In Part I, this CRS report discusses the policy on “one China” since the United States began in 1971 to reach understandings with the People’s Republic of China (PRC) government in Beijing. Part II documents the evolution of the “one China” principle as articulated in key statements by Washington, Beijing, and Taipei. The U.S. policy on “one China” has evolved to cover three issues: sovereignty, peaceful resolution, and cross-strait dialogue.

The bilateral relationship between the U.S. and the People's Republic of China (PRC) is vitally important, touching on a wide range of areas including, among others, economic policy, security, foreign relations, and human rights. This report addresses relevant policy questions in current U.S.-China relations, discusses trends and key legislation in the current Congress, and provides a chronology of developments and high-level exchanges.

This report focuses on the implications that certain elements of China’s military modernization may have for future required U.S. Navy capabilities. The issue for Congress addressed in this report is: How should China’s military modernization be factored into decisions about U.S. Navy programs? Congress’s decisions on this issue could significantly affect future U.S. Navy capabilities, U.S. Navy funding requirements, and the U.S. defense industrial base, including the shipbuilding industry.

Despite apparently consistent statements in over three decades, the "one China" policy concerning Taiwan remains somewhat ambiguous and subject to different interpretations. Questions have arisen about the policy itself and about the policy in relation to U.S. interests regarding peace and stability. This report discusses U.S. policy on the "one China" policy in regards to three major issues: sovereignty, use of force, and cross-strait dialogue. Since the mid-1990s, U.S. interests in preventing conflict across the Taiwan Strait have been challenged by China's military modernization and Taiwanese moves toward independence that have been perceived in Beijing as provocative. This report describes these issues in detail, including relevant legislation.

Throughout much of the George W. Bush Administration, U.S.-China relations have remained unusually smooth and stable. But U.S. policy toward China now appears to be subject to competing reassessments. State Department officials late in 2005 unveiled what they described as a new policy framework for the relationship -- one in which the United States was willing to work cooperatively with a non-democratic China while encouraging Beijing to become a "responsible stakeholder" in the global system. Other U.S. policymakers appear to be adopting somewhat tougher stances on issues involving China and U.S.-China relations, expressing their concerns about strong PRC economic growth and a more assertive and influential PRC diplomacy in the international arena.

Concern has grown in Congress and elsewhere about China's military modernization. The topic is an increasing factor in discussions over future required U.S. Navy capabilities. The issue for Congress addressed in this report can be summed up in the following question: How should China's military modernization be factored into decisions about U.S. Navy programs?

China is the leading vehicle producer in the world and has the fastest growing market. It imports and exports very few vehicles, with exports more than imports. Chinese exports in competition withtheur own markets. Chinese aftermarket parts are also making their way into the United States.