US-China Commission Report - Fatal System Error

CHAPTER 1
THE UNITED STATES–CHINA TRADE
AND ECONOMIC RELATIONSHIP
SECTION 1: THE U.S.–CHINA TRADE AND
ECONOMIC RELATIONSHIP’S CURRENT STATUS
AND SIGNIFICANT CHANGES DURING 2008
The legislation passed by Congress in 2000 to establish the Commission
sets forth specific topical areas of concern with respect
to the People’s Republic of China and associated issues and requires
the Commission to investigate and report to Congress
on those topics. Congress has modified those topical areas in
the intervening years. Today there are eight mandated topics.
(They can be found at 22 U.S.C. 7002 and at the Commission’s
Web site—www.uscc.gov. They also are printed in full in appendix
I of this Report, beginning on page 349.) At the beginning
of each section of this Report, the mandated topical area
(or areas) that section addresses is identified.
‘‘The Commission shall investigate and report exclusively on—
...
‘‘WORLD TRADE ORGANIZATION COMPLIANCE—The compliance
of the People’s Republic of China with its accession
agreement to the World Trade Organization.
‘‘ECONOMIC TRANSFERS—The qualitative and quantitative
nature of the transfer of United States production activities to
the People’s Republic of China, including the relocation of high
technology, manufacturing, and research and development facilities,
the impact of such transfers on United States national
security, the adequacy of United States export control laws,
and the effect of such transfers on United States economic security
and employment. . . .’’
Introduction
At the beginning of 2008, with its economy growing at around 10
percent a year despite global economic turmoil, with foreigners still
clamoring to invest there, and with exports booming, China’s economic
prospects seemed assured. But then came a surge in global
commodity prices that put China at risk of inflation in such core
areas as food and fuel. A plunging Shanghai stock market added
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