Members of Congress are concerned about whether U.S. firms have provided technology or expertise to China for use in its ballistic missile program and whether a series of decisions by the Clinton Administration on satellite exports have facilitated legal or illegal transfers of missile-related technology to China. The New York Times reported in April 1998 that the Justice Department is conducting an ongoing criminal investigation into whether Loral Space and Communications (of New York), and Hughes Electronics (of Los Angeles) violated export control laws. The firms are alleged to have shared their findings with China on the cause of a Chinese rocket’s explosion while launching a U.S.-origin satellite in February 1996. In sharing their conclusions, the companies are said to have provided expertise that China could use to improve its ballistic missiles, including their guidance systems. This CRS report provides detailed background information, significant Congressional action, and a comprehensive chronology. The events summarized here, based on various open sources and interviews, pertain to various aspects of U.S. foreign and security policy.

The purpose of this report is to provide background for and summarize current developments in U.S. - People’s Republic of China (PRC) relations, including current and pending congressional actions involving the PRC.

In recent years, the United States and other countries have expressed considerable concern that China’s national currency (the yuan or renminbi) is seriously undervalued. Some analysts say the yuan needs to rise by as much as 40% in order to reflect its equilibrium value. Critics say that China’s undervalued currency provides it with an unfair trade advantage that has seriously injured the manufacturing sector in the United States. Chinese officials counter that they have not pegged the yuan to the dollar in order to gain trade advantages. Rather, they say the fixed rate promotes economic stability that is vital for the functioning of its domestic economy.