“Falun Gong,” also known as “Falun Dafa,”1 combines an exercise regimen with meditation and moral tenets. The “Falun Gong” movement has led to the largest and most protracted public demonstrations in China since the democracy movement of 1989. On April 25, 1999, an estimated 10,000 to 30,000 adherents assembled in front of Zhongnanhai, the Chinese Communist Party leadership compound, and participated in a silent protest against state repression of their activities. On July 21, 1999, the People’s Republic of China (PRC) government, fearful of the spread of social unrest, outlawed the movement and began to arrest Falun Gong protesters.

This report discusses the background information and most recent development in U.S.-China relations since mid-1996. Since the early 1990s, U.S.-China relations have followed an uneven course, with modest improvements overshadowed by various recurring difficulties and setbacks. Longstanding bilateral difficulties have included U.S. problems with the PRC’s worsening human rights record, growing tensions over the PRC’s southern military build-up opposite Taiwan and Taiwan’s political status, and continued controversy over allegations of Chinese proliferation of weapons to unstable regimes.

U.S.-China economic ties have expanded substantially over the past several years. China is now the third largest U.S. trading partner, its second largest source of imports, and its fourth largest export market. However, U.S.-China commercial ties have been strained by a number of issues, including a surging U.S. trade deficit with China, China's refusal to float its currency, and failure to fully comply with its World Trade Organization (WTO) commitments, especially its failure to provide protection for U.S. intellectual property rights (IPR). This report explores these issues in detail, especially concerning the lack of protection for U.S. IPR.

China’s economy continues to be a concern to U.S. policymakers. On the one hand, China’s economic growth presents huge opportunities for U.S. exporters. On the other hand, the surge in Chinese exports to the United States has put competitive pressures on many U.S. industries. Many U.S. policymakers have argued that greater efforts should be made to pressure China to fully implement its WTO commitments and to change various economic policies deemed harmful to U.S. economic interests, such as its currency peg and its use of subsidies to support its SOEs. In addition, recent bids by Chinese state-owned firms to purchase various U.S. firms have raised concerns among Members over the impact such acquisitions could have on U.S. national and economic security.