United States Strategic Approach to
The People’s Republic of China

Introduction
Since the United States and the People’s Republic of China (PRC) established diplomatic
relations in 1979, United States policy toward the PRC was largely premised on a hope thatdeepening engagement would spur fundamental economic and political opening in the PRC
and lead to its emergence as a constructive and responsible global stakeholder, with a more
open society. More than 40 years later, it has become evident that this approach
underestimated the will of the Chinese Communist Party (CCP) to constrain the scope of
economic and political reform in China. Over the past two decades, reforms have slowed,
stalled, or reversed. The PRC’s rapid economic development and increased engagement withthe world did not lead to convergence with the citizen-centric, free and open order as theUnited States had hoped. The CCP has chosen instead to exploit the free and open rulesbased order and attempt to reshape the international system in its favor. Beijing openly
acknowledges that it seeks to transform the international order to align with CCP interestsand ideology. The CCP’s expanding use of economic, political, and military power to compel
acquiescence from nation states harms vital American interests and undermines thesovereignty and dignity of countries and individuals around the world.

To respond to Beijing’s challenge, the Administration has adopted a competitive approach to
the PRC, based on a clear-eyed assessment of the CCP’s intentions and actions, a reappraisalof the United States’ many strategic advantages and shortfalls, and a tolerance of greaterbilateral friction. Our approach is not premised on determining a particular end state for
China. Rather, our goal is to protect United States vital national interests, as articulated in
the four pillars of the 2017 National Security Strategy of the United States of America (NSS).
We aim to: (1) protect the American people, homeland, and way of life; (2) promote
American prosperity; (3) preserve peace through strength; and (4) advance American
influence.

Our competitive approach to the PRC has two objectives: first, to improve the resiliency of
our institutions, alliances, and partnerships to prevail against the challenges the PRC
presents; and second, to compel Beijing to cease or reduce actions harmful to theUnited States’ vital, national interests and those of our allies and partners. Even as wecompete with the PRC, we welcome cooperation where our interests align. Competition need
not lead to confrontation or conflict. The United States has a deep and abiding respect for
the Chinese people and enjoys longstanding ties to the country. We do not seek to contain
China’s development, nor do we wish to disengage from the Chinese people. The UnitedStates expects to engage in fair competition with the PRC, whereby both of our nations,businesses, and individuals can enjoy security and prosperity.
Prevailing in strategic competition with the PRC requires cooperative engagement withmultiple stakeholders, and the Administration is committed to building partnerships toprotect our shared interests and values. Vital partners of this Administration include theCongress, state and local governments, the private sector, civil society, and academia. The
Congress has been speaking out through hearings, statements, and reports that shed light on
the CCP’s malign behavior. The Congress also provides legal authorities and resources for
the United States Government to take the actions to achieve our strategic objectives. The
Administration also recognizes the steps allies and partners have taken to develop moreclear-eyed and robust approaches toward the PRC, including the European Union’s
publication in March 2019 of EU-China: A Strategic Outlook, among others.

The United States is also building cooperative partnerships and developing positive
alternatives with foreign allies, partners, and international organizations to support theshared principles of a free and open order. Specific to the Indo-Pacific region, many of these
initiatives are described in documents such as the Department of Defense June 2019 IndoPacific Strategy Report and the Department of State November 2019 report on A Free andOpen Indo-Pacific: Advancing a Shared Vision. The United States is working in concert withmutually aligned visions and approaches such as the Association of Southeast Asian Nation’s
Outlook on the Indo-Pacific, Japan’s free and open Indo-Pacific vision, India’s Security and
Growth for All in the Region policy, Australia’s Indo-Pacific concept, the Republic of Korea’s
New Southern Policy, and Taiwan’s New Southbound Policy.
This report does not attempt to detail the comprehensive range of actions and policy
initiatives the Administration is carrying out across the globe as part of our strategiccompetition. Rather, this report focuses on the implementation of the NSS as it applies mostdirectly to the PRC.

Challenges

The PRC today poses numerous challenges to United States national interests.
1. Economic Challenges

Beijing’s poor record of following through on economic reform commitments and its
extensive use of state-driven protectionist policies and practices harm United Statescompanies and workers, distort global markets, violate international norms, and pollute theenvironment. When the PRC acceded to the World Trade Organization (WTO) in 2001,
Beijing agreed to embrace the WTO’s open market-oriented approach and embed theseprinciples in its trading system and institutions. WTO members expected China to continue
on its path of economic reform and transform itself into a market-oriented economy andtrade regime.

These hopes were not realized. Beijing did not internalize the norms and practices ofcompetition-based trade and investment, and instead exploited the benefits of WTO
membership to become the world’s largest exporter, while systematically protecting its
domestic markets. Beijing’s economic policies have led to massive industrial overcapacitythat distorts global prices and allows China to expand global market share at the expense of2

competitors operating without the unfair advantages that Beijing provides to its firms. The
PRC retains its non-market economic structure and state-led, mercantilist approach to tradeand investment. Political reforms have likewise atrophied and gone into reverse, anddistinctions between the government and the party are eroding. General Secretary Xi’s
decision to remove presidential term limits, effectively extending his tenure indefinitely,
epitomized these trends.

In his 2018 Findings of the Investigation into China’s Acts, Policies, and Practices Related toTechnology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Actof 1974, the United States Trade Representative (USTR) determined that numerous acts,
policies, and practices of the PRC government were unreasonable or discriminatory, andburden or restrict United States commerce. Based on a rigorous investigation, USTR foundthat the PRC: (1) requires or pressures United States companies to transfer their technology
to Chinese entities; (2) places substantial restrictions on United States companies’ ability tolicense their technology on market terms; (3) directs and unfairly facilitates acquisition ofUnited States companies and assets by domestic firms to obtain cutting edge technologies;and (4) conducts and supports unauthorized cyber intrusions into United States companies’
networks to access sensitive information and trade secrets.
The list of Beijing’s commitments to cease its predatory economic practices is littered withbroken and empty promises. In 2015, Beijing promised that it would stop governmentdirected cyber-enabled theft of trade secrets for commercial gain, reiterating that samepromise in 2017 and 2018. Later in 2018, the United States and a dozen other countries
attributed global computer intrusion campaigns, targeting intellectual property andconfidential business information, to operators affiliated with the PRC’s Ministry of State
Security – a contravention of Beijing’s 2015 commitment. Since the 1980s, Beijing has signed
multiple international agreements to protect intellectual property. Despite this, more than
63 percent of the world’s counterfeits originate in China, inflicting hundreds of billions ofdollars of damage on legitimate businesses around the world.

While Beijing acknowledges that China is now a “mature economy,” the PRC continues toargue in its dealings with international bodies, including the WTO, that it is still a “developing
country.” Despite being the top importer of high technology products and ranking second
only to the United States in terms of gross domestic product, defense spending, and outward
investment, China self-designates as a developing country to justify policies and practices
that systematically distort multiple sectors globally, harming the United States and othercountries.
One Belt One Road (OBOR) is Beijing’s umbrella term to describe a variety of initiatives,
many of which appear designed to reshape international norms, standards, and networks toadvance Beijing’s global interests and vision, while also serving China’s domestic economic
requirements. Through OBOR and other initiatives, the PRC is expanding the use of Chinese
industrial standards in key technology sectors, part of an effort to strengthen its own
companies’ position in the global marketplace at the expense of non-Chinese firms. Projects
that Beijing has labeled OBOR include: transportation, information and communications
technology and energy infrastructure; industrial parks; media collaboration; science and3technology exchanges; programs on culture and religion; and even military and security
cooperation. Beijing is also seeking to arbitrate OBOR-related commercial disputes throughits own specialized courts, which answer to the CCP. The United States welcomes
contributions by China to sustainable, high-quality development that accords withinternational best practices, but OBOR projects frequently operate well outside of thesestandards and are characterized by poor quality, corruption, environmental degradation, alack of public oversight or community involvement, opaque loans, and contracts generating
or exacerbating governance and fiscal problems in host nations.

Given Beijing’s increasing use of economic leverage to extract political concessions from orexact retribution against other countries, the United States judges that Beijing will attempt
to convert OBOR projects into undue political influence and military access. Beijing uses a
combination of threat and inducement to pressure governments, elites, corporations, thinktanks, and others – often in an opaque manner – to toe the CCP line and censor free
expression. Beijing has restricted trade and tourism with Australia, Canada, South Korea,
Japan, Norway, the Philippines, and others, and has detained Canadian citizens, in an effort
to interfere in these countries’ internal political and judicial processes. After the Dalai Lama
visited Mongolia in 2016, the PRC government imposed new tariffs on land-locked
Mongolia’s mineral exports passing through China, temporarily paralyzing Mongolia’s
economy.

Beijing seeks global recognition for its environmental efforts and claims to promote “green
development.” China, however, has been the world’s largest greenhouse gas emitter by awide margin for more than a decade. Beijing has put forward vague and unenforceable
emissions reduction commitments that allow China’s emissions to keep growing until“around 2030.” China’s planned growing emissions will outweigh the reductions from therest of the world combined. Chinese firms also export polluting coal-fired power plants todeveloping countries by the hundreds. The PRC is also the world’s largest source of marine
plastic pollution, discharging over 3.5 million metric tons into the ocean each year. The PRC
ranks first in the world for illegal, unreported, and unregulated fishing in coastal nations’waters around the world, threatening local economies and harming the marine environment.
Chinese leaders’ unwillingness to rein in these globally harmful practices does not match
their rhetorical promises of environmental stewardship.
2. Challenges to Our Values

The CCP promotes globally a value proposition that challenges the bedrock American belief
in the unalienable right of every person to life, liberty, and the pursuit of happiness. Under
the current generation of leadership, the CCP has accelerated its efforts to portray its
governance system as functioning better than those of what it refers to as “developed,
western countries.” Beijing is clear that it sees itself as engaged in an ideological competition
with the West. In 2013, General Secretary Xi called on the CCP to prepare for a “long-term
period of cooperation and conflict” between two competing systems and declared that“capitalism is bound to die out and socialism is bound to win.”
4

The CCP aims to make China a “global leader in terms of comprehensive national power andinternational influence,” as General Secretary Xi expressed in 2017, by strengthening what
it refers to as “the system of socialism with Chinese characteristics.” This system is rooted
in Beijing’s interpretation of Marxist-Leninist ideology and combines a nationalistic, singleparty dictatorship; a state-directed economy; deployment of science and technology in theservice of the state; and the subordination of individual rights to serve CCP ends. This runs
counter to principles shared by the United States and many likeminded countries ofrepresentative government, free enterprise, and the inherent dignity and worth of every
individual.

Internationally, the CCP promotes General Secretary Xi’s vision for global governance underthe banner of “building a community of common destiny for mankind.” Beijing’s efforts tocompel ideological conformity at home, however, present an unsettling picture of what a
CCP-led “community” looks like in practice: (1) an anticorruption campaign that has purged
political opposition; (2) unjust prosecutions of bloggers, activists, and lawyers;(3) algorithmically determined arrests of ethnic and religious minorities; (4) stringent
controls over and censorship of information, media, universities, businesses, andnon-governmental organizations; (5) surveillance and social credit scoring of citizens,
corporations, and organizations; and (6) and arbitrary detention, torture, and abuse ofpeople perceived to be dissidents. In a stark example of domestic conformity, local officials
publicized a book burning event at a community library to demonstrate their ideologicalalignment to “Xi Jinping Thought.”

One disastrous outgrowth of such an approach to governance is Beijing’s policies in Xinjiang,
where since 2017, authorities have detained more than a million Uighurs and members ofother ethnic and religious minority groups in indoctrination camps, where many endure
forced labor, ideological indoctrination, and physical and psychological abuse. Outside thesecamps, the regime has instituted a police state employing emerging technologies such as
artificial intelligence and biogenetics to monitor ethnic minorities’ activities to ensure
allegiance to the CCP. Widespread religious persecution – of Christians, Tibetan Buddhists,
Muslims, and members of Falun Gong – includes the demolition and desecration of places ofworship, arrests of peaceful believers, forced renunciations of faith, and prohibitions on
raising children in traditions of faith.

The CCP’s campaign to compel ideological conformity does not stop at China’s borders. In
recent years, Beijing has intervened in sovereign nations’ internal affairs to engineer consent
for its policies. PRC authorities have attempted to extend CCP influence over discourse andbehavior around the world, with recent examples including companies and sports teams in
the United States and the United Kingdom and politicians in Australia and Europe. PRC
actors are exporting the tools of the CCP’s techno-authoritarian model to countries aroundthe world, enabling authoritarian states to exert control over their citizens and surveil
opposition, training foreign partners in propaganda and censorship techniques, and using
bulk data collection to shape public sentiment.
China’s party-state controls the world’s most heavily resourced set of propaganda tools.
Beijing communicates its narrative through state-run television, print, radio, and online
5organizations whose presence is proliferating in the United States and around the world.
The CCP often conceals its investments in foreign media entities. In 2015, China RadioInternational was revealed to control 33 radio stations in 14 countries via shell entities, andto subsidize multiple intermediaries through providing free, pro-Beijing content.
Beyond the media, the CCP uses a range of actors to advance its interests in the United Statesand other open democracies. CCP United Front organizations and agents target businesses,
universities, think tanks, scholars, journalists, and local, state, and Federal officials in the
United States and around the world, attempting to influence discourse and restrict external
influence inside the PRC.

Beijing regularly attempts to compel or persuade Chinese nationals and others to undertakea range of malign behaviors that threaten United States national and economic security, andundermine academic freedom and the integrity of the United States research anddevelopment enterprise. These behaviors include misappropriation of technology andintellectual property, failure to appropriately disclose relationships with foreign
government sponsored entities, breaches of contract and confidentiality, and manipulationof processes for fair and merit-based allocation of Federal research and development
funding. Beijing also attempts to compel Chinese nationals to report on and threaten fellow
Chinese students, protest against events that run counter to Beijing’s political narrative, andotherwise restrict the academic freedom that is the hallmark and strength of the American
education system.

PRC media entities, journalists, academics, and diplomats are free to operate in the
United States, but Beijing denies reciprocal access to American counterpart institutions andofficials. The PRC government routinely denies United States officials, including theUnited States Ambassador to the PRC, access to Department of State-funded American
Cultural Centers, which are hosted in Chinese universities to share American culture with
the Chinese people. Foreign reporters working in the PRC often face harassment andintimidation.
3. Security Challenges

As China has grown in strength, so has the willingness and capacity of the CCP to employ
intimidation and coercion in its attempts to eliminate perceived threats to its interests andadvance its strategic objectives globally. Beijing’s actions belie Chinese leaders’proclamations that they oppose the threat or use of force, do not intervene in other countries’internal affairs, or are committed to resolving disputes through peaceful dialogue. Beijing
contradicts its rhetoric and flouts its commitments to its neighbors by engaging inprovocative and coercive military and paramilitary activities in the Yellow Sea, the East andSouth China Seas, the Taiwan Strait, and Sino-Indian border areas.
In May 2019, the Department of Defense issued its annual report to the Congress, Military
and Security Developments Involving the PRC, assessing current and future trajectories ofChina’s military-technological development, security and military strategies, and People’s
Liberation Army (PLA) organizational and operational concepts. In July 2019, the PRC
6

Minister of Defense publicly acknowledged that OBOR is linked to the PRC’s aspirational
expansion of PLA presence overseas, including locations such as the Pacific Islands and the
Caribbean.

Beijing’s military buildup threatens United States and allied national security interests andposes complex challenges for global commerce and supply chains. Beijing’s Military-Civil
Fusion (MCF) strategy gives the PLA unfettered access into civil entities developing andacquiring advanced technologies, including state-owned and private firms, universities, andresearch programs. Through non-transparent MCF linkages, United States and other foreigncompanies are unwittingly feeding dual-use technologies into PRC military research anddevelopment programs, strengthening the CCP’s coercive ability to suppress domestic
opposition and threaten foreign countries, including United States allies and partners.
The PRC’s attempts to dominate the global information and communications technology
industry through unfair practices is reflected in discriminatory regulations like the PRC
National Cyber Security Law, which requires companies to comply with Chinese data
localization measures that enable CCP access to foreign data. Other PRC laws compel
companies like Huawei and ZTE to cooperate with Chinese security services, even when they
do business abroad, creating security vulnerabilities for foreign countries and enterprises
utilizing Chinese vendors’ equipment and services.
Beijing refuses to honor its commitment to provide travel documents for Chinese citizens
with orders of removal from the United States in a timely and consistent manner, effectively
blocking their removals from our country and creating security risks for American
communities. In addition, the PRC’s violations of our bilateral consular treaty puts
United States citizens at risk in China, with many Americans detrimentally affected by the
PRC government’s coercive exit bans and wrongful detentions.

Approach

The NSS demands that the United States “rethink the policies of the past two decades –policies based on the assumption that engagement with rivals and their inclusion ininternational institutions and global commerce would turn them into benign actors andtrustworthy partners. For the most part, this premise turned out to be false. Rival actors use
propaganda and other means to try to discredit democracy. They advance anti-Westernviews and spread false information to create divisions among ourselves, our allies, and ourpartners.”

Guided by a return to principled realism, the United States is responding to the CCP’s direct
challenge by acknowledging that we are in a strategic competition and protecting ourinterests appropriately. The principles of the United States’ approach to China arearticulated both in the NSS and our vision for the Indo-Pacific region – sovereignty, freedom,
openness, rule of law, fairness, and reciprocity. United States-China relations do not
determine our Indo-Pacific strategy, but rather fall within that strategy and the overarching
7

NSS. By the same token, our vision of a free and open Indo-Pacific region does not exclude
China.

The United States holds the PRC government to the same standards and principles that apply
to all nations. We believe this is the treatment that the people of China want and deservefrom their own government and from the international community. Given the strategic
choices China’s leadership is making, the United States now acknowledges and accepts therelationship with the PRC as the CCP has always framed it internally: one of great powercompetition.

United States policies are not premised on an attempt to change the PRC’s domestic
governance model, nor do they make concessions to the CCP’s narratives of exceptionalism
and victimhood. Rather, United States policies are designed to protect our interests andempower our institutions to withstand the CCP’s malign behavior and collateral damage
from the PRC’s internal governance problems. Whether the PRC eventually converges withthe principles of the free and open order can only be determined by the Chinese people
themselves. We recognize that Beijing, not Washington, has agency over and responsibility
for the PRC government’s actions.
The United States rejects CCP attempts at false equivalency between rule-of-law and ruleby-law; between counterterrorism and oppression; between representative governance andautocracy; and between market-based competition and state-directed mercantilism. The
United States will continue to challenge Beijing’s propaganda and false narratives that
distort the truth and attempt to demean American values and ideals.

Similarly, the United States does not and will not accommodate Beijing’s actions that weakena free, open, and rules-based international order. We will continue to refute the CCP’snarrative that the United States is in strategic retreat or will shirk our international security
commitments. The United States will work with our robust network of allies and likeminded partners to resist attacks on our shared norms and values, within our own
governance institutions, around the world, and in international organizations.

The American people’s generous contributions to China’s development are a matter ofhistorical record – just as the Chinese people’s remarkable accomplishments in the era of
Reform and Opening are undeniable. However, the negative trend lines of Beijing’s policies
and practices threaten the legacy of the Chinese people and their future position in the world.

Beijing has repeatedly demonstrated that it does not offer compromises in response to
American displays of goodwill, and that its actions are not constrained by its priorcommitments to respect our interests. As such, the United States responds to the PRC’s
actions rather than its stated commitments. Moreover, we do not cater to Beijing’s demands
to create a proper “atmosphere” or “conditions” for dialogue.

Likewise, the United States sees no value in engaging with Beijing for symbolism andpageantry; we instead demand tangible results and constructive outcomes. We acknowledge
and respond in kind to Beijing’s transactional approach with timely incentives and costs, or8credible threats thereof. When quiet diplomacy proves futile, the United States will increase
public pressure on the PRC government and take action to protect United States interests byleveraging proportional costs when necessary.

The PRC government has fallen short of its commitments in many areas including: trade andinvestment; freedoms of expression and belief; political interference; freedoms of navigationand overflight; cyber and other types of espionage and theft; weapons proliferation;
environmental protection; and global health. Agreements with Beijing must include
stringent verification and enforcement mechanisms.

We speak candidly with the Chinese people and expect honesty from PRC leaders. In mattersof diplomacy, the United States responds appropriately to the CCP’s insincere or vague
threats, and stands up alongside our allies and partners to resist coercion. Through ourcontinuous and frank engagement, the United States welcomes cooperation by China to
expand and work toward shared objectives in ways that benefit the peace, stability, andprosperity of the world. Our approach does not exclude the PRC. The United States stands
ready to welcome China’s positive contributions.
As the above tenets of our approach imply, competition necessarily includes engagementwith the PRC, but our engagements are selective and results-oriented, with each advancing
our national interests. We engage with the PRC to negotiate and enforce commitments toensure fairness and reciprocity; clarify Beijing’s intentions to avoid misunderstanding; andresolve disputes to prevent escalation. The United States is committed to maintaining open
channels of communication with the PRC to reduce risks and manage crises. We expect the
PRC to also keep these channels open and responsive.

Implementation

In accordance with the President’s NSS, the political, economic, and security policies outlinedin this report seek to protect the American people and homeland, promote American
prosperity, preserve peace through strength, and advance a free and open vision abroad.
During the first 3 years of the Administration, the United States has taken significant steps
in implementing this strategy as it applies to China.
1. Protect the American People, the Homeland, and the American Way of Life

The United States Department of Justice (DOJ)’s China Initiative and Federal Bureau of
Investigation are directing resources to identify and prosecute trade secrets theft, hacking,and economic espionage; and increasing efforts to protect against malign foreign investment
in United States infrastructure, supply chain threats, and foreign agents seeking to influence
American policy. For example, DOJ informed PRC state media company CGTN-America of its
obligation to register as a foreign agent as specified under the Foreign Agents Registration
Act (FARA), which obligates registrants to disclose their activities to Federal authorities and9appropriately label information materials they distribute. CGTN-America subsequently
registered under FARA.
The Administration is also responding to CCP propaganda in the United States byhighlighting malign behavior, countering false narratives, and compelling transparency.
United States officials, including those from the White House and the Departments of State,
Defense, and Justice, are leading efforts to educate the American public about the PRC
government’s exploitation of our free and open society to push a CCP agenda inimical toUnited States interests and values. In an effort to achieve reciprocity of access, theDepartment of State has implemented a policy requiring Chinese diplomats to notify theUnited States Government before meeting with state and local government officials andacademic institutions.

The Administration is raising awareness of and actively combatting Beijing’s co-optation andcoercion of its own citizens and others in United States academic institutions, beyond
traditional espionage and influence efforts. We are working with universities to protect therights of Chinese students on American campuses, provide information to counter CCP
propaganda and disinformation, and ensure an understanding of ethical codes of conduct inan American academic environment.
Chinese students represent the largest cohort of foreign students in the United States today.
The United States values the contributions of Chinese students and researchers. As of 2019,the number of Chinese students and researchers in the United States has reached an all-time
high, while the number of student visa denials to Chinese applicants has steadily declined.
The United States strongly supports the principles of open academic discourse andwelcomes international students and researchers conducting legitimate academic pursuits;
we are improving processes to screen out the small minority of Chinese applicants who
attempt to enter the United States under false pretenses or with malign intent.

In the United States research community, Federal agencies such as the National Institutes of
Health and the Department of Energy have updated or clarified regulations and procedures
to ensure compliance with applicable standards of conduct and reporting, in order toimprove transparency and prevent conflicts of interest. The National Science andTechnology Council’s Joint Committee on the Research Environment is developing standards
for Federally-funded research, and best practices for United States research institutions. The
Department of Defense is working to ensure grantees do not also have contracts with China’s
talent recruitment programs, while also continuing to welcome foreign researchers.

To prevent foreign malign actors from gaining access to United States information networks,
the President issued the “Executive Order on Securing the Information and Communications
Technology and Services Supply Chain” and the “Executive Order on Establishing theCommittee for the Assessment of Foreign Participation in the United States
Telecommunications Services Sector.” The implementation of these Executive Orders will
prevent certain companies associated with or answering to the intelligence and security
apparatus of foreign adversaries from, for example, readily accessing the private andsensitive information of the United States Government, the United States private sector, and10

individual Americans. To ensure protection of our information worldwide, including
sensitive military and intelligence data, the United States is actively engaging with our allies
and partners, including in multilateral fora, to promote a set of common standards for secure,resilient, and trusted communications platforms that underpin the global information
economy. To compel Beijing to adhere to norms of responsible state behavior, theUnited States is working with allies and like-minded partners to attribute and otherwise
deter malicious cyber activities.

The Administration is implementing the Foreign Investment Risk Review Modernization Act
to update and strengthen the capacity of the Committee on Foreign Investment in the
United States (CFIUS) to address growing national security concerns over foreign
exploitation of investment structures, which previously fell outside CFIUS jurisdiction. This
includes preventing Chinese companies from exploiting access to United States innovation
through minority investments in order to modernize the Chinese military. The United States
has updated its export control regulations, particularly in light of Beijing’s whole-of-society
MCF strategy and its efforts to acquire advanced technologies related to hypersonics,
quantum computing, artificial intelligence, biotechnology, and other emerging andfoundational technologies. We are also engaging allies and partners to develop their own
foreign investment screening mechanisms, and to update and implement export controls
collaboratively through multilateral regimes and other forums.
The United States Government is also taking concrete actions to protect the American
consumer from counterfeit and substandard products. Between 2017 and 2018, theUnited States Department of Homeland Security seized more than 59,000 shipments ofcounterfeit goods, produced in the PRC, valued at more than $2.1 billion. This represents
five times the total shipments and value seized from all other foreign countries combined.

In addition to falsely branded apparel, footwear, handbags, and watches, United States
Customs and Border Protection intercepted three shipments containing 53,000 illegal
Chinese gun parts and electronics that could have compromised the security and privacy ofAmerican businesses and consumers. United States law enforcement agencies are also
targeting counterfeit pharmaceuticals and cosmetics originating from China, which havebeen found to contain high levels of contaminants, including bacteria and animal waste thatpose a danger to American consumers.

The United States is working with Chinese authorities to stem the deadly flow of illicit
Chinese fentanyl from the PRC to the United States. In December 2018, the President secured
a commitment from his Chinese counterpart to control all forms of fentanyl in the PRC. With
the Chinese regulatory regime in place since May 2019, United States and PRC law
enforcement agencies are sharing intelligence and coordinating to set conditions for
enforcement actions that will deter Chinese drug producers and traffickers. The
United States is also working with China’s postal agencies to improve tracking of small
parcels for law enforcement purposes.

11

2. Promote American Prosperity

In response to the PRC’s documented unfair and abusive trade practices and industrial
policies, the Administration is taking strong actions to protect American businesses,
workers, and farmers, and to put an end to Beijing’s practices that have contributed to ahollowing-out of the United States manufacturing base. The United States is committed torebalancing the United States-China economic relationship. Our whole-of-government
approach supports fair trade and advances United States competitiveness, promotes
United States exports, and breaks down unjust barriers to United States trade andinvestment. Having failed since 2003 to persuade Beijing to adhere to its economic
commitments through regular, high-level dialogues, the United States is confronting China’s
market-distorting forced technology transfer and intellectual property practices by
imposing costs in the form of tariffs levied on Chinese goods coming into the United States.
Those tariffs will remain in place until a fair Phase Two trade deal is agreed to by the UnitedStates and the PRC.

In response to Beijing’s repeated failure to reduce or eliminate its market-distorting
subsidies and overcapacity, the United States imposed tariffs to protect our strategicallyimportant steel and aluminum industries. For those unfair Chinese trade practices that are
subject to dispute settlement at the WTO, the United States continues to pursue and win
multiple cases. Finally, to crack down on China’s dumping and subsidies across a broad
range of industries, the Department of Commerce is making greater utility of United States
antidumping and countervailing duties laws than in past administrations.
In January 2020, the United States and the PRC signed Phase One of an economic and trade
agreement that requires structural reforms and other changes to China’s economic and trade
regime, addressing several longstanding United States concerns. The agreement prohibits
the PRC from forcing or pressuring foreign companies to transfer their technology as acondition for doing business in China; strengthens protection and enforcement ofintellectual property in China in all key areas; creates new market opportunities in China for
United States agriculture and financial services by addressing policy barriers; and addresses
longstanding, unfair currency practices. The agreement also establishes a strong dispute
resolution mechanism that ensures prompt and effective implementation and enforcement.
By addressing structural barriers to trade and making the commitments fully enforceable,
the Phase One agreement will expand United States exports to China. As part of thisagreement, the PRC committed over the next 2 years to increase imports of United States
goods and services by no less than $200 billion in four broad categories: manufactured
goods, agriculture, energy, and services. This agreement marks critical progress toward amore balanced trade relationship and a more level playing field for American workers andcompanies.

Domestically, the Administration is taking steps to strengthen the United States economy
and promote economic sectors of the future, such as 5G technology, through tax reforms anda robust deregulatory agenda. The President’s “Executive Order on Maintaining American
Leadership in Artificial Intelligence” is an example of a United States Government initiative12

to promote investment and collaboration to ensure the United States continues to lead ininnovation and setting standards for a growing industry.

Together with other likeminded nations, the United States promotes an economic vision
based on principles of sovereignty, free markets, and sustainable development. Alongside
the European Union and Japan, the United States is engaged in a robust trilateral process todevelop disciplines for state-owned enterprises, industrial subsidies, and forced technology
transfers. We will also continue to work with our allies and partners to ensure that
discriminatory industrial standards do not become global standards. As the world’s mostvaluable consumer market, largest source of foreign direct investment, and leading
wellspring of global technological innovation, the United States engages extensively withallies and partners to evaluate shared challenges and coordinate effective responses toensure continued peace and prosperity. We work closely with United States companies tobuild their competitiveness at home and abroad while fostering sustainable development
through programs such as Prosper Africa, America Crece in Latin America and the Caribbean,
and Enhancing Development and Growth through Energy in the Indo-Pacific region.

3. Preserve Peace through Strength

The 2018 National Defense Strategy (NDS) prioritizes long-term competition with China andemphasizes modernization and partnerships to counter the PLA’s technologicaladvancements, force development, and growing international presence and assertiveness.
As described in the Nuclear Posture Review, the Administration is prioritizing themodernization of the nuclear triad, including the development of supplementary capabilities
designed to deter Beijing from using its weapons of mass destruction or conducting otherstrategic attacks. Meanwhile, the United States continues to urge China’s leaders to come tothe table and begin arms control and strategic risk reduction discussions as a nuclear powerwith a modern and growing nuclear arsenal and the world’s largest collection ofintermediate range delivery systems. The United States believes it is in the interest of allnations to improve Beijing’s transparency, prevent miscalculations, and avoid costly arms
buildups.

The Department of Defense is moving quickly to deploy hypersonic platforms, increasing
investments in cyber and space capabilities, and developing more lethal fires based on
resilient, adaptive, and cost-effective platforms. Together, these capabilities are intended todeter and counter Beijing’s growing ambitions and the PLA’s drive toward technologicalparity and superiority.

As part of our worldwide freedom of navigation operations program, the United States ispushing back on Beijing’s hegemonic assertions and excessive claims. The United States
military will continue to exercise the right to navigate and operate wherever internationallaw allows, including in the South China Sea. We are speaking up for regional allies andpartners, and providing security assistance to help them build capacity to withstand Beijing’s
attempts to use its military, paramilitary, and law enforcement forces to coerce and prevail
in disputes. In 2018, the United States military withdrew the invitation for the PLA to
13

participate in the biennial Rim of the Pacific exercise due to Beijing’s deployment ofadvanced missile systems onto manmade features in the South China Sea.

Stronger alliances and partnerships are a cornerstone of the NDS. The United States isbuilding partner capacity and deepening interoperability to develop a combat-credibleforward operating presence, fully integrated with allies and partners to deter and deny PRC
aggression. The Administration’s Conventional Arms Transfer policy aims to promote
United States arms sales and accelerate the transformation of partner military capabilities
in a strategic and complementary manner. In June 2019, the Department of Defense released
its first Indo-Pacific Strategy Report, articulating the Department’s implementation of the
NDS and our whole-of-government strategy for the Indo-Pacific region.
The United States will continue to maintain strong unofficial relations with Taiwan inaccordance with our “One China” policy, based on the Taiwan Relations Act and thethree United States-PRC Joint Communiques. The United States maintains that any
resolution of cross-Strait differences must be peaceful and according to the will of the people
on both sides, without resorting to threat or coercion. Beijing’s failure to honor its
commitments under the communiques, as demonstrated by its massive military buildup,
compels the United States to continue to assist the Taiwan military in maintaining a credible
self-defense, which deters aggression and helps to ensure peace and stability in the region.
In a 1982 memorandum, President Ronald Reagan insisted “that the quantity and quality of
the arms provided Taiwan be conditioned entirely on the threat posed by the PRC.” In 2019,
the United States approved more than $10 billion of arms sales to Taiwan.
The United States remains committed to maintaining a constructive, results-oriented
relationship with the PRC. The United States conducts defense contacts and exchanges with
the PRC to communicate strategic intent; prevent and manage crises; reduce the risks of
miscalculation and misunderstanding that could escalate into conflict; and cooperate inareas of shared interest. The United States military engages with the PLA to develop effective
crisis communication mechanisms, including responsive channels for de-escalation in
unplanned scenarios.
4. Advance American Influence

For the past seven decades, the free and open international order has provided the stability
to allow sovereign, independent states to flourish and contribute to unprecedented global
economic growth. As a large, developed country and a major beneficiary of this order, the
PRC should help guarantee freedom and openness for other nations around the globe. When
Beijing instead promotes or abets authoritarianism, self-censorship, corruption, mercantilist
economics, and intolerance of ethnic and religious diversity, the United States leadsinternational efforts to resist and counter these malign activities.

In 2018 and 2019, the Secretary of State hosted the first two gatherings of the Ministerial to
Advance Religious Freedom. Along with the President’s unprecedented Global Call to Protect
Religious Freedom during the United Nations General Assembly (UNGA) in September 2019,
these events brought together global leaders to address religious persecution around the14world. During both ministerials, the United States and partner countries released jointstatements calling on the PRC government to respect the rights of Uighur and other Turkic
Muslims, Tibetan Buddhists, Christians, and Falun Gong adherents, all of whom face
repression and persecution in China. In February 2020, the Department of State launched
the first ever International Religious Freedom Alliance with 25 likeminded partners to
defend the right of every person to worship without fear. The President met with Chinesedissidents and survivors on the margins of the 2019 Ministerial, and he shared the stage
during UNGA with victims of religious persecution from China. The United States also
continues to support human rights defenders and independent civil society working in or on
China.
In October 2019 at the United Nations in New York, the United States joined likemindednations in condemning Beijing’s ongoing human rights violations and other repressive
policies in Xinjiang that threaten international peace and security. The latter event followed
United States Government actions to stop United States exports to select Chinese
government agencies and surveillance technology companies complicit in the Xinjiang
human rights abuses and to deny United States visas for Chinese officials, and their family
members, responsible for violating Beijing’s international human rights commitments. The
United States has also begun actions to block imports of Chinese goods produced using
forced labor in Xinjiang.
The United States will continue to take a principled stand against the use of our technology
to support China’s military and its technology-enabled authoritarianism, working in
conjunction with likeminded allies and partners. In doing so, we will implement policies thatkeep pace with rapid technological change and PRC efforts to blend civil and military uses
and compel companies to support China’s security and intelligence services.

These efforts demonstrate United States commitment to the fundamental values and norms
that have served as the foundation of the international system since the end of the Second
World War. While the United States has no desire to interfere in the PRC’s internal affairs,
Washington will continue to be candid when Beijing strays from its international
commitments and responsible behavior, especially when United States interests are at stake.
For example, the United States has significant interests in the future of Hong Kong.
Approximately 85,000 United States citizens and more than 1,300 United States businesses
reside in Hong Kong. The President, the Vice President, and the Secretary of State haverepeatedly called on Beijing to honor the 1984 Sino-British Joint Declaration and preserve
Hong Kong’s high degree of autonomy, rule of law, and democratic freedoms, which enable
Hong Kong to remain a successful hub of international business and finance.

The United States is expanding its role as an Indo-Pacific nation that promotes freeenterprise and democratic governance. In November 2019, the United States, Japan, andAustralia launched the Blue Dot Network to promote transparently-financed, high quality
infrastructure through private sector led development around the world, which will add tothe nearly 1 trillion dollars of United States direct investment in the Indo-Pacific region
alone. At the same time, the Department of State issued a detailed progress report on the15

implementation of our whole-of-government strategy for the Indo-Pacific region:
A Free and Open Indo-Pacific: Advancing a Shared Vision.

Conclusion
The Administration’s approach to the PRC reflects a fundamental reevaluation of how theUnited States understands and responds to the leaders of the world’s most populous country
and second largest national economy. The United States recognizes the long-term strategiccompetition between our two systems. Through a whole-of-government approach andguided by a return to principled realism, as articulated by the NSS, the United States
Government will continue to protect American interests and advance American influence. At
the same time, we remain open to constructive, results-oriented engagement andcooperation from China where our interests align. We continue to engage with PRC leaders
in a respectful yet clear-eyed manner, challenging Beijing to uphold its commitments.

16