U.S. - China Relations

In recent years, tensions between the United States and China have introduced new challenges—especially related to economic and defense issues. China is a critical trading partner for the United States but is also a major competitor. China’s harmful and unfair economic practices, including trade in illicit goods, use of forced labor, and theft of sensitive technologies pose risks to the U.S. economic and security interests. China is also developing its military capabilities, posing challenges to the U.S. military. Additionally, nearly a third of foreign students and scholars in the U.S. are from China and have made substantial contributions to university research efforts. These students and scholars are involved in developing many of the nation’s leading-edge civilian and defense-related technologies. However, there is a concern that some foreign students and scholars will "export" sensitive information to their home countries, which may be hostile to U.S. interests. 

Federal agencies could improve how they address these and other issues related to U.S.-China relations. 

For example:

• Steel and aluminum tariffs. A 2018 investigation by the Commerce Department found that the domestic economy and global free markets were adversely affected by substantial chronic global excess steel production led by China.  In response, the President placed tariffs on some imports of steel and aluminum products from China (and other countries) in 2018. Commerce can exclude some products from these tariffs in certain circumstances. However, Commerce rejected thousands of requests for exclusion because companies made errors in their applications. The agency also did not decide most of the requests in a timely manner. Commerce made changes to its procedures for deciding such requests, but it did not update its public guidance to reflect these changes.
• Protecting U.S. research. Universities perform important research on behalf of the U.S. government, though these efforts face certain challenges and risks. U.S. agencies have identified several factors indicating the types of students—such as being from a country of concern like China—who may pose a greater risk of transferring technology to foreign entities. Conflict of interest policies require researchers to disclose information that may indicate potential conflicts and help to address potential threats. However, federal grant-making agencies need to improve such policies to protect U.S. research from undue foreign influence.
• Enforcement at universities. Enforcement agencies involved in addressing threats to university research have underscored the importance of education and outreach, and they have targeted their outreach by analyzing risk factors to identify universities at greater risk. However, Commerce’s enforcement office has not implemented a mechanism to periodically reassess these risk factors in light of new and evolving threats. Further, universities report challenges working with DOD because of DOD officials’ inconsistent interpretation of export controls, including how to assess whether a university is engaging in fundamental research.  

Physical Security Mechanisms Selected Universities Employ to Safeguard Export-Controlled Items

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• Drug manufacturing. China was also one of the countries with the most establishments manufacturing drugs for the U.S. market in 2021. The Food and Drug Administration (FDA) inspects foreign and domestic drug manufacturers to ensure drug safety and effectiveness. But FDA temporarily postponed almost all inspections of foreign manufacturing establishments in March 2020 due to COVID-19. While the agency resumed inspections in China and other countries, it faced an inspection backlog resulting from the postponement. 

Number of Establishments in the U.S. and the 10 Countries with the Most Foreign Establishments Manufacturing Drugs for the U.S. Market as of January 2024

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• National defense. The 2022 National Defense Strategy prioritizes deterring aggression from China—the most consequential strategic competitor—in the Indo-Pacific. China has transformed what was an obsolete military into one that can challenge the U.S. military across the spectrum of conventional and unconventional capabilities. There are a number of actions that DOD could take to better position itself to address challenges posed by China—such as strengthening cybersecurity and addressing F-35 and Navy maintenance issues.