This report describes the origins and command, roles, and influence of Commission of Science, Technology, and Industry for National Defense (COSTIND) in the PLA and the defense industries of China.

Congressional interest in China's transformation has grown. Congressional concerns focus on economic opportunities in China and how conditions there affect U.S. security, economic and political interests.

Congressional interest in the leadership change and economic transformation underway in China has grown substantially over the past few years. Leading congressional concerns focus on how economic conditions in China pose opportunities for U.S. enterprise and how the evolution of conditions in China fosters U.S. security, economic, and political interests. Congressional concern with China grew in 1995 and 1996 as a result of reports of the serious decline in the health of senior Chinese leader Deng Xiaoping. Present conditions in China include; A vibrant but sometimes overheated economy, A less divided central political leadership.

The October 24, 1995 meeting between President Bill Clinton and China's President Jiang Zemin helped to ease the crisis in U.S.-PRC-Taiwan relations that ensued from Beijing's harsh response to Taiwan President Lee Teng-hui's June 1995 visit to Cornell University.

In the months approaching China's resumption of sovereignty over Hong Kong on July 1, 1997, policy analysts are trying to assess how the territory will fare under Chinese rule. The answer is important to U.S. interests because of the enormous U.S. economic presence in Hong Kong; because any adverse developments in Hong Kong are likely to affect U.S.-China relations; and because China's promise to give Hong Kong a high degree of autonomy under the "one-China, two-systems" policy has major implications for Taiwan. But given the political situation, the American ability to affect the course of events in Hong Kong seems marginal unless the U.S. decides to confront Beijing more directly. Developments in U.S.-China relations in 1994-1995 suggest Washington might be hesitant to do so.

Congressional interest in the Chinese military, or People’s Liberation Army (PLA), has increased as a result of the March 1996 tensions in the Taiwan Strait, continuing allegations of Chinese proliferation of technology useful in weapons of mass destruction, and reports that some Chinese defense-related corporations have circumvented U.S. export controls to acquire dual-use technology. The Commission of Science, Technology, and Industry for National Defense (COSTIND), an important, high-level PLA organization, plays a role in China’s weapon programs, sales of civilian goods, acquisition of military technology, and arms sales and export controls. The purpose of this CRS Report is to examine the origins and command, roles, and influence of COSTIND.