Concerned with Taiwan's growing assertiveness in world affairs, symbolized recently by Taiwan President Lee Teng-hui's June 1995 visit to the United States, Beijing has shifted to a harder line toward Taiwan.

U.S. policymakers face continued debate over normalizing U.S. relations with Vietnam. Some favor greater U.S. flexibility and forward movement in relations with Vietnam; others oppose such changes until Vietnam meets long-standing U.S. conditions, especially accounting more fully for U.S. prisoners of war/missing in action (POW/MIA) from the Vietnam War.

This report discusses congressional interest in the leadership change and economic transformation underway in China, which has grown substantially over the past two 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 foster U.S. security, economic, and political interests. Congressional concern with China grew in 1995 as a result of reports of the serious decline in the health of senior Chinese leader Deng Xiaoping.

U.S. policy concerns Taiwan center on striking a proper balance between increasing ties with the People's Republic of China (PRC) while sustaining support for Taiwan. Despite eased tensions in the Taiwan Strait and extensive Taiwan trade with and investment in the China mainland, the two sides remain politically far apart and compete for international influence.