, July 22, 2024.
327. Silverado Policy Accelerator, “Russia Semiconductor Imports Dashboard: Pre-
and Post-Invasion Trends,” July 8, 2024; Paul Mozur, Aaron Krolik, and Adam Sa-
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New York Times, December 19, 2023.
328. Brian Chun Hey Kot, “Hong Kong’s Technology Lifeline to Russia.” Carnegie
Endowment for International Peace, May 17, 2023.
329. Samuel Bickett, “Beneath the Harbor: Hong Kong’s Leading Role in Sanctions
Evasion,” Committee for Freedom in Hong Kong Foundation, July 22, 2024, 15.
332. Kenji Kawase and Echo Wong, “U.S. Sanctions China, Hong Kong Entities for
Russia Links: What We Know,” Nikkei Asia, May 2, 2024.
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338. Hong Kong Democracy Council, “The Counter Lobby Confidential,” July 2023.
731
339. Hong Kong Democracy Council, “The Counter Lobby Confidential,” July 2023,
18.
340. Ricardo Barrios and Michael D. Sutherland, “Hong Kong Economics and
Trade Offices,” Congressional Research Service CRS IF 12313, January 20, 2023;
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Trade Offices,” Federal Register 62:127 (July 2, 1997).
341. Hong Kong Democracy Council, “The Counter Lobby Confidential,” July 2023,
14.
342. James Pomfret and Jessie Pang, “Diplomatic Tensions Grow over UK Arrest
of Hong Kong Trade Office Official,” Reuters, May 14, 2024.
343. James Pomfret and Jessie Pang, “Diplomatic Tensions Grow over UK Arrest
of Hong Kong Trade Office Official,” Reuters, May 14, 2024.
344. Elizabeth Cheung, “Berlin Invited Chinese Diplomat to Meet over Spying
Case Linked to Hong Kong Trade Body Ex-Employee,” South China Morning Post,
May 14, 2024.
COMPREHENSIVE LIST OF
THE COMMISSION’S 2024 RECOMMENDATIONS
Part II: Technology and Consumer Product

Opportunities and Risks
Chapter 3: U.S.-China Competition in Emerging Technologies
1. Congress establish and fund a Manhattan Project-like program
dedicated to racing to and acquiring an Artificial General In-
telligence (AGI) capability. AGI is generally defined as systems
that are as good as or better than human capabilities across
all cognitive domains and would surpass the sharpest human
minds at every task. Among the specific actions the Commission
recommends for Congress:
• Provide broad multiyear contracting authority to the execu-
tive branch and associated funding for leading artificial in-
telligence, cloud, and data center companies and others to
advance the stated policy at a pace and scale consistent with
the goal of U.S. AGI leadership; and
• Direct the U.S. secretary of defense to provide a Defense Pri-
orities and Allocations System “DX Rating” to items in the
artificial intelligence ecosystem to ensure this project receives
national priority.
2. Congress consider legislation to:
• Require prior approval and ongoing oversight of Chinese in-
volvement in biotechnology companies engaged in operations
in the United States, including research or other related
transactions. Such approval and oversight operations shall
be conducted by the U.S. Department of Health and Human
Services in consultation with other appropriate governmental
entities. In identifying the involvement of Chinese entities
or interests in the U.S. biotechnology sector, Congress should
include firms and persons:
○ Engaged in genomic research;
○ Evaluating and/or reporting on genetic data, including for
medical or therapeutic purposes or ancestral documenta-
tion;
○ Participating in pharmaceutical development;
○ Involved with U.S. colleges and universities; and
○ Involved with federal, state, or local governments or agen-
cies and departments.
(733)
734
• Support significant Federal Government investments in bio-

technology in the United States and with U.S. entities at
chain, from basic research through product development and
market deployment, including investments in intermediate
services capacity and equipment manufacturing capacity.
3. To protect U.S. economic and national security interests, Con-
certain technologies and services controlled by Chinese entities,
including:
• Autonomous humanoid robots with advanced capabilities of
• Energy infrastructure products that involve remote servicing,
maintenance, or monitoring capabilities, such as load balanc-
ing and other batteries supporting the electrical grid, bat-
teries used as backup systems for industrial facilities and/
or critical infrastructure, and transformers and associated
equipment.
4. Congress encourage the Administration’s ongoing rulemaking
efforts regarding “connected vehicles” to cover industrial ma-
chinery, Internet of Things devices, appliances, and other con-
nected devices produced by Chinese entities or including Chi-
nese technologies that can be accessed, serviced, maintained, or
updated remotely or through physical updates.
5. Congress enact legislation prohibiting granting seats on boards
of directors and information rights to China-based investors in
strategic technology sectors. Allowing foreign investors to hold
seats and observer seats on the boards of U.S. technology start-
ups provides them with sensitive strategic information, which
could be leveraged to gain competitive advantages. Prohibiting
this practice would protect intellectual property and ensure that
U.S. technological advances are not compromised. It would also
reduce the risk of corporate espionage, safeguarding America’s
leadership in emerging technologies.
6. Congress establish that:
• The U.S. government will unilaterally or with key interna-
tional partners seek to vertically integrate in the develop-
ment and commercialization of quantum technology.
• Federal Government investments in quantum technology
support every level of the technology development cycle and
supply chain from basic research through product develop-
ment and market deployment, including investments in in-
termediate services capacity.
• The Office of Science and Technology Policy, in consultation
with appropriate agencies and experts, develop a Quantum
Technology Supply Chain Roadmap to ensure that the United
States coordinates outbound investment, U.S. critical supply
chain assessments, the activities of the Committee on Foreign
Investment in the United States (CFIUS), and federally sup-
ported research activities to ensure that the United States,
735
along with key allies and partners, will lead in this critical
technology and not advance Chinese capabilities and devel-
opment.
Chapter 4: Unsafe and Unregulated Chinese Consumer Goods:
Challenges in Enforcing Import Regulations and Laws
7. With respect to imports sold through an online marketplace,
known as the “de minimis” exemption), which allows goods val-
ued under $800 to enter the United States duty free and, for
all practical purposes, with less rigorous regulatory inspection.
Congress should provide U.S. Customs and Border Protection
adequate resources, including staff and technology, for imple-
mentation, monitoring, and enforcement.
8. Congress amend the Consumer Product Safety Act to (1) grant
the U.S. Consumer Product Safety Commission (CPSC) unilat-
eral mandatory recall authority over products where the Chi-
nese seller is unresponsive to requests from the CPSC for fur-
ther information or to initiate a voluntary recall and the CPSC
has evidence of a substantial product hazard, defined as either
failing to comply with any CPSC rule, regulation, standard, or
ban or posing a substantial risk of injury to the public; and (2)
classify Chinese e-commerce platforms as distributors to allow
for enforcement of recalls and other safety standards for prod-
ucts sold on these platforms.
9. Congress direct the U.S. Department of Homeland Security and
U.S. Customs and Border Protection, in conjunction with the
U.S. Department of Commerce, to develop assessment tools ca-
pable of identifying the true origins of parts, components, and
materials contained in products entering the United States to
prevent tariff evasion and limit safety and security risks in
light of the increasing complexity of global supply chains.
10. Congress require that the U.S. Trade Representative, in consul-
tation with the U.S. Department of Commerce, the U.S. Inter-
national Trade Commission, and other entities, as appropriate,
prepare a comprehensive report within 90 days on the operation
of the U.S.-Mexico-Canada Trade Agreement since its entry into
force that provides data and information on:
• Chinese-affiliated investments in Mexico and Canada and
specific information on their production of goods and how
those goods may enter the U.S. market either as finished
products or as components in other products;
• Trade flows of products produced in China to Mexico and
Canada and how such trade flows have changed;
• Prices of products produced in China shipped to Mexico and
Canada as well as products shipped through those countries
to the United States and how those prices relate to the prices
of such goods shipped directly into the U.S. market; and
• Trade enforcement actions by Mexico and Canada regarding
Chinese-produced products (including those transshipped
736
through third countries’ markets) and how such actions re-

late to U.S. trade enforcement actions.
11. Congress amend applicable laws to mandate that online mar-
ketplaces clearly disclose on product listings for Chinese-made
goods the name, physical address, and contact information for
the manufacturer. The online marketplaces should also be re-
quired to clearly display a warning label that the item is man-
ufactured in a country that does not comply with U.S. consumer
safety standards.
12. Congress direct the U.S. Government Accountability Office to
investigate the reliability of safety testing certifications for con-
sumer products and medical devices imported from China.
Part III: Competition and Conflict

Chapter 5: China and the Middle East
13. Congress direct the Office of the Director of National Intelli-
gence to produce and provide to the U.S. Department of the
Treasury within six months a detailed study of Chinese pur-
chases of Iranian oil over the span of the last five years. The
study shall include analysis of China’s use of transshipment
points and shell companies as methods to insulate itself from
sanctions. Congress should further direct that within six months
of receipt of the study, the Treasury Department must make a
determination if sanctionable activity is occurring and report its
findings to Congress.
14. Congress direct the U.S. member on the International Maritime
Organization (IMO) Council to use their voice and vote to re-
quire China to abide by its treaty obligations under the IMO
conventions, including by upholding safety regulations on the
use of Automatic Identification System transponders.
Chapter 6: Key Economic Strategies for Leveling the U.S.-
China Playing Field
15. Congress consider legislation to eliminate federal tax expendi-
tures for investments in Chinese companies on the Entity List
maintained by the U.S. Department of Commerce, or identified
as a Chinese military company on either the “Non-Specially
Designated National (SDN) Chinese Military-Industrial Com-
plex Companies List” maintained by the U.S. Department of
the Treasury or the “Chinese military companies” list main-
tained by the U.S. Department of Defense. Among the tax
expenditures that would be eliminated prospectively are the
preferential capital gains tax rate, the capital loss carry-for-
ward provisions, and the treatment of carried interest.
16. To enhance the effectiveness of export controls, Congress should:
• Improve the analytic and enforcement capabilities of the U.S.
Department of Commerce’s Bureau of Industry and Security
(BIS) by providing resources necessary to hire more in-house
737
experts; establish a Secretary’s Fellows Program to more ef-

fectively attract interagency talent; expand partnerships with
the national labs; increase access to data and data analysis
tools, including the acquisition of proprietary datasets and
modern data analytic systems; and hire additional agents
and analysts for the Office of Export Enforcement.
• Amend the Export Control Reform Act to require that within
30 days of granting a license for export to entities on the
Entity List, including under the Foreign Direct Product Rule,
BIS shall provide all relevant information about the license
approval to the relevant congressional committees, subject to
restrictions on further disclosure under 50 U.S.C. § 4820(h)(2)
(B)(ii).
• Direct the president to:
○ Designate a senior official to coordinate efforts across the
Administration to prioritize bilateral and multilateral sup-
port for U.S. export control initiatives; and
○ Establish a Joint Interagency Task Force, reporting to and
overseen by the national security advisor and with its own
budget and staff, to assess ways to achieve the goal of lim-
iting China’s access to and development of advanced tech-
nologies that pose a national security risk to the United
States. The task force should include designees from the
U.S. Departments of Commerce, Defense, State, Treasury,
and Energy; the intelligence community; and other rele-
vant agencies. It should assess the effectiveness of existing
export controls; provide advice on designing new controls
and/or using other tools to maximize their effect while min-
imizing their negative impact on U.S. and allied economies;
and recommend new authorities, institutions, or interna-
tional arrangements in light of the long-term importance
of U.S.-China technology competition.
• Codify the “Securing the Information and Communications
Technology and Services Supply Chain” Executive Order to
ensure that as the authority is used more robustly, challenges
to its status as an executive order will not constrain BIS’s
implementation decisions or delay implementation.
17. Congress direct the Administration to create an Outbound In-
vestment Office within the executive branch to oversee invest-
ments into countries of concern, including China. The office
should have a dedicated staff and appropriated resources and
be tasked with:
• Prohibiting outbound U.S. investment through a sector-based
approach in technologies the United States has identified as
a threat to its national or economic security;
• Expanding the list of covered sectors with the goal of aligning
outbound investment restrictions with export controls. The of-
fice should identify and refine the list of covered technologies
in coordination with appropriate agencies as new innovations
emerge; and
738
• Developing a broader mandatory notification program for

sectors where investment is not prohibited to allow policy-
makers to accumulate visibility needed to identify potential
high-risk investments and other sectors that pose a threat
to U.S. national or economic security. In addition to direct
investments, the notification regime should capture passive
investment flows to help inform debates around the expan-
sion of prohibitions to cover portfolio investment.
18. Congress repeal Permanent Normal Trade Relations (PNTR) for
China. The PNTR status allows China to benefit from the same
trade terms as U.S. allies, despite engaging in practices such as
intellectual property theft and market manipulation. Repealing
PNTR could reintroduce annual reviews of China’s trade prac-
tices, giving the United States more leverage to address unfair
trade behaviors. This move would signal a shift toward a more
assertive trade policy aimed at protecting U.S. industries and
workers from economic coercion.
19. Congress direct relevant departments and agencies to expand
their data collection and transparency initiatives into the vol-
ume and types of investment flowing into China by taking the
following actions:
• Amending the International Investment and Trade in Ser-
vices Survey Act to require the Bureau of Economic Analysis
within the U.S. Department of Commerce to publish more
detailed sectoral breakdowns of U.S. direct investment in
China on a nationality basis and the U.S. Department of the
Treasury to publish annual sector breakdowns of U.S. portfo-
lio investment in China on a nationality basis. The portfolio
investment sectors should be more specific than those provid-
ed by the Commerce Department for direct investment. Ad-
ditionally, Congress should require the Treasury Department
to publish quarterly updates—without sector breakdowns—of
nationality-based portfolio investment in China.
• Requiring the U.S. Department of Commerce to produce a
report on the feasibility and methodology for publishing na-
tionality-based results for direct investment, where offshore
tax havens and locales of incorporation would not be said to
receive hundreds of billions of dollars and true destinations
of the capital would be accurately identified.
20. Congress direct the Administration to impose sanctions on Chi-
nese financial institutions that violate sanctions, including those
that are proven to be working with or supporting the Russian
military industrial base or facilitating purchases of Iranian oil.
21. In light of the periodic and increasingly frequent removal of
some of these materials from Chinese websites, Congress direct
the executive branch to fund the creation and operation of a
regularly updated, permanent data archive, in effect a series
of snapshots of portions of the Chinese internet. In the past
decade, foreign analysts have made use of open source Chi-
nese-language materials to gain insight into various aspects of
current policy as well as internal (but unclassified) discussions
739
of future military, diplomatic, and economic strategy. Informa-

tion would be stored in the permanent data archive, accessible
to both government and private analysts.
22. Congress consider legislation to set priorities and goals for
U.S.-China economic relations. These policy priorities and goals
should include:
• Updating existing trade and economic tools to ensure their
timely application, utility, and effectiveness in countering
China’s non-market economic policies;
• Limiting U.S. economic and security dependence on supply
chains in critical and emerging products, technologies, and
services provided by companies controlled, operating in, or
subject to the influence of China;
• Enhancing the accountability of the executive branch to Con-
gress and increasing the transparency of its actions to ensure
coordinated governmental action and respect for Congress’s
constitutional Article I, Section 8 authority;
• Prioritizing domestic production and employment while also
recognizing the need, as appropriate, to coordinate and align
policies with friends and allies;
• Acting to address production overcapacity fueled by Chinese
policies and actions; and
• Advancing the resilience of the U.S. economy and ensuring its
access to key inputs and technologies.
23. Congress pass legislation eliminating the ability of entities
operating in U.S. Foreign-Trade Zones (FTZs) to qualify for
zero or lower tariffs on products imported from China or Chi-
nese-affiliated or -invested entities into the FTZ and then re-
exported.
24. The relevant committees of Congress hold hearings to assess
the desirability and feasibility of creating a trade defense co-
alition with other like-minded countries to forestall the risk
of a second China shock. Such a grouping would seek to align
policies for responding to the recent acceleration in China’s ex-
ports of subsidized, underpriced materials and manufactured
goods.
Chapter 7: China’s New Measures for Control, Mobilization,
and Resilience
gence, within 180 days, to conduct a classified assessment, and
brief its findings to Congress, of the intelligence community’s
(IC) ability to accurately monitor strategic, nonmilitary indi-
cators that would signal that China is preparing for immi-
nent conflict and the extent to which China’s increasing lack
of transparency affects the IC’s ability to monitor this infor-
mation. The assessment should include, but not be limited to,
the following:
740
• The IC’s ability to monitor:

○ China’s energy storage locations and stockpiling rates, par-
ticularly for crude oil, coal, and natural gas;
○ Production shifts from civilian to military industries;
○ China’s national defense mobilization system; and
○ China’s strategic reserves and their compositions and lo-
cations;
• The IC’s ability to coordinate with non-Title 10 and -Title 50
federal agencies that have technical expertise in agriculture
and trade to monitor China’s food and energy stockpiling and
any derived indicators that may signal a potential prepara-
tion for conflict;
• Whether the IC’s current geospatial intelligence posture is
adequate to compensate for the loss of open source informa-
tion from China; and
• The desirability and feasibility of establishing an Energy
Strategic Warning system involving coordination between rel-
evant entities including the National Geospatial-Intelligence
Agency and the U.S. Departments of Energy, Commerce,
State, and the Treasury.
Chapter 8: China’s Evolving Counter-Intervention Capabilities
and the Role of Indo-Pacific Allies
26. Congress direct the U.S. Department of Defense to produce
within 60 days a classified net assessment report on current
People’s Liberation Army (PLA) Command, Control, Communi-
cations, Computers Intelligence, Surveillance, and Reconnais-
sance (C4ISR) capabilities and PLA electronic warfare (EW) ca-
pabilities (including electronic attack and electronic protection
capabilities). The report should examine U.S. counter-C4ISR
and counter-EW capabilities, assess the resiliency of U.S. capa-
bilities, identify counter-C4ISR and counter-EW gaps, and pro-
vide a menu of procurement options to close the gaps. Not later
than 60 days after its completion, the U.S. secretary of defense
shall provide the report to the appropriate congressional com-
mittees and brief them on its findings.
gence, in conjunction with the U.S. Departments of Defense,
Commerce, and the Treasury, and other relevant agencies, to
conduct a comprehensive review of potential technological
chokepoints across the People’s Republic of China military in-
dustrial base and devise plans to apply controls, in conjunction
with allies, to slow China’s military development.
28. Congress reinvigorate and recommit to space as an area of
strategic competition, including by conducting a review of the
commercial space industry to determine if there are regulatory
updates that would ensure that the U.S. commercial space in-
dustry is able to innovate as quickly as possible while maintain-
ing safety as a top priority.
741
Part IV: Taiwan and Hong Kong

Chapter 9: Taiwan
29. Congress amend the Arms Export Control Act of 1976 to include
Taiwan on the list of “NATO Plus” recipients.
30. Congress create a “Taiwan Allies Fund” that would provide
foreign assistance only to countries that have an official diplo-
matic relationship with Taiwan. No country could receive more
than 15 percent of the appropriated funding each year. Coun-
tries that no longer have a diplomatic relationship with Taiwan
would immediately be ineligible for this funding.
Chapter 10: Hong Kong
31. Congress require the Administration to produce a determina-
tion whether reasonable grounds exist for concluding that the
Hong Kong Special Administrative Region should be designated
as a Primary Money Laundering Concern (PMLC) jurisdiction
under Section 311 of the Patriot Act due to its growing role as
the central sanctions evasion hub and transshipment center for
illicit finance and technology to Russia, Iran, and North Korea.
32. Congress direct the U.S. Department of the Treasury, in coor-
dination with the U.S. Departments of State and Commerce,
to provide the relevant congressional committees a report as-
sessing the ability of U.S. and foreign financial institutions
operating in Hong Kong to identify and prevent transactions
that facilitate the transfer of products, technology, and money
to Russia, Iran, and other sanctioned countries and entities in
violation of U.S. export controls, financial sanctions, and related
rules. The report should:
• Evaluate the extent of Hong Kong’s role in facilitating the
transfer of products and technologies to Russia, Iran, other
adversary countries, and the Mainland, which are prohibited
by export controls from being transferred to such countries;
• Evaluate Hong Kong’s role in facilitating trade and financial
transactions that violate U.S. sanctions on Russia, Iran, and
other countries and entities subject to U.S. financial sanctions;
• Examine whether Hong Kong’s National Security Law has
limited the ability of financial institutions to adhere to global
standards for anti-money laundering and know-your-custom-
er procedures; and
• Describe the level of cooperation between Hong Kong and
U.S. authorities in enforcing export controls and sanctions
regimes.
742
ADDITIONAL VIEWS OF COMMISSIONER

ROBIN CLEVELAND
In 2009, Senator Mitch McConnell (R-KY) first appointed me to
the Commission. I am grateful to the Leader who has supported my
effort over many years to serve with integrity and always speak my
mind. The trust he has placed in me changed my life profoundly.
I also have been honored to serve alongside a distinguished group
of Commissioners who contribute wisdom and energy to this import-
ant effort. The greatest privilege, however, is to learn from the dedi-
cated, knowledgeable staff who bring language skills, deep expertise,
curiosity, and, most of all, patience with the Commissioners as we
work toward a consensus of views.
This year, I voted for the report and believe it largely builds on
the Commission’s record of understanding and providing policy
recommendations regarding China’s efforts to consolidate control
domestically and expand its authority globally. Regrettably, there
are two aspects of the report that reach beyond our commitment
to provide China-based recommendations and raise concerns about
unanticipated repercussions.
While I support suspension of the de minimis trade exemption
specifically for Chinese e-commerce products because of concerns re-
garding safety hazards, forced labor, lack of enforcement related to
counterfeit products, and the imbalance of the exemption level (U.S.
exemption is $800; China is $7), I disagree with the decision to elim-
inate the provision in its entirety for e-commerce imports. Based on
the most recent data available from Customs & Border Protection
authorities, 42 percent of de minimis imports come from countries
other than China. The Commission has spoken repeatedly about the
need to strengthen relations with emerging markets as we seek to
balance China’s predatory political and economic practices. The de-
cision to eliminate the de minimis exemption for e-commerce sales
from all countries was taken without consideration of the poten-
tial damage that may be done to our relationships with Southeast
Asian, Latin American, European, and African trading partners.
My second concern relates to our recommendation to eliminate
capital gains, capital loss carry-forward provisions, and the treat-
ment of carried interest for U.S. companies. This proposal was nei-
ther presented nor discussed in any Commission hearing, policy
paper, or witness statement. While I agree with the spirit of the
concern that the United States should restrict investments in dan-
gerous Chinese military enterprises, the implementation and con-
sequences of this provision have not been evaluated. The provision
mirrors a previous recommendation that appeared designed to in-
flict harm on the U.S. private sector without clarity on the actual, if
any, impact on Chinese enterprises which present a threat.
APPENDIX I
CHARTER
The Commission was created on October 30, 2000, by the Floyd
D. Spence National Defense Authorization Act for Fiscal Year 2001,
Pub. L. No. 106–398 (codified at 22 U.S.C. § 7002), as amended by:
• The Treasury and General Government Appropriations Act,
2002, Pub. L. No. 107–67 (Nov. 12, 2001) (regarding employ-
ment status of staff and changing annual report due date from
March to June);
• The Consolidated Appropriations Resolution, 2003, Pub. L. No.
108–7 (Feb. 20, 2003) (regarding Commission name change,
terms of Commissioners, and responsibilities of the Commis-
sion);
• The Science, State, Justice, Commerce, and Related Agencies
Appropriations Act, 2006, Pub. L. No. 109–108 (Nov. 22, 2005)
(regarding responsibilities of the Commission and applicability
of FACA);
• The Consolidated Appropriations Act, 2008, Pub. L. No. 110–
161 (Dec. 26, 2007) (regarding submission of accounting reports,
printing and binding, compensation for the executive director,
changing annual report due date from June to December, and
travel by members of the Commission and its staff);
• The Carl Levin and Howard P. ‘‘Buck’’ McKeon National Defense
Authorization Act for Fiscal Year 2015, Pub. L. No. 113–291
(Dec. 19, 2014) (regarding responsibilities of the Commission).
• Pub. L. No. 117–286 (Dec. 27, 2022) (technical amendment).
22 U.S.C. § 7002. United States-China Economic and
Security Review Commission
(a) Purposes
The purposes of this section are as follows:
(1) To establish the United States-China Economic and Security
Review Commission to review the national security implications of
trade and economic ties between the United States and the People’s
Republic of China.
(2) To facilitate the assumption by the United States-China Eco-
nomic and Security Review Commission of its duties regarding the
review referred to in paragraph (1) by providing for the transfer to
that Commission of staff, materials, and infrastructure (including
leased premises) of the Trade Deficit Review Commission that are
appropriate for the review upon the submittal of the final report of
the Trade Deficit Review Commission.
(743)
744
(b) Establishment of United States-China Economic and Security

Review Commission
(1) In general
There is hereby established a commission to be known as the
United States-China Economic and Security Review Commission (in
this section referred to as the “Commission”).
(2) Purpose
The purpose of the Commission is to monitor, investigate, and re-
port to Congress on the national security implications of the bilat-
eral trade and economic relationship between the United States and
the People’s Republic of China.
(3) Membership
The Commission shall be composed of 12 members, who shall
be appointed in the same manner provided for the appointment of
members of the Trade Deficit Review Commission under section
127(c)(3) of the Trade Deficit Review Commission Act (19 U.S.C.
2213 note), except that—
(A) appointment of members by the Speaker of the House of Rep-
resentatives shall be made after consultation with the chairman of
the Committee on Armed Services of the House of Representatives,
in addition to consultation with the chairman of the Committee on
Ways and Means of the House of Representatives provided for under
clause (iii) of subparagraph (A) of that section;
(B) appointment of members by the President pro tempore of the
Senate upon the recommendation of the majority leader of the Sen-
ate shall be made after consultation with the chairman of the Com-
mittee on Armed Services of the Senate, in addition to consultation
with the chairman of the Committee on Finance of the Senate pro-
vided for under clause (i) of that subparagraph;
(C) appointment of members by the President pro tempore of
the Senate upon the recommendation of the minority leader of the
Senate shall be made after consultation with the ranking minori-
ty member of the Committee on Armed Services of the Senate, in
addition to consultation with the ranking minority member of the
Committee on Finance of the Senate provided for under clause (ii)
of that subparagraph;
(D) appointment of members by the minority leader of the House
of Representatives shall be made after consultation with the rank-
ing minority member of the Committee on Armed Services of the
House of Representatives, in addition to consultation with the rank-
ing minority member of the Committee on Ways and Means of the
House of Representatives provided for under clause (iv) of that sub-
paragraph;
(E) persons appointed to the Commission shall have expertise in
national security matters and United States-China relations, in ad-
dition to the expertise provided for under subparagraph (B)(i)(I) of
that section;
(F) each appointing authority referred to under subparagraphs
(A) through (D) of this paragraph shall—
(i) appoint 3 members to the Commission;
(ii) make the appointments on a staggered term basis, such that—
(I) 1 appointment shall be for a term expiring on December 31,
2003;
745
(II) 1 appointment shall be for a term expiring on December 31,

2004; and
(III) 1 appointment shall be for a term expiring on December 31,
2005;
(iii) make all subsequent appointments on an approximate 2-year
term basis to expire on December 31 of the applicable year; and
(iv) make appointments not later than 30 days after the date on
which each new Congress convenes;
(G) members of the Commission may be reappointed for addition-
al terms of service as members of the Commission; and
(H) members of the Trade Deficit Review Commission as of Octo-
ber 30, 2000, shall serve as members of the Commission until such
time as members are first appointed to the Commission under this
paragraph.
(4) Retention of support
The Commission shall retain and make use of such staff, mate-
rials, and infrastructure (including leased premises) of the Trade
Deficit Review Commission as the Commission determines, in the
judgment of the members of the Commission, are required to facili-
tate the ready commencement of activities of the Commission under
subsection (c) or to carry out such activities after the commence-
ment of such activities.
(5) Chairman and Vice Chairman
The members of the Commission shall select a Chairman and Vice
Chairman of the Commission from among the members of the Com-
mission.
(6) Meetings
(A) Meetings
The Commission shall meet at the call of the Chairman of the
Commission.
(B) Quorum
A majority of the members of the Commission shall constitute a
quorum for the transaction of business of the Commission.
(7) Voting
Each member of the Commission shall be entitled to one vote,
which shall be equal to the vote of every other member of the Com-
mission.
(c) Duties
(1) Annual report
Not later than December 1 each year (beginning in 2002), the
Commission shall submit to Congress a report, in both unclassified
and classified form, regarding the national security implications and
impact of the bilateral trade and economic relationship between the
United States and the People’s Republic of China. The report shall
include a full analysis, along with conclusions and recommendations
for legislative and administrative actions, if any, of the national se-
curity implications for the United States of the trade and current
balances with the People’s Republic of China in goods and services,
financial transactions, and technology transfers. The Commission
shall also take into account patterns of trade and transfers through
third countries to the extent practicable.
(2) Contents of report
746
Each report under paragraph (1) shall include, at a minimum, a

full discussion of the following:
(A) The role of the People’s Republic of China in the proliferation
of weapons of mass destruction and other weapon systems (includ-
ing systems and technologies of a dual use nature), including actions
the United States might take to encourage the People’s Republic of
China to cease such practices.
(B) The qualitative and quantitative nature of the transfer of
United States production activities to the People’s Republic of Chi-
na, including the relocation of manufacturing, advanced technology
and intellectual property, and research and development facilities,
the impact of such transfers on the national security of the United
States (including the dependence of the national security industrial
base of the United States on imports from China), the economic se-
curity of the United States, and employment in the United States,
and the adequacy of United States export control laws in relation to
the People’s Republic of China.
(C) The effects of the need for energy and natural resources in
the People’s Republic of China on the foreign and military policies of
the People’s Republic of China, the impact of the large and growing
economy of the People’s Republic of China on world energy and nat-
ural resource supplies, prices, and the environment, and the role the
United States can play (including through joint research and devel-
opment efforts and technological assistance) in influencing the en-
ergy and natural resource policies of the People’s Republic of China.
(D) Foreign investment by the United States in the People’s Re-
public of China and by the People’s Republic of China in the United
States, including an assessment of its economic and security impli-
cations, the challenges to market access confronting potential Unit-
ed States investment in the People’s Republic of China, and foreign
activities by financial institutions in the People’s Republic of China.
(E) The military plans, strategy and doctrine of the People’s Re-
public of China, the structure and organization of the People’s Re-
public of China military, the decision-making process of the People’s
Republic of China military, the interaction between the civilian and
military leadership in the People’s Republic of China, the develop-
ment and promotion process for leaders in the People’s Republic of
China military, deployments of the People’s Republic of China mili-
tary, resources available to the People’s Republic of China military
(including the development and execution of budgets and the allo-
cation of funds), force modernization objectives and trends for the
People’s Republic of China military, and the implications of such
objectives and trends for the national security of the United States.
(F) The strategic economic and security implications of the cyber
capabilities and operations of the People’s Republic of China.
(G) The national budget, fiscal policy, monetary policy, capital con-
trols, and currency management practices of the People’s Republic of
China, their impact on internal stability in the People’s Republic of
China, and their implications for the United States.
(H) The drivers, nature, and implications of the growing econom-
ic, technological, political, cultural, people-to-people, and security re-
lations of the People’s Republic of China’s with other countries, re-
gions, and international and regional entities (including multilateral
747
organizations), including the relationship among the United States,

Taiwan, and the People’s Republic of China.
(I) The compliance of the People’s Republic of China with its
commitments to the World Trade Organization, other multilateral
commitments, bilateral agreements signed with the United States,
commitments made to bilateral science and technology programs,
and any other commitments and agreements strategic to the Unit-
ed States (including agreements on intellectual property rights and
prison labor imports), and United States enforcement policies with
respect to such agreements.
(J) The implications of restrictions on speech and access to in-
formation in the People’s Republic of China for its relations with
the United States in economic and security policy, as well as any
potential impact of media control by the People’s Republic of China
on United States economic interests.
(K) The safety of food, drug, and other products imported from
China, the measures used by the People’s Republic of China Gov-
ernment and the United States Government to monitor and enforce
product safety, and the role the United States can play (including
through technical assistance) to improve product safety in the Peo-
ple’s Republic of China.
(3) Recommendations of report
Each report under paragraph (1) shall also include recommenda-
tions for action by Congress or the President, or both, including spe-
cific recommendations for the United States to invoke Article XXI
(relating to security exceptions) of the General Agreement on Tariffs
and Trade 1994 with respect to the People’s Republic of China, as
a result of any adverse impact on the national security interests of
the United States.
(d) Hearings
(1) In general
The Commission or, at its direction, any panel or member of the
Commission, may for the purpose of carrying out the provisions of
this section, hold hearings, sit and act at times and places, take
testimony, receive evidence, and administer oaths to the extent that
the Commission or any panel or member considers advisable.
(2) Information
The Commission may secure directly from the Department of
Defense, the Central Intelligence Agency, and any other Federal
department or agency information that the Commission considers
necessary to enable the Commission to carry out its duties under
this section, except the provision of intelligence information to the
Commission shall be made with due regard for the protection from
unauthorized disclosure of classified information relating to sensi-
tive intelligence sources and methods or other exceptionally sensi-
tive matters, under procedures approved by the Director of Central
Intelligence.
(3) Security
The Office of Senate Security shall—
(A) provide classified storage and meeting and hearing spaces,
when necessary, for the Commission; and
(B) assist members and staff of the Commission in obtaining se-
curity clearances.
748
(4) Security clearances

All members of the Commission and appropriate staff shall be
sworn and hold appropriate security clearances.
(e) Commission personnel matters
(1) Compensation of members
Members of the Commission shall be compensated in the same
manner provided for the compensation of members of the Trade Defi-
cit Review Commission under section 127(g)(1) and section 127(g)(6)
of the Trade Deficit Review Commission Act (19 U.S.C. 2213 note).
(2) Travel expenses
Travel expenses of the Commission shall be allowed in the same
manner provided for the allowance of the travel expenses of the
Trade Deficit Review Commission under section 127(g)(2) of the
Trade Deficit Review Commission Act.
(3) Staff
An executive director and other additional personnel for the Com-
mission shall be appointed, compensated, and terminated in the
same manner provided for the appointment, compensation, and ter-
mination of the executive director and other personnel of the Trade
Deficit Review Commission under section 127(g)(3) and section
127(g)(6) of the Trade Deficit Review Commission Act. The execu-
tive director and any personnel who are employees of the United
States-China Economic and Security Review Commission shall be
employees under section 2105 of title 5 for purposes of chapters 63,
81, 83, 84, 85, 87, 89, and 90 of that title. [Amended by P.L. 111–117
to apply section 308(e) of the United States China Relations Act of
2000 (22 U.S.C. 6918(e)) (relating to the treatment of employees as
Congressional employees) to the Commission in the same manner
as such section applies to the Congressional-Executive Commission
on the People’s Republic of China.]
(4) Detail of government employees
Federal Government employees may be detailed to the Commis-
sion in the same manner provided for the detail of Federal Gov-
ernment employees to the Trade Deficit Review Commission under
section 127(g)(4) of the Trade Deficit Review Commission Act.
(5) Foreign travel for official purposes
Foreign travel for official purposes by members and staff of the
Commission may be authorized by either the Chairman or the Vice
Chairman of the Commission.
(6) Procurement of temporary and intermittent services
The Chairman of the Commission may procure temporary and
intermittent services for the Commission in the same manner pro-
vided for the procurement of temporary and intermittent services
for the Trade Deficit Review Commission under section 127(g)(5) of
the Trade Deficit Review Commission Act.
(f) Authorization of appropriations
(1) In general
There is authorized to be appropriated to the Commission for fis-
cal year 2001, and for each fiscal year thereafter, such sums as may
be necessary to enable the Commission to carry out its functions
under this section.
749
(2) Availability
Amounts appropriated to the Commission shall remain available
until expended.
(g) Applicability of chapter 10 of title 5
The provisions of chapter 10 of title 5 shall apply to the activities
of the Commission.
(h) Effective date
This section shall take effect on the first day of the 107th Con-
gress.
(Pub. L. 106–398, § 1 [[div. A], title XII, § 1238], Oct. 30, 2000, 114
Stat. 1654 , 1654A–334; Pub. L. 107–67, title VI, §§ 645(a), 648, Nov.
12, 2001, 115 Stat. 556; Pub. L. 108–7, div. P, § 2(b)(1), (c)(1), Feb.
20, 2003, 117 Stat. 552; Pub. L. 109–108, title VI, § 635(b), Nov. 22,
2005, 119 Stat. 2347; Pub. L. 110–161, div. J, title I, Dec. 26, 2007,
121 Stat. 2285; Pub. L. 113–291, div. A, title XII, § 1259B(a), Dec. 19,
2014, 128 Stat. 3578.)
Amendments
2022—Subsec. (g). Pub. L. 117–286 substituted “chapter 10 of ti-
tle 5” for “FACA” in the heading and “chapter 10 of title 5” for “the
Federal Advisory Committee Act (5 U.S.C. App.)” in text.
2014—Subsec. (c)(2). Pub. L. 113–291 added subpars. (A) to (K)
and struck out former subpars. (A) to (J) which described required
contents of report.
2007—Subsec. (c)(1). Pub. L. 110–161 substituted “December” for
“June”.
2005—Subsec. (g). Pub. L. 109–108 amended heading and text of
subsec. (g) generally. Prior to amendment, text read as follows: “The
provisions of the Federal Advisory Committee Act (5 U.S.C. App.)
shall not apply to the Commission.”
2003—Pub. L. 108–7, § 2(b)(1)(A), inserted “Economic and” before
“Security” in section catchline.
Subsec. (a)(1), (2). Pub. L. 108–7, § 2(b)(1)(B), inserted “Economic
and” before “Security”.
Subsec. (b). Pub. L. 108–7, § 2(b)(1)(C)(i), inserted “Economic and”
before “Security” in heading.
Subsec. (b)(1). Pub. L. 108–7, § 2(b)(1)(C)(ii), inserted “Economic
and” before “Security”.
Subsec. (b)(3). Pub. L. 108–7, § 2(b)(1)(C)(iii)(I), which directed the
amendment of introductory provisions by inserting “Economic and”
before “Security”, could not be executed because “Security” does not
appear.
Subsec. (b)(3)(F). Pub. L. 108–7, § 2(c)(1), added subpar. (F) and
struck out former subpar. (F) which read as follows: “members shall
be appointed to the Commission not later than 30 days after the
date on which each new Congress convenes;”.
Subsec. (b)(3)(H), (4), (e)(1), (2). Pub. L. 108–7, § 2(b)(1)(C)(iii)(II),
(iv), (D)(i), (ii), which directed insertion of “Economic and” before
“Security”, could not be executed because “Security” does not appear.
750
Subsec. (e)(3). Pub. L. 108–7, § 2(b)(1)(D)(iii)(II), inserted “Econom-

ic and” before “Security” in second sentence.
Pub. L. 108–7, § 2(b)(1)(D)(iii)(I), which directed the amendment of
first sentence by inserting “Economic and” before “Security”, could
not be executed because “Security” does not appear.
Subsec. (e)(4), (6). Pub. L. 108–7, § 2(b)(1)(D)(iv), (v), which direct-
ed the amendment of pars. (4) and (6) by inserting “Economic and”
before “Security”, could not be executed because “Security” does not
appear.
2001—Subsec. (c)(1). Pub. L. 107–67, § 648, substituted “June” for
“March”.
Subsec. (e)(3). Pub. L. 107–67, § 645(a), inserted at end “The exec-
utive director and any personnel who are employees of the United
States-China Security Review Commission shall be employees un-
der section 2105 of title 5 for purposes of chapters 63, 81, 83, 84, 85,
87, 89, and 90 of that title.”
APPENDIX II
BACKGROUND OF COMMISSIONERS
Robin Cleveland, PhD, Chairman
Chairman Robin Cleveland was reappointed to the Commission
by Senate Republican Leader Mitch McConnell for a term expiring
December 31, 2024.
Chairman Cleveland served U.S. Senator Mitch McConnell (R-KY)
in a number of positions including in his personal office, on the Sen-
ate Select Committee on Intelligence, the Senate Foreign Relations
Committee, and as Clerk of the Foreign Operations Subcommittee
of the Senate Appropriations Committee. In 2002, Dr. Cleveland was
appointed as the Associate Director for National Security and Inter-
national Affairs in the Office of Management and Budget, Executive
Office of the President. During her tenure in the White House, Dr.
Cleveland worked to improve Department of Defense policies and
acquisition programs to ensure they effectively aligned with budget
processes. Dr. Cleveland also co-led the interagency effort to develop
and implement two Presidential initiatives: the Millennium Chal-
lenge Corporation (MCC) and the President’s Emergency Plan for
AIDS Relief (PEPFAR). MCC and PEPFAR reflect her commitment
to advance humanitarian and development goals while strength-
ening policy, performance, and resource management. In 2005, Dr.
Cleveland was appointed as Counselor to the President of the World
Bank where she had a broad policy, budget, and fund-raising portfo-
lio including debt relief programs in Africa.
After three decades of government service, Cleveland received her
PhD in Counseling. She is now in private practice and serves an as
adjunct faculty member at George Washington University (GWU).
While pursuing her degree, Dr. Cleveland was the Executive Direc-
tor of the Office of Student Life at the Graduate School of Education
and Human Development at GWU.
Chairman Cleveland graduated from Wesleyan University with
honors and received her Masters and PhD in Counseling from The
George Washington University.
Reva Price, Vice Chair

Reva Price is the former Director of Outreach and Senior Advisor
for former Speaker of the House Nancy Pelosi. During her more than
seventeen-year tenure with Speaker Pelosi, Vice Chair Price played
a central role across the spectrum of domestic and foreign policy
issues. She handled key aspects of several foreign policy portfolios
with particular emphasis on China as well as the Middle East. She
was also responsible for building relationships with a varied and
wide segment of groups, coalitions, and non-governmental organiza-
tions, strengthening communication and awareness of the Speaker’s
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752
priorities and activities to the American people. She was appointed

to the Commission by then House Speaker Nancy Pelosi for a term
expiring December 31, 2024.
Prior to working on Capitol Hill, Vice Chair Price spent more than
two decades working for non-profit organizations in Washington, DC
engaged in both domestic and international affairs. She advocated
for her organization’s policy priorities to the Congress, the Admin-
istration, and International Organizations including the OSCE and
the United Nations. She is a graduate of the State University of
New York at Binghamton.
Aaron Friedberg
Aaron Friedberg is Professor of Politics and International Affairs
at Princeton University, where he has been a member of the facul-
ty since 1987, and is co-director of Princeton’s Center for Interna-
tional Security Studies. He is also a non-resident senior fellow at
the American Enterprise Institute and a counselor to the National
Bureau of Asian Research. From 2003 to 2005 he served as a Dep-
uty Assistant for National Security Affairs in the office of the Vice
President and he was subsequently appointed to the Defense Policy
Board. In 2000–2001 he was a member of a panel tasked by Con-
gress with reviewing the CIA’s analysis of China. He has conducted
studies for a number of government agencies, including the Office
of Net Assessment in the Office of the Secretary of Defense and the
National Security Council.
In 2001–2002 Friedberg was selected as the first occupant of the
Henry A. Kissinger Chair at the Library of Congress. He has been
a research fellow at the Australian Strategic Policy Institute, the
Norwegian Nobel Institute, the Smithsonian Institution’s Woodrow
Wilson International Center for Scholars in Washington, D.C., and
Harvard University’s Center for International Affairs. He is a mem-
ber of the Council on Foreign Relations and the International Insti-
tute for Strategic Studies in London.
Friedberg is the author of several books, including A Contest for
Supremacy: China, America, and the Struggle for Mastery in Asia
(2011), Beyond Air-Sea Battle: The Debate Over U.S. Military Strat-
egy in Asia (2014), and Getting China Wrong (2022).
Dr. Friedberg received his A.B., M.A., and Ph.D. degrees from Har-
vard University.
Commissioner Friedberg was reappointed by Senate Republican
Leader Mitch McConnell for a term expiring December 31, 2025.
Kimberly T. Glas
Commissioner Kimberly Glas was reappointed by Senate Majority
Leader Charles Schumer for a term expiring December 31, 2024.
She served as Vice Chair of the Commission for the 2022 report
cycle.
Commissioner Glas joined the National Council of Textile Orga-
nizations (NCTO) in May 2019 as President and CEO representing
domestic manufacturers of textiles and apparel.
She has over two decades experience in government and policy
advocacy focused on economics, trade, and manufacturing.
753
She served as Executive Director of the BlueGreen Alliance, a

non-profit partnership of labor unions and environmental organiza-
tions. In that capacity, she led an organization that works to advance
policies to help achieve a stronger economy and a more sustainable
future at the intersection of energy, the environment, and trade.
Before leading the BlueGreen Alliance, Commissioner Glas served
as the Deputy Assistant Secretary for Textiles, Consumer Goods,
and Materials at the U.S. Department of Commerce. In that role, she
worked to improve the domestic and international competitiveness
of the broad product range of U.S. industries.
Commissioner Glas served for a decade on Capitol Hill working
extensively on manufacturing, trade, and economic policy issues for
Congressman Michael H. Michaud from Maine and Congressman
John J. LaFalce from New York. As Deputy Chief of Staff and Leg-
islative Director for Congressman Michaud, she led efforts to estab-
lish the House Trade Working Group, a key coalition of Members
of Congress that works extensively on trade policy and domestic
competitiveness issues to this day.
Ms. Glas earned a Bachelor of Arts in History and graduated sum-
ma cum laude from the State University of New York at Geneseo.
The Honorable Carte P. Goodwin

Senator Carte P. Goodwin was reappointed to the Commission by
Senate Democratic Leader Chuck Schumer for a term expiring De-
cember 31, 2025.
He is an attorney with the law firm of Frost Brown Todd, LLP
where he serves as the Partner-in-Charge of its Charleston office,
vice chair of the Appellate Practice Group, and leader of the firm’s
Industry Consultants and Advisors team. Goodwin’s practice in-
cludes litigation and appellate advocacy, and advising clients on gov-
ernment relations, regulatory matters, and commercial transactions.
He currently serves as the Chair of the West Virginia Bar Appellate
Committee and is a permanent member of the Judicial Conference
of the U.S. Court of Appeals for the Fourth Circuit. In 2020, he was
recognized by the State Bar’s philanthropic association as a West
Virginia Bar Foundation Fellow, and previously served as President
of the West Virginia Bar Association.
In July of 2010, then West Virginia Governor Joe Manchin III
appointed Goodwin to the United States Senate to fill the vacancy
caused by the passing of Senator Robert C. Byrd, where he served
until a special election was held to fill the remainder of Senator
Byrd’s unexpired term.
From 2005 to 2009, Goodwin served four years as General Coun-
sel to then Governor Manchin, during which time he also chaired
the Governor’s Advisory Committee on Judicial Nominations. In
addition, Goodwin chaired the West Virginia School Building Au-
thority and served as a member of the State Consolidated Public
Retirement Board. Following his return to private practice in 2009,
Goodwin was appointed to chair the Independent Commission on
Judicial Reform, along with former Supreme Court Justice Sandra
Day O’Connor, which was tasked with evaluating the need for broad
systemic reform to West Virginia’s judicial system.
754
Goodwin also previously worked as a law clerk for the Honorable

Robert B. King of the United States Court of Appeals for the Fourth
Circuit. A native of Mt. Alto, West Virginia, Goodwin received his
Bachelor of Arts degree in Philosophy from Marietta College in Mar-
ietta, Ohio, in 1996 and received his Doctor of Law degree from the
Emory University School of Law, graduating Order of the Coif in
1999.
Goodwin currently resides in Charleston, West Virginia, with his
wife, Rochelle; son, Wesley Patrick; and daughter, Anna Vail.
Jacob Helberg
Jacob Helberg is a Senior Advisor to the Chief Executive Officer of
Palantir Technologies and the author of The Wires of War: Technol-
ogy and the Global Struggle for Power (Simon & Schuster, October
2021). Helberg is an Adjunct Senior Fellow for the Technology and
National Security Program at CNAS and was a Senior Advisor at
the Stanford University Program on Geopolitics and Technology un-
til 2022. From 2016 to 2020, Helberg was Google’s global lead for the
company’s internal global product policy efforts to combat foreign
interference. Prior to joining Google, Helberg was a member of the
founding team of GeoQuant, a geopolitical risk forecasting technol-
ogy company acquired by Fitch Ratings. Jacob Helberg received his
M.S. in cybersecurity risk and strategy from New York University.
Commissioner Helberg was appointed to the Commission by then
House Speaker Kevin McCarthy for a term expiring December 31,
2024.
Michael Kuiken
Mike Kuiken serves as a Commissioner on the U.S.-China Eco-
nomic and Security Review Commission following nearly 23 years
in the U.S. Senate. He is also a Distinguished Visiting Fellow at
the Hoover Institution at Stanford University, an Expert Advisor at
the Strategic Competition Studies Project, and an advisor to CEOs,
boards, and senior leaders of investment, AI, defense, and technolo-
gy firms across the country.
Mike previously served as Majority Leader Schumer’s National
Security Advisor, holding the Senate’s most senior national securi-
ty staff role. He also crafted and led the successful campaign that
secured the passage of the CHIPS and Science Act and played a
key role in establishing and managing the Senate’s Artificial Intel-
ligence Insight Forums.
Prior to joining Senator Schumer’s team, Mike spent more than
12 years as a professional staff member on the Senate Armed Ser-
vices Committee.
Over the course of his career, Mike has been on the front lines
of virtually every consequential national security policy issue—the
war on terrorism, wars in Iraq and Afghanistan, crisis in Darfur,
U.S. pressure campaign against Iran, Arab Spring, conflict in Syria,
rise of the Islamic State, Benghazi, America’s rebalance to confront
China, Russia’s interference in American democracy, responding
to cyber events, Taiwan, and the ongoing conflicts in Ukraine and
Gaza. He has traveled to more than 75 countries and has visited the
frontlines of every major war zone since 9/11.
755
Mike began his career on the staff of the late Senator Carl Levin.
Commissioner Michael Kuiken was appointed to the Commission
by Senate Democratic Leader Chuck Schumer for a term expiring
December 31, 2025.
Leland R. Miller
Commissioner Leland Miller is the co-founder and CEO of China
Beige Book.
A noted authority on China’s economy and financial system, he is
a frequent commentator on major media outlets and has served as
guest host of two of the financial world’s top morning news shows,
CNBC Squawk Box and Bloomberg Surveillance. His work is fea-
tured regularly in the Wall Street Journal, New York Times, Finan-
cial Times, Washington Post and others.
Before co-founding China Beige Book in 2010, Leland was a cap-
ital markets attorney based out of New York and Hong Kong and
worked on the deal team at a global investment bank. He holds a
law degree from the University of Virginia School of Law, where he
was Hardy C. Dillard fellow and editor-in-chief of the Internation-
al Law Journal; a master’s degree in Chinese History from Oxford
University (St. Antony’s College); a BA in European History from
Washington & Lee University; and a graduate Chinese language
fellowship from Tunghai University (Taiwan). He returned to W&L
as the Williams School’s Executive-in-Residence in 2015.
Leland is an elected member of the National Committee on
U.S.-China Relations, an elected life member of the Council on For-
eign Relations, a board member of the Global Interdependence Cen-
ter, and a non-resident Senior Fellow at the Brent Scowcroft Center
on International Security at the Atlantic Council.
Commissioner Miller was appointed by Speaker Mike Johnson for
a term expiring December 31, 2025.
The Honorable Randall Schriver

Mr. Randall Schriver is the Chairman of the Board of the Project
2049 Institute and a partner at Pacific Solutions LLC. He is also
a lecturer for Stanford University’s “Stanford-in-Washington” pro-
gram, is on the Board of Advisors to the Sasakawa Peace Founda-
tion USA, and is on the Board of Directors of the US-Taiwan Busi-
ness Council.
Just prior, he served for two years as the Assistant Secretary of
Defense for Indo-Pacific Security Affairs where he led a team of
nearly one hundred professionals and was the principal advisor to
the Secretary of Defense on matters related to the Indo-Pacific re-
gion.
Prior to his Senate confirmation, Mr. Schriver was one of five
founding partners of Armitage International LLC, a consulting firm
that specializes in international business development and strate-
gies. He was also CEO and President of the Project 2049 Institute,
a non-profit research organization dedicated to the study of security
trend lines in Asia. He was also an adjunct lecturer for Stanford
University’s “Stanford-in-Washington” program where he taught a
quarter long course on U.S. foreign policy every fall and spring for
fourteen years.
756
Previously, Mr. Schriver served as Deputy Assistant Secretary

of State for East Asian and Pacific Affairs. He was responsible for
China, Taiwan, Mongolia, Hong Kong, Australia, New Zealand, and
the Pacific Islands. From 2001 to 2003, he served as Chief of Staff
and Senior Advisor to the Deputy Secretary of State. From 1994 to
1998, he worked in the Office of the Secretary of Defense, including
as the senior official responsible for U.S. bilateral relations with the
People’s Liberation Army and the bilateral security and military re-
lationships with Taiwan.
Prior to his civilian service, he served as an active duty Navy
Intelligence Officer from 1989 to 1991, including a deployment in
support of Operation Desert Shield/Desert Storm. After active duty,
he served in the Navy Reserves for nine years, including as Special
Assistant to the Chairman of the Joint Chiefs of Staff and as an
attaché at U.S. Embassies Beijing and Ulaanbaatar.
Mr. Schriver hails from Oregon and received a Bachelor of Arts
degree in history from Williams College and a Master of Arts de-
gree from Harvard University. He has won numerous military and
civilian awards from the U.S. government and was recently present-
ed with the Department of Defense Medal for Distinguished Public
Service (highest civilian award). While at the State Department he
was presented with the Order of the Propitious Clouds by the Pres-
ident of Taiwan for service promoting U.S.-Taiwan relations. He is
married to Jordan Schriver, and is father to Lucas, Rory, Brody, and
Mae.
Commissioner Schriver was reappointed by Senate Republican
Leader Mitch McConnell for a term expiring December 31, 2025.
Cliff Sims
Commissioner Cliff Sims served as Deputy Director of National
Intelligence for Strategy and Communications, helping to oversee
the 18 agencies of the U.S. intelligence community (IC) and play-
ing an integral role in shifting the IC’s funding and focus toward
the threat of a rising and adversarial China. Sims was previous-
ly Special Assistant to the President and Director of White House
Message Strategy. He has appeared on Fox News, CNN, MSNBC,
CBS, and ABC, and his opinions on national security, foreign policy,
and current events have been published in The Wall Street Journal,
Newsweek, The National Interest, and numerous other publications.
Commissioner Sims graduated Magna Cum Laude from the Univer-
sity of Alabama with a degree in Political Science and received an
Executive Certificate in Public Leadership from Harvard Universi-
ty’s John F. Kennedy School of Government.
Commissioner Sims was appointed by Speaker Mike Johnson for
a term expiring December 31, 2025.
The Honorable Jonathan N. Stivers

Commissioner Jonathan Stivers has more than 25 years of
high-level foreign policy experience in the Congress and the Admin-
istration specializing in U.S.-China relations, Asian affairs, national
security, trade and economics, international development, and hu-
man rights.
757
Jon currently is the U.S. Director at the Committee for Free-

dom in Hong Kong (CFHK) Foundation. He recently served as the
Minority Staff Director on the Select Committee on the Strategic
Competition Between the U.S. and Chinese Communist Party and
as a Professional Staff Member on the House State-Foreign Opera-
tions Appropriations Subcommittee overseeing the budgets for the
State Department and the U.S. Agency for International Develop-
ment (USAID). He also served as the Staff Director on the Congres-
sional-Executive Commission on China where he spearheaded the
Uyghur Forced Labor Prevention Act and legislation on Tibet and
Hong Kong while leading a staff of 14 researchers and analysts in
support of annual reports and policy recommendations.
In the Obama Administration, Jon served as the USAID Assistant
Administrator for the Bureau for Asia. In this Senate-confirmed po-
sition he managed a budget of approximately $1.2 billion in foreign
assistance and led a staff of approximately 1,200 development pro-
fessionals in 32 countries in East Asia and the Pacific Islands, South
Asia, and Central Asia. He testified before Congressional committees
on almost two dozen occasions on topics related to the Asia-Pacific
Rebalance policy, China’s Belt and Road Initiative, and on health,
development, humanitarian, and democracy promotion initiatives in
the region.
Prior to the Executive Branch, Jon served as Senior Advisor to
Speaker Pelosi for 15 years. He played a leadership role on numer-
ous foreign policy initiatives related to China and the Asia-Pacific
region, trade, currency manipulation, and human rights while serv-
ing in the offices of the Speaker, Democratic Leader and Whip. In
addition, he was a Senior Legislative Assistant to Rep. Pelosi when
she was the Ranking Member of the State-Foreign Operations Ap-
propriations Subcommittee and Jon was a leader in the effort to
defeat China PNTR/WTO accession. He also worked in the Office of
the Democratic Whip for former Rep. David Bonior (MI).
Jon earned a Masters of International Policy and Practice from
The Elliott School of International Affairs at The George Washing-
ton University in Asian Affairs and a Bachelor of Arts from James
Madison College at Michigan State University in International Re-
lations.
Commissioner Stivers was appointed by House Democratic Lead-
er Hakeem Jeffries for a term expiring December 31, 2025.
Michael R. Wessel
Commissioner Michael R. Wessel, an original member of the Com-
mission, was reappointed by then House Speaker Nancy Pelosi for a
term expiring December 31, 2024.
Commissioner Wessel served on the staff of former House Demo-
cratic Leader Richard Gephardt for more than two decades, leaving
his position as general counsel in March 1998. In addition, Com-
missioner Wessel was Congressman Gephardt’s chief policy advisor,
strategist, and negotiator. He was responsible for the development,
coordination, management, and implementation of the Democratic
leader’s overall policy and political objectives, with specific responsi-
bility for international trade, finance, economics, labor, and taxation.
758
During his more than 20 years on Capitol Hill, Commissioner

Wessel served in a number of positions. As Congressman Gephardt’s
principal Ways and Means aide, he developed and implemented nu-
merous tax and trade policy initiatives. He participated in the en-
actment of every major trade policy initiative from 1978 until his
departure in 1998. In the late 1980s, he was the executive director
of the House Trade and Competitiveness Task Force, where he was
responsible for the Democrats’ trade and competitiveness agenda
as well as overall coordination of the Omnibus Trade and Competi-
tiveness Act of 1988. He currently serves as staff chair of the Labor
Advisory Committee for Trade Negotiations and Trade Policy to the
USTR and Secretary of Labor.
Commissioner Wessel was intimately involved in the development
of comprehensive tax reform legislation in the early 1980s and every
major tax bill during his tenure. Beginning in 1989, he became the
principal advisor to the Democratic leadership on economic policy
matters and served as tax policy coordinator to the 1990 budget
summit.
In 1988, he served as national issues director for Congressman
Gephardt’s presidential campaign. During the 1992 presidential
campaign, he assisted the Clinton presidential campaign on a broad
range of issues and served as a senior policy advisor to the Clinton
Transition Office. In 2004, he was a senior policy advisor to the
Gephardt for President Campaign and later co-chaired the Trade
Policy Group for the Kerry presidential campaign. In 2008, he was
publicly identified as a trade and economic policy advisor to the
Obama presidential campaign and advised the Clinton campaign in
2016 and Biden campaign in 2020.
He coauthored a number of articles with Congressman Gephardt
and a book, An Even Better Place: America in the 21st Century. Com-
missioner Wessel served as a member of the U.S. Trade Deficit Re-
view Commission in 1999–2000, a congressionally created commis-
sion charged with studying the nature, causes, and consequences of
the U.S. merchandise trade and current account deficits.
Today, Commissioner Wessel is President of The Wessel Group
Incorporated, a public affairs consulting firm offering expertise in
government, politics, and international affairs. Commissioner Wes-
sel holds a Bachelor of Arts and a Juris Doctorate from The George
Washington University. He is a member of the Bars of the District
of Columbia and of Pennsylvania and is a member of the Council on
Foreign Relations. He and his wife Andrea have four children and
two grandchildren.

Mike Castellano joined the Commission as Executive Director in
May 2024. Previously, he was serving as Senior Advisor to the Under
Secretary of Commerce for Industry & Security (BIS), where he led
various special projects and stakeholder outreach relating to export
control policy and the Information and Communications Technology
and Services (ICTS) authority for the Office of the Under Secretary.
Mike spent the prior 20 years focused heavily on international
trade policy, including extensive work on China. Ten of those years
were as Vice President, Government Relations at the Walt Disney
759
Company, focusing on Disney’s international policy agenda. While

working for Disney he served on the International Trade Adviso-
ry Committee for Intellectual Property, advising the Department of
Commerce and the U.S. Trade Representative on international trade
policy. Before Disney, Mike spent ten years on Capitol Hill. Six of
those years he worked for Senate Majority/Minority Leader Har-
ry Reid, ending as Senior Counsel & Senior Policy Advisor, where
he was responsible for issues of international trade and related in-
ternational economic policy, including a significant focus on China,
intellectual property rights and cyber security (commercial side),
among other areas. The previous four years Mike worked as Trade
Counsel for the Committee on Ways & Means Democrats and Tax
& Trade Counsel for U.S. Representative Sandy Levin covering the
full scope of international trade policy issues.
Michael started his career clerking for Judge Francis Murnaghan
of the U.S. Court of Appeals for the Fourth Circuit, followed by a
stint practicing international trade law at petitioner’s law firm Dew-
ey Ballantine, LLP. He received his J.D. magna cum laude from
Harvard Law School, M.A.L.D. from the Fletcher School of Law and
Diplomacy, and B.A. with honors in political science from Johns
Hopkins University.
APPENDIX III
PUBLIC HEARINGS OF THE COMMISSION
Full transcripts and written testimonies are available online at

the Commission’s website: www.USCC.gov.
February 1, 2024: Public Hearing on

“Current and Emerging Technologies in U.S.-China
Economic and National Security Competition”
Washington, DC
Commissioners present: Robin Cleveland, Acting Chairman; Aar-
on Friedberg; Kimberly T. Glas; Jacob Helberg (Hearing Co-Chair);
Reva Price, Vice Chair; Hon. Randall Schriver; Michael R. Wessel
(Hearing Co-Chair).
Witnesses: Nazak Nikakhtar, Wiley Rein LLP; Ivan Tsarynny,
Feroot Security; Jack Corrigan, Center for Security and Emerging
Technology; Jacob Stokes, Center for a New American Security; Na-
than Beauchamp-Mustafaga, RAND Corporation; Edward Parker,
RAND Corporation; Ngor Luong, Center for Security and Emerg-
ing Technology; Michelle Rozo, National Security Commission on
Emerging Biotechnology; Jeffrey Nadaner, Govini; Christoph He-
beisen,* Lookout.
March 1, 2024: Public Hearing on
“Consumer Products from China: Safety, Regulations,
and Supply Chains”
Washington, DC
Commissioners present: Robin Cleveland, Chairman (Hearing Co-
Chair); Aaron Friedberg; Kimberly T. Glas (Hearing Co-Chair); Le-
land R. Miller; Reva Price, Vice Chair; Hon. Randall Schriver; Cliff
Sims; Michael R. Wessel.
Witnesses: James Joholske, U.S. Consumer Product Safety Com-
mission; Teresa Murray, U.S. Public Interest Research Group; Dan-
iel Shapiro, Red Points; Dan Harris, Harris Sliwoski LLP; Edmund
Malesky, Duke University; Rebecca Ray, Boston University Global
Development Policy Center; Elizabeth Drake, Schagrin Associates;
Gordon Hanson, Harvard Kennedy School; François Chimits, Mer-
cator Institute for China Studies and Centre d’Etudes Prospectives
et d’Informations Internationales; Adam Wolfe, Absolute Strategy
Research.
* Did not appear in person but submitted material for the record.
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762
March 21, 2024: Public Hearing on

“China’s Evolving Counter Intervention Capabilities and
Implications for the United States and Indo-Pacific Allies
and Partners”
Washington, DC
Commissioners present: Robin Cleveland, Chairman; Aaron Fried-
berg; Kimberly T. Glas; Jacob Helberg; Leland R. Miller; Reva Price,
Vice Chair (Hearing Co-Chair); Hon. Randall Schriver (Hearing Co-
Chair); Cliffs Sims; Hon. Jonathan N. Stivers; Michael R. Wessel.
Witnesses: Thomas Shugart, Center for a New American Security;
J. Michael Dahm, Mitchell Institute for Aerospace Studies; Cristina
Garafola, RAND Corporation; Maryanne Kivlehan-Wise, Center for
Naval Analyses; Christopher Johnstone, Center for Strategic and In-
ternational Studies; Caitlin Lee, RAND Corporation; Tetsuo Kotani,
Meikai University and Japan Institute of International Affairs; Ed-
cel Ibarra, University of the Philippines Diliman; Bec Shrimpton,
Australian Strategic Policy Institute.
April 19, 2024: Public Hearing on
“China and the Middle East”
Washington, DC
berg (Hearing Co-Chair); Kimberly T. Glas; Jacob Helberg; Leland
R. Miller; Reva Price, Vice Chair; Hon. Randall Schriver; Cliff Sims;
Hon. Jonathan N. Stivers (Hearing Co-Chair).
Witnesses: Erica Downs, Center on Global Energy Policy at Colum-
bia University; Mohammed Soliman, Middle East Institute; Karen
Young, Center on Global Energy Policy at Columbia University; Jona-
than Fulton, Atlantic Council; Jon Alterman, Center for Strategic and
International Studies; Dawn Murphy, U.S. National War College; Grant
Rumley, Washington Institute for Near East Policy; Maria Papageor-
giou, University of Exeter; Alessandro Arduino, King’s College London.
May 23, 2024: Public Hearing on
“Key Economic Strategies for Leveling the U.S.-China
Playing Field: Trade, Investment, and Technology”
Washington, DC
berg; Kimberly T. Glas; Jacob Helberg; Michael Kuiken; Leland R.
Miller (Hearing Co-Chair); Reva Price, Vice Chair; Hon. Randall
Schriver; Cliff Sims; Hon. Jonathan N. Stivers; Michael R. Wessel
(Hearing Co-Chair).
Witnesses: Jamieson Greer, King & Spalding LLP; Mary Lovely,
Peterson Institute for International Economics; Davin Chor, Tuck
School of Business at Dartmouth College; Kevin Wolf, Akin; Giovan-
na Cinelli, National Security Institute at George Mason University;
Peter Harrell, Carnegie Endowment for International Peace; Derek
Scissors, American Enterprise Institute; Emily Kilcrease, Center for
a New American Security; Deborah Elms, Hinrich Foundation; Pepe
Zhang, Atlantic Council; Julia Friedlander, Atlantik-Brücke; Sarah
Bauerle Danzman,* Indiana University Bloomington.
763
June 13, 2024: Public Hearing on

“China’s Stockpiling and Mobilization Measures for
Competition and Conflict”
Washington, DC
berg; Kimberly T. Glas; Hon. Carte P. Goodwin (Hearing Co-Chair);
Jacob Helberg; Michael Kuiken; Leland R. Miller; Reva Price, Vice
Chair; Hon. Randall Schriver; Cliff Sims (Hearing Co-Chair); Mi-
chael R. Wessel.
Witnesses: Manoj Kewalramani, Takshashila Institution; Katja
Drinhausen, Mercator Institute for China Studies; Lauri Paltemaa,
University of Turku; Gustavo Ferreira, U.S. Department of Agricul-
ture; Gabriel Collins, Baker Institute; Zongyuan Zoe Liu, Council
on Foreign Relations; Timothy Heath, RAND Corporation; Devin
Thorne, Recorded Future; Gregory Wischer,* Dei Gratia Minerals.
APPENDIX IIIA
LIST OF WITNESSES TESTIFYING BEFORE
THE COMMISSION
2024 Hearings
Full transcripts and written testimonies are available online at

the Commission’s website: www.USCC.gov.
Alphabetical Listing of Witnesses Testifying before the

Commission
Witness Name Witness Affiliation Hearing Date

Alterman, Jon Center for Strategic and Interna- April 19, 2024
tional Studies
Arduino, Alessandro King’s College London April 19, 2024
Bauerle Danzman, Indiana University Bloomington May 23, 2024

Sarah *
Beauchamp-Mustafaga, RAND Corporation February 1, 2024
Nathan
Chimits, François Mercator Institute for China March 1, 2024
Studies and Centre d’Etudes
Prospectives et d’Informations
Internationales
Chor, Davin Tuck School of Business at Dart- May 23, 2024
mouth College
Cinelli, Giovanna National Security Institute at May 23, 2024
George Mason University
Collins, Gabriel Baker Institute June 13, 2024
Corrigan, Jack Center for Security and Emerging February 1, 2024

Technology
Dahm, J. Michael Mitchell Institute for Aerospace March 21, 2024
Studies
Downs, Erica Center on Global Energy Policy at April 19, 2024
Columbia University
Drake, Elizabeth Schagrin Associates March 1, 2024
Drinhausen, Katja Mercator Institute for China Stud- June 13, 2024
ies
* Did not attend in person but submitted material for the record
(765)
766

Commission—Continued

Elms, Deborah Hinrich Foundation May 23, 2024
Ferreira, Gustavo U.S. Department of Agriculture June 13, 2024
Friedlander, Julia Atlantik-Brücke May 23, 2024
Fulton, Jonathan Atlantic Council April 19, 2024
Garafola, Cristina RAND Corporation March 21, 2024
Greer, Jamieson King & Spalding LLP May 23, 2024
Hanson, Gordon Harvard Kennedy School March 1, 2024
Harrell, Peter Carnegie Endowment for Interna- May 23, 2024

tional Peace
Harris, Dan Harris Sliwoski LLP March 1, 2024
Heath, Timothy RAND Corporation June 13, 2024
Hebeisen, Christoph * Lookout February 1, 2024
Ibarra, Edcel University of the Philippines Dili- March 21, 2024

man
Johnstone, Christopher Center for Strategic and Interna- March 21, 2024
tional Studies
Joholske, James U.S. Consumer Product Safety March 1, 2024
Commission
Kewalramani, Manoj Takshashila Institution June 13, 2024
Kilcrease, Emily Center for a New American Secu- May 23, 2024
rity
Kivlehan-Wise, Center for Naval Analyses March 21, 2024
Maryanne
Kotani, Tetsuo Meikai University and Japan Insti- March 21, 2024
tute of International Affairs
Lee, Caitlin RAND Corporation March 21, 2024
Liu, Zongyuan Zoe Council on Foreign Relations June 13, 2024
Lovely, Mary Peterson Institute for International May 23, 2024

Economics
Luong, Ngor Center for Security and Emerging February 1, 2024
Technology
Malesky, Edmund Duke University March 1, 2024
Murphy, Dawn U.S. National War College April 19, 2024
Murray, Teresa U.S. Public Interest Research Group March 1, 2024
767

Commission—Continued

Nadaner, Jeffrey Govini February 1, 2024
Nikakhtar, Nazak Wiley Rein LLP February 1, 2024
Paltemaa, Lauri University of Turku June 13, 2024
Papageorgiou, Maria University of Exeter April 19, 2024
Parker, Edward RAND Corporation February 1, 2024
Ray, Rebecca Boston University Global Develop- March 1, 2024

ment Policy Center
Rozo, Michelle National Security Commission on February 1, 2024
Emerging Biotechnology
Rumley, Grant Washington Institute for Near East April 19, 2024
Policy
Scissors, Derek American Enterprise Institute May 23, 2024
Shapiro, Daniel Red Points March 1, 2024
Shrimpton, Bec Australian Strategic Policy Institute March 21, 2024
Shugart, Thomas Center for a New American March 21, 2024

Security
Soliman, Mohammed Middle East Institute April 19, 2024
Stokes, Jacob Center for a New American February 1, 2024

Security
Thorne, Devin Recorded Future June 13, 2024
Tsarynny, Ivan Feroot Security February 1, 2024
Wischer, Gregory * Dei Gratia Minerals June 13, 2024
Wolf, Kevin Akin May 23, 2024
Wolfe, Adam Absolute Strategy Research March 1, 2024
Young, Karen Center on Global Energy Policy at April 19, 2024

Columbia University
Zhang, Pepe Atlantic Council May 23, 2024
APPENDIX IV
LIST OF RESEARCH MATERIAL
Contracted and Staff Research Reports Released
in Support of the 2024 Annual Report
Disclaimer
The reports listed in this appendix were prepared at the request
of the Commission to supports its deliberations. They have been
posted to the Commission’s website to promote greater public
understanding of the issues addressed by the Commission in its
ongoing assessment of U.S.-China economic relations and their
implications for U.S. national security, as mandated by Public
Law No. 106–398, and amended by Public Laws No. 107–67, No.
108–7, No. 109–108, No. 110–161, No. 113–291, and No. 117–286.
The posting of these reports to the Commission’s website does
not imply an endorsement by the Commission or any individual
Commissioner of the views or conclusions expressed therein.
Contracted Reports
Censorship Practices of the People’s Republic of China
Prepared for the Commission by Kieran Green, Andrew Sprott, Ed
Francis, Dr. Brian Lafferty, Hartley Wise, Molly Henry, Grace
Faerber, and Frank Miller
Exovera
February 2024
https://www.uscc.gov/research/censorship-practices-peoples-
republic-china
Staff Research Reports, Issue Briefs, and Backgrounders

Humanoid Robots
October 2024
https://www.uscc.gov/research/humanoid-robots
China’s Foreign Missions in the United States
Written by former Policy Analyst Lauren (Greenwood) Menon and
Congressional Liaison Jonathan Roberts
July 2024
https://www.uscc.gov/research/chinas-foreign-missions-united-
states
(769)
770
China’s Position on Russia’s Invasion of Ukraine

April 2022 to April 2024 (Periodically updated)
https://www.uscc.gov/research/chinas-position-russias-invasion-
ukraine
PRC in International Organizations
November 2023 and February 2024 (Periodically updated)
https://www.uscc.gov/research/prc-international-organizations
Chinese Companies Listed on Major U.S. Stock Exchanges
January 2024 (Periodically updated)
https://www.uscc.gov/research/chinese-companies-listed-major-us-
stock-exchanges
Women in China’s Leadership
Written by Director of Research and Policy Analyst Sierra Janik,
Policy Analyst Nicole Morgret, Policy Analyst Daniel Blaugher,
and former Director Jonathan Ray
December 2023 (Update)
https://www.uscc.gov/research/women-chinas-leadership
China’s Global Police State: Background and U.S. Policy
Implications
Written by Policy Fellow Andrew Hartnett, Policy Analyst Nicole
Morgret, and Senior Policy Analyst Rachael Burton
December 2023
https://www.uscc.gov/research/chinas-global-police-state-
background-and-us-policy-implications
APPENDIX V
CONFLICT OF INTEREST AND LOBBYING
DISCLOSURE REPORTING
The Commission seeks to hold itself to the highest standards of

transparency in carrying out its mission. In accordance with its
policy for avoiding conflicts of interest, Commissioners who believe
they have an actual or perceived conflict of interest must recuse
themselves from the source or subject matter of the conflict. The
following Commissioners recused themselves from the portions of
the 2024 Report cycle below.
• Commissioner Jonathan N. Stivers recused himself from Com-
mission activities that include the direct participation of the
Committee for Freedom in Hong Kong (CFHK) Foundation,
including a Commission briefing relating to Hong Kong which
included an employee of the CFHK Foundation.
• Commissioner Michael R. Wessel recused himself from Commis-
sion activities relating to the following two matters: the trade
remedy cases involving certain solar imports from Cambodia,
Malaysia, Thailand, and Vietnam filed in April 2024 and the
Section 301 case relating to shipbuilding sectors filed March
2024.
Lobbying disclosure reports filed by any Commissioners who en-
gage in “lobbying activities” as defined by the Lobbying Disclosure
Act in connection with their outside employment activities may be
accessed via public databases maintained by the House (https://
lobbyingdisclosure.house.gov/) and Senate (https://lda.senate.gov/
system/public/).
(771)
APPENDIX VI
ACRONYMS AND ABBREVIATIONS
A2/AD Anti-Access/Area Denial

ABO access, basing, and overflight
ACD Archipelagic Coastal Defense
ACE Agile Combat Employment
AD/CVD antidumping and countervailing duty
ADB Asian Development Bank
ADF Australian Defense Force
ADIZ air defense identification zone
AECA Arms Export Control Act
AECC Aero Engine Corporation of China
AES Advanced Encryption Standard
AEW&C airborne early warning and control
AI artificial intelligence
AmCham American Chamber of Commerce
ANPRM Advance Notice of Proposed Rulemaking
ANZUS Australia, New Zealand, and the United States
ARATS Association for Relations Across the Taiwan Straits
ARM anti-radiation missile
ASBM anti-ship ballistic missile
ASD’s ACSC Australian Signals Directorate’s Australian Cyber
Security Centre
ASEAN Association of Southeast Asian Nations
ASPI Australian Strategic Policy Institute
ASW anti-submarine warfare
AUD Australian dollars
AUKUS Australia, United Kingdom, United States
AVIC Aviation Industry Corporation of China
bcm billion cubic meters
BEA U.S. Bureau of Economic Analysis
BESS battery energy storage system
BfV German Federal Office for the Protection of the
Constitution
BIO Biotechnology Innovation Organization
BIS Bureau of Industry and Security
BND German Federal Intelligence Service
BNO British National Overseas
BRI Belt and Road Initiative
BRICS Brazil, Russia, India, China, South Africa
C4ISR Command, Control, Communications, Computers,
Intelligence, Surveillance, and Reconnaissance
CAA Civil Aeronautics Administration
CAAC Civil Aviation Administration of China
(773)
774
CAC Cyberspace Administration of China

CAICT Chinese Academy of Information and
Communications Technology
CANN Compute Architecture for Neural Networks
CASCF China-Arab States Cooperation Forum
CATL Contemporary Amperex Technology Co., Ltd
CBDC Central Bank Digital Currency
CBP U.S. Customs and Border Protection
CCDI Central Commission for Discipline Inspection
CCG China Coast Guard
CCP Chinese Communist Party
CDMO contract development and manufacturing
organization
CDS Cross Domain Solutions
CEE Central and Eastern Europe
CELAC Community of Latin American and Caribbean
States
CFHK Committee for Freedom in Hong Kong
CGA Coast Guard Administration (Taiwan)
China- China-Community of Latin American and
CELAC Caribbean States
CHIPS Clearing House Interbank Payments System
CHPL Common High Priority List
CICIR China Institutes of Contemporary International
Relations
CIPS Cross-Border Interbank Payments System
CISA U.S. Cybersecurity and Infrastructure Security
Agency
CMC Central Military Commission
CMO contract manufacturing organization
CNA Central News Agency (Taiwan)
CNC Computer Numerically Controlled
CNH RMB for offshore market outside mainland China
CNPC China National Petroleum Corporation
CNSC Central National Security Commission
CNY RMB for onshore market in mainland China
COFA Compact of Free Association
COMAC Commercial Aircraft Corporation of China, Ltd.
CONUS Continental United States
CPI consumer price index
CPIS Coordinated Portfolio Investment Survey
CPPCC Chinese People’s Political Consultative Conference
CPSC Consumer Product Safety Commission
CPSIA Consumer Product Safety Improvement Act
CPTPP Comprehensive and Progressive Trans-Pacific
Partnership
CRDMO contract research, development, and manufacturing
organization
CRO contract research organization
CSCEC China State Construction Engineering Corporation
CSET Center for Strategic and Emerging Technology
CSRC China Securities Regulatory Commission
CUHK Chinese University of Hong Kong
775
DARPA U.S. Defense Advanced Research Projects Agency

DEWA Dubai Electricity and Water Authority
DFC U.S. International Development Finance
Corporation
DMO Distributed Maritime Operations
DOD U.S. Department of Defense
DPP Democratic Progressive Party
DSR Digital Silk Road
EA electronic attack
EABO Expeditionary Advanced Base Operations
EAPA Enforce and Protect Act
EAR Export Administration Regulations
ECCN Export Control Classification Number
ECFA Economic Cooperation Framework Agreement
ECRA Export Control Reform Act
EDCA Enhanced Defense Cooperation Agreement
EDWC Eastern Data Western Computing
EEZ exclusive economic zone
EO executive order
EO/IR electro-optical/infrared
EP electronic protection
ETF exchange-traded fund
EU European Union
EV electric vehicle
EW electronic warfare
FAS Freely Associated States
FBA Fulfillment by Amazon
FBI U.S. Federal Bureau of Investigation
FCA False Claims Act
FCC Federal Communications Commission
FCS fire control systems
FDA Food and Drug Administration
FDI foreign direct investment
FDPR Foreign Direct Product Rule
FEOC Foreign Entity of Concern
FIE foreign-invested enterprise
FIRRMA Foreign Investment Risk Review Modernization Act
FLOP floating point operation
FMF foreign military financing
FMS Foreign Military Sales
FOCAC Forum on China-Africa Cooperation
FTZ foreign trade zone
FX foreign exchange
FY fiscal year
GAC General Administration of Customs
GAO U.S. Government Accountability Office
GBA Greater Bay Area
GCC Gulf Cooperation Council
GDP gross domestic product
GE genetically engineered
GEA Global Express Association
GMO genetically modified organism
GPS Global Positioning System
776
GPU graphic processing unit

GSOMIA General Security of Military Information
Agreement
GW gigawatt
GWh gigawatt hour
HF high frequency
HFNL Hefei National Laboratory for Physical Sciences at
the Microscale
HIMARS High Mobility Artillery Rocket System
HKD Hong Kong dollars
HKDC Hong Kong Democracy Council
HKETO Hong Kong Economics and Trade Office
HKIC Hong Kong Investment Corporation
HKJA Hong Kong Journalists Association
HKMA Hong Kong Monetary Authority
HTS Harmonized Tariff System
IC intelligence community
ICAO International Civil Aviation Organization
ICTS information and communications technology and
services
IEEPA International Emergency Economic Powers Act
ILAC-MRA International Laboratory Accreditation Cooperation-
Mutual Recognition Arrangement
IMEC India-Middle East-Europe Economic Corridor
IMF International Monetary Fund
IMO International Maritime Organization
INDSR Institute for National Defense and Security
Research
IP intellectual property
IPAC Inter-Parliamentary Alliance on China
IPEF Indo-Pacific Economic Framework for Prosperity
IPO initial public offering
IPR intellectual property rights
IRBM intermediate-range ballistic missile
ISR intelligence, surveillance, and reconnaissance
IT information technology
ITIF Information Technology and Innovation Foundation
JADC2 Joint All-Domain Command and Control
JJOC Japan Self-Defense Forces Joint Operations
Command
JLSF Joint Logistics Support Force
JORC Judicial Officers Recommendation Commission
JTIDS Joint Tactical Information Distribution System
KMT Kuomintang
LAT Lot Acceptance Testing
LEO low Earth orbit
LGFV local government financing vehicle
LLM large language model
LNG liquified natural gas
LOA Letter of Offer and Acceptance
LSD League of Social Democrats
M&A mergers and acquisitions
MAC Mainland Affairs Council
777
MDO Multi-Domain Operations

MENA Middle East and North Africa
MIC Made in China
MIDS-LVT Multifunctional Information Distribution Systems-
Low Volume Terminals
MIIT Ministry of Industry and Information Technology
MIT Massachusetts Institute of Technology
MLP Medium- to Long-Term Program
MND Ministry of National Defense
MOE mixed-ownership enterprise
MOF Ministry of Finance
MOFCOM Ministry of Commerce
MOU memorandum of understanding
MRLS Multiple Rocket Launch System
MSS Ministry of State Security
MTCR Missile Technology Control Regime
MW megawatt
NATO North Atlantic Treaty Organization
NBC nuclear, biological, and chemical
NCSC-UK United Kingdom National Cyber Security Centre
NCSIST National Chung-Shan Institute of Science and
Technology
NDA National Data Administration
NDAA National Defense Authorization Act
NDM National Defense Mobilization
NDMC National Defense Mobilization Commission
NDTL National Defense Transportation Law
NEA National Energy Administration
NETF Naval Escort Task Force
NGO nongovernmental organization
NICPN nationally integrated computing power network
NIS Republic of Korea’s National Intelligence Service
NISC Japan’s National Center of Incident Readiness and
Strategy for Cybersecurity
NOV Notice of Violation
NPA Japan’s National Police Agency
NPC National People’s Congress
NPL non-performing loan
NPRM Notice of Proposed Rulemaking
NSA U.S. National Security Agency
NSL National Security Law
NSP New Southbound Policy
NSS National Security Strategy
NTD New Taiwan dollar
NTESS new-type energy storage system
NYSE New York Stock Exchange
OCONUS Outside the Continental United States
ODA official development assistance
OECD Organisation for Economic Co-operation and
Development
OODA observe-orient-decide-act
OS operating system
OTC over-the-counter
778
OTH over-the-horizon
PACER publicly available electronic docket
PAP People’s Armed Police
PBOC People’s Bank of China
PCAOB Public Company Accounting Oversight Board
PCT Patent Cooperation Treaty
PDA Presidential Drawdown Authority
PGII Partnership for Global Infrastructure and
Investment
PIF Public Investment Fund
PILS Pneumatic Integrated Launch Systems
PLA People’s Liberation Army
POW prisoner of war
PRC People’s Republic of China
PV photovoltaic
QC quality control
QED-C Quantum Economic Development Consortium
QIS quantum information science
QKD quantum key distribution
R&D research and development
RFA Radio Free Asia
RMB renminbi
ROC Republic of China
ROK Republic of Korea
RSA Rivest-Shamir Adleman (algorithm)
RSF Reporters Without Borders
SAMR State Administration for Market Regulation
SAR synthetic aperture radar
SAR Special Administrative Region
SASAC State-Owned Assets Supervision and
Administration Commission of the State Council
SCMP South China Morning Post
SCO Shanghai Cooperation Organization
SDN Specially Designated Nationals
SDR Special Drawing Rights
SEF Straits Exchange Foundation
SHIP Stop Harboring Iranian Petroleum
SIGINT signals intelligence
SMIC Semiconductor Manufacturing International
Corporation
SOE state-owned enterprise
SOFA Status of United States Forces in Australia
SOPA Society of Publishers in Asia
SPR Strategic Petroleum Reserve
SWIFT Society for Worldwide Interbank Financial
Telecommunication
TEDA Tianjin Economic-Technological Development Area
TEU twenty-foot equivalent unit
TIC Treasury International Capital
TPP Taiwan People’s Party
TSMC Taiwan Semiconductor Manufacturing Company
TTC U.S.-EU Trade and Technology Council
TWh terawatt hour
779
TWSE Taiwan Stock Exchange

U.S. United States
UAE United Arab Emirates
UAS unmanned aerial system
UAV unmanned aerial vehicle
UBO ultimate beneficial owner
UFLPA Uyghur Forced Labor Prevention Act
UHF ultra-high frequency
UHV ultra-high vacuum
UK United Kingdom
UN United Nations
UNCLOS United Nations Convention on the Law of the Sea
UNIFIL United Nations Interim Force in Lebanon
UNSC United Nations Security Council
UNTSO United Nations Truce Supervision Organization
USDA U.S. Department of Agriculture
USFJ U.S. Forces Japan
USITC U.S. International Trade Commission
USMCA United States-Mexico-Canada Agreement
USTR Office of the U.S. Trade Representative
UUV uncrewed underwater vehicle
VAT value-added tax
VC venture capital
VFA Visiting Forces Agreement
VHF very-high frequency
VIE variable interest entity
WTO World Trade Organization
XUAR Xinjiang Uyghur Autonomous Region
YMTC Yangtze Memory Technologies Corp
781
2024 COMMISSION STAFF

Christopher P. Fioravante, Deputy Executive Director
Sarah M. Anderson, Operations Specialist

Graham E. Ayres, Policy Analyst, Economics and Trade
Daniel Blaugher, Policy Analyst, Economics and Trade
Rachael Burton, Acting Co-Director, Security and Foreign Affairs
Jameson Cunningham, Director, Congressional Affairs and Communications
Matthew J. Dagher-Margosian, Policy Analyst, Economics and Trade
Benton Gordon, Research Assistant, Economics and Trade
Niels Graham, Policy Analyst, Economics and Trade
Walter Hutchens, Director, Economics and Trade
Sierra Janik, Acting Co-Director, Security and Foreign Affairs
Ryan Mangefrida, Policy Analyst, Security and Foreign Affairs
Zoe Merewether, Policy Analyst, Economics and Trade
Nicole Morgret, Policy Analyst, Security and Foreign Affairs
Jack Neubauer, Policy Analyst, Security and Foreign Affairs
Jonathan Roberts, Congressional Liaison
Evan J. Ulman, Administrative Assistant
Cindy Zheng, Policy Analyst, Security and Foreign Affairs
ACKNOWLEDGEMENTS
The Commission would like to express its deep appreciation to those who testified
as expert witnesses, the researchers and analysts who prepared papers under con-
tract, and the representatives from the executive branch and others who briefed the
Commissioners on a wide array of economic and security issues. All of these efforts
informed the Commission and the public debates on issues vital to ongoing U.S.-Chi-
na relations.
The Commission offers it special thanks to General Michael E. Kurilla, U.S. Cen-
tral Command; General Bryan P. Fenton, U.S. Special Operations Command; then
Acting Director Jeremy Cornforth, American Institute in Taiwan; then Deputy Chief
of Mission Raymond F. Greene, U.S. Embassy in Tokyo; and Admiral Samuel J. Pap-
aro, U.S. Indo-Pacific Command, and their staffs for their outstanding support of the
Commission’s fact-finding trips this year.
The Commissioners are deeply grateful to the service and expertise of the staff
who develop materials for our hearings, research papers, and Annual Report. Each
person brings a unique perspective, expertise, and dedication to the Commission and
country, which every Commissioner has benefited from as we seek to understand U.S.
relations with China. We are also grateful to the congressional and administrative
teams, which offer experienced and capable support ensuring the Commission’s hear-
ings, congressional engagement, and daily operations run smoothly.
Finally, the Commissioners express their thanks to Erin Mulligan, who served as
a copyeditor of the Report, to Tyler Loveless, who served as a fact-checker of the Re-
port, to former Security and Foreign Affairs Director Anastasya Lloyd-Damnjanovic,
and to former staffers Andrew Hartnett, Nicholas Kaufman, Lauren Menon, and Au-
brey Waddick who each made significant contributions to the 2024 Report cycle. The
Commissioners are especially grateful to former executive director Daniel W. Peck for
his leadership of the Commission’s staff (2018–2024).

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2024

U.S.-CHINA ECONOMIC AND

Printed for the use of the

U.S.-CHINA ECONOMIC AND

Printed for the use of the

u.s. government publishing office

For sale by the Superintendent of Documents, U.S. Government Publishing Office

ROBIN CLEVELAND, Chairman

Michael Castellano, Executive Director

November 19, 2024

Robin Cleveland Reva Price

Robin Cleveland, Chairman Reva Price, Vice Chair

Aaron Friedberg, Commissioner Kimberly T. Glas, Commissioner

Carte P. Goodwin, Commissioner Jacob Helberg, Commissioner

Michael Kuiken, Commissioner Leland R. Miller, Commissioner

Randall Schriver, Commissioner Cliff Sims, Commissioner

Jonathan N. Stivers, Commissioner Michael R. Wessel, Commission

2024 Report to Congress of the

Part I: The Year in Review ................................................................................. 31

proaches. Designed to strengthen self-sufficiency and achieve global

equate to about 90 percent of that country’s government budget, en-

opportunistically to win energy concessions and promote alterna-

do not have. A combination of slowing growth post-pandemic

tools, and microelectronics—all while claiming to play a leading

Part II: Technology and Consumer Product

• China’s state-centric approach and heavy investments in do-

systems and developing advanced radar technology, claims that

of their imports to dodge higher tariffs on products from China. Du-

data, personnel, and overwhelming volume mean these ship-

Part III: Competition and Conflict

mains securing steady flows of energy resources, with between

policymakers have actively explored creating an outbound in-

and resilience in the case of hostilities. Recent changes have made

• China is taking measures to enhance its financial security, chal-

technologies may threaten the United States’ ability to access

Part IV: Taiwan and Hong Kong

of Taiwan travelers to the Mainland. Soon after Lai’s inauguration,

• China has intensified its military coercion around Taiwan, aim-

Chapter 10: Hong Kong

which historically have supported Hong Kong’s status as a global

THE COMMISSION’S 2024 KEY

datasets and modern data analytic systems; and hire ad-

○ Participating in pharmaceutical development;

CPSC has evidence of a substantial product hazard, defined

of the CCP Xi Jinping’s vision for future economic growth in

China’s focus on manufacturing stems from a long tradition of

shifts to support new manufacturers, this share is likely trending

cent, respectively.* 25 Even with these export surges, the country’s

from incurring additional debt until they reduced their liabilities

Real estate starts

Real estate sales

In 2024, Chinese officials focused on targeted policies that

over-month new home prices, excluding state-subsidized housing,

ments will likely take advantage of $138 billion (RMB 1 trillion)

through business operations as a balance sheet asset, including

Lukewarm Policy Support for Alternative Growth Drivers

Chinese Consumption Data Are Contentious

China remains reliant on manufacturing, exports, and the

fer-style stimulus program.* 148 Furthermore, because of China’s