U.S. Department of State Background Notes: China, October 1997 
Bureau of East Asian and Pacific Affairs  

Official Name: People's Republic of China  

PROFILE  

Geography  

Total area: 9,596,960 sq. km (approximately 3.7 million sq. mi.).  
Cities: 
Capital--Beijing. Other major cities--Shanghai, Tianjin, Shenyang, Wuhan,  
Guangzhou, Chongqing, Harbin, Chengdu. 
Terrain: Plains, deltas, and hills in  east; mountains, high plateaus, deserts in west. 
Climate: Tropical in south to  subarctic in north.  

People  

Nationality: Noun and adjective--Chinese (singular and plural). 
Population (1997 est.): 1.22 billion. Population growth rate (1997 est.): .93%. Health (1997 est.): Infant mortality rate--37.9/1,000. 
Life expectancy--70.0 years (overall);  68.6 years for males, 71.5 years for females. 
Ethnic groups: Han Chinese--91.9%; Zhuang, Manchu, Hui, Miao, Uygur, Yi,  Mongolian, Tibetan, Buyi, Korean, and other nationalities--8.1%. 
Religions: Officially atheist; Confucianism, Taoism, Buddhism, Islam, Christianity. Language:  Mandarin (Putonghua), plus many local dialects. 
Education:  Years compulsory-- 9. 
Literacy--81.5%. 
Work force (699 million):  Agriculture and forestry--60%. Industry and commerce--25%.  Other--15%.  

Government  

Type: Communist party-led state. Constitution: December 4, 1982. Independence: 
Unification under the Qin (Ch'in) Dynasty 221 BC; Qing (Ch'ing or  Manchu) 
Dynasty replaced by a republic on February 12, 1912; People's Republic  
established October 1, 1949. Branches: Executive--president, vice president, 
State Council, premier. Legislative-- unicameral National People's Congress. 
Judicial--Supreme People's Court. Administrative divisions: 23 provinces (the 
P.R.C. considers Taiwan to be its 23rd  province); 5 autonomous regions, 
including Tibet; 4 municipalities directly under the State Council. Political 
parties: Chinese Communist Party, over 58 million members; 8 minor parties  
under Communist supervision. Suffrage: Universal at 18.  

Economy  

GDP (1996 est.): $839 billion (exchange rate-based); $3.39 trillion (PPP-based). 
Per capita GDP (1996 est.): $688 (exchange rate-based); $2,800 (PPP-based). GDP 
real growth rate: 9.4%. Natural resources: Coal, iron ore, crude oil, mercury, 
tin, tungsten, antimony, manganese,  molybdenum, vanadium, magnetite, aluminum, 
lead, zinc, uranium, hydropower potential (world's largest). Agriculture: Among 
the world's largest producers of rice, potatoes, sorghum, peanuts, tea, millet, 
barley; commercial crops include cotton, other fibers, and oilseeds; produces 
variety of livestock products. Industry: Types--iron, steel, coal, machinery, 
light industrial products, armaments,  petroleum. Trade (1996): Exports--$151.1 
billion: mainly textiles, garments, electrical machinery,  foodstuffs, 
chemicals, footwear, minerals. Main partners--Hong Kong, Japan, U.S.,  South 
Korea, Germany, Singapore, Netherlands. Imports--$138.8 billion: mainly  
industrial machinery, electrical equipment, chemicals, textiles, steel.  Main 
partners--Japan,  Taiwan, U.S., South Korea, Hong Kong, Germany, Russia.  

PEOPLE  

Ethnic Groups  

The largest ethnic group is the Han Chinese, who constitute about 91.9% of the 
total  population. The remaining 8.1% are Zhuang (16 million), Manchu (10 
million), Hui (9  million), Miao (8 million), Uygur (7 million), Yi (7 million), Mongolian (5 million),  Tibetan (5 million), Buyi (3 million), Korean  (2 million), and other ethnic minorities.  

Language  

There are seven major Chinese dialects and many subdialects. Mandarin (or 
Putonghua),  the predominant dialect, is spoken by over 70% of the population. 
It is taught in all schools  and is the medium of government. Only about two-
thirds of the Han ethnic group are native  speakers of Mandarin; the rest, 
concentrated in southwest and southeast China, speak one  of the six other major  Chinese dialects. Non-Chinese languages spoken widely by ethnic  minorities include Mongolian, Tibetan, Uygur and other Turkic languages (in Xinjiang),  and Korean (in the Northeast).  

The Pinyin System of Romanization  

On January 1, 1979, the Chinese Government officially adopted the pinyin system 
for  spelling Chinese names and places in Roman letters. A system of 
Romanization invented  by the Chinese, pinyin has long been widely used in China on street and commercial signs  as well as in elementary Chinese textbooks as an aid in learning Chinese characters.  Variations of pinyin are also used as the written forms of several minority languages.  

Pinyin has now replaced other conventional spellings in China's English-language  publications. The U.S. Government has also adopted the pinyin system for all names and  places in China. For example, the capital of China is now spelled "Beijing" rather than "Peking."  

In the pinyin system, letters are pronounced much as they would be in American 
English  with the following exceptions.  

Complex initial sounds: 
c -- like the t's in it's 
q -- like the ch in cheap 
x -- like the sh in she
z -- like the ds in lids 
zh -- like the j in just  

Final Sounds: e -- Pronounced like "uh" eng -- like the ung in lung ai -- as in 
aisle ui -- pronounced way uai -- like the wi in wide i -- like the i in skin* 
ua -- like the wa in waft ao -- like the ow in now ian -- pronounced yen ou -- 
like the ow in know uan -- like the wan in wander  

*When zh, ch, sh, zh are followed by an "i," the "i" is pronounced like an r.  

Religion  

Religion plays a significant part in the life of many Chinese. Buddhism is most 
widely  practiced, with an estimated 100 million adherents; traditional Taoism 
also is practiced.  Official figures indicate there are 20 million Muslims, 3.6 
million Catholics, and 5.6 million Protestants; unofficial estimates are much 
higher.  

While the Chinese Constitution affirms religious toleration, the Chinese 
government places restrictions on religious practice outside officially 
recognized organizations. Only two Christian organizations--a Catholic church 
without ties to Rome and the "Three-Self-Patriotic" Protestant church--are 
sanctioned by the Chinese government. Unauthorized churches have sprung up in 
many parts of the country and are growing rapidly.  

Population Policy  

With a population of over 1.22 billion and an estimated growth rate of .93%, 
China is very concerned about its population growth and has attempted to 
implement a strict population control policy. The government's goal is one child per family, with exceptions in rural areas and for ethnic minorities. This policy is often ignored in the countryside and also by  many urban dwellers. The government states that it opposes physical compulsion to submit  to abortion or sterilization, but instances of coercion have continued as local officials strive  to meet population targets. The government's goal is to stabilize the population early in the 21st century, although some current projections estimate a population of 1.6 billion by 2025.  

HISTORY  

China is the oldest continuous major world civilization, with records dating 
back about  3,500 years. Successive dynasties developed a system of bureaucratic control which gave  the agrarian-based Chinese an advantage over neighboring nomadic and hill cultures. Chinese civilization was further strengthened by the development of a Confucian state ideology and a common written language that bridged the gaps among the country's many local languages and dialects. Whenever China was conquered by nomadic tribes, as it was by the Mongols in the 13th century, the conquerors sooner or later adopted the ways of the  "higher" Chinese civilization and staffed the bureaucracy with Chinese.  

The last dynasty was established in 1644, when the nomadic Manchus overthrew the native Ming dynasty and established the Qing (Ch'ing) dynasty with Beijing as its capital. At great  expense in blood and treasure, the Manchus over the next half century gained control of  many border areas, including Xinjiang, Yunnan, Tibet, Mongolia, and Taiwan. The  success of the early Qing period was based on the combination of Manchu martial prowess  and traditional Chinese bureaucratic skills.  

During the 19th century, Qing control weakened, and prosperity diminished; the 
"Mandate  of Heaven" which legitimized dynastic rule appeared ready to shift 
once more. China  suffered massive social strife, economic stagnation, explosive population growth, and  Western penetration and influence. Britain's desire to continue its illegal opium trade with  China collided with imperial edicts prohibiting the addictive drug, and the First Opium War  erupted in 1840. China lost the war; subsequently, Britain and other Western powers,  including the United States, forcibly occupied "concessions" and gained special commercial  privileges. Hong Kong was ceded to Britain in 1842 under the Treaty of Nanking, and in  1898, when the Opium Wars finally ended, Britain executed a 99-year lease of the New  Territories, significantly expanding the size of the Hong Kong colony.  

The Taiping and Nian rebellions, along with a Russian-supported Muslim 
separatist  movement in Xinjiang, drained Chinese resources and almost toppled 
the dynasty. As time  went on, the Western powers, wielding superior military 
technology, gained more  economic and political privileges. Reformist Chinese 
officials argued for the adoption of  Western technology to strengthen the 
dynasty and counter Western advances, but the Qing  court played down both the 
Western threat and the benefits of Western technology.  

China's defeat in 1895 by Japan, which had adopted Western technology and other  
elements of Western culture, shocked Chinese officialdom and some of the Qing 
court. The  country embarked on a crash reformist program, until the effort was 
stymied by  conservative reaction in the Qing court. Anti-foreign and anti-
Christian groups then  rampaged through northern China in what became known as 
the Boxer Rebellion, which  was eventually crushed by expeditionary forces of 
the foreign powers.  

The Chinese Dynasties

Xia (Hsia) Dynasty--c. 21st-16th centuries BC
Shang (Yin)--c. 16th century-1066 BC
Zhou (Chou)--c. 1066-221 BC

Western Zhou (Chou)--c. 1066-771 BC
Eastern Zhou (Chou)--c. 770-256 BC
Spring and Autumn Period--772-481 BC
Warring States Period--403-221 BC

Qin--221-206 BC
Han--206 BC-220 AD
Six Dynasties--220-439 AD

Three Kingdoms--220-265
Wei--220-265; Shu--221-263
Wu--222-280
Western Jin (Tsin)--265-316
Eastern Jin (Tsin)--317-420
Sixteen States--304-439

Southern and Northern Dynasties

Southern

Song (Sung)--420-479
Qi (Ch'i)--479-502
Liang--520-557
Chen (Ch'en)--557-589

Northern

Northern Zhou (Chou)--557-581
Western Wei--535-557
Northern Qi (Ch'i)--550-577
Eastern Wei--534-550
Northern Wei--386-534

Sui--581-618
Tang (T'ang)--618-907

Five Dynasties and Ten Kingdoms Period--907-979

Latter Liang--907-923
Latter Tang (T'ang)--923-936
Latter Jin (Tsin)--936-946
Latter Han--947-950
Latter Zhou (Chou)--951-960
10 Kingdoms--902-979
Song (Sung)--960-1279
Liao (Kitan)--907-1125
Western Xia--1032-1227
Jin (Nurchen)--1115-1233
Yuan (Mongol)--1279-1368
Ming--1368-1644
Qing (Ch'ing or Manchu)--1644-1911
Republic--1912-1949
People's Republic*--1949-present.

*  The Taiwan authorities are currently recognized by 30 countries as the 
"Republic of  China."  

Early 20th Century China  

Frustrated by the Qing court's resistance to reform, young officials, military 
officers, and  students--inspired by the revolutionary ideas of Sun Yat-sen--
began to advocate the  overthrow of the Qing dynasty and creation of a republic. A revolutionary military uprising  on October 10, 1911, led to the abdication of the last Qing monarch. As part of a  compromise to overthrow the dynasty without a civil war, the revolutionaries and  reformers allowed high Qing officials to retain prominent positions in the new republic.  One of these figures, General Yuan Shikai, was chosen as the republic's first president.  Before his death in 1916, Yuan unsuccessfully attempted to name himself emperor. His  death left the republican government all but shattered, ushering in the era of the "warlords"  during which China was ruled and ravaged by shifting coalitions of competing provincial  military leaders.  

In the 1920s, Sun Yat-sen established a revolutionary base in south China and 
set out to  unite the fragmented nation. With Soviet assistance, he organized 
the Kuomintang (KMT  or "Chinese Nationalist People's Party") along Leninist 
lines, and entered into an alliance  with the fledgling Chinese Communist Party 
(CCP). After Sun's death in 1925, one of his  proteges, Chiang Kai-shek, seized 
control of the KMT and succeeded in bringing most of  south and central China 
under its rule. In 1927, Chiang destroyed the CCP's party  organization and 
executed many of its leaders. The remnants fled into the mountains of  eastern 
China.  

Finally, driven out of their mountain bases in 1934, the CCP's forces embarked 
on a  "Long March" across China's most desolate terrain to the northwest, where 
they  established a guerrilla base at Yan'an in Shaanxi Province.  

During the "Long March," the Communists reorganized under a new leader, Mao 
Zedong  (Mao Tse-tung). The bitter struggle between the KMT and the CCP 
continued openly or  clandestinely through the 14-year long Japanese invasion 
(1931-45), even though the two  parties nominally formed a united front to 
oppose the Japanese invaders in 1937. The war  between the two parties resumed 
after the Japanese defeat in 1945. By 1949, the CCP  occupied most of the 
country.  

Chiang Kai-shek fled with the remnants of his KMT government and military forces to  Taiwan, where he proclaimed Taipei to be China's "provisional capital" and vowed to  reconquer the Chinese mainland. The KMT authorities on Taiwan still call themselves the  "Republic of China."  

The People's Republic of China  

In Beijing, on October 1, 1949, Mao Zedong proclaimed the People's Republic of 
China.  The new government assumed control of a people exhausted by two 
generations of war and  social conflict, and an economy ravaged by high 
inflation and disrupted transportation  links. A new political and economic 
order modeled on the Soviet example was quickly  installed.  

In the early 1950s, China undertook a massive economic and social 
reconstruction. The  new leaders gained popular support by curbing inflation, 
restoring the economy, and  rebuilding many war-damaged industrial plants. The 
CCP's authority reached into almost  every phase of Chinese life. Party control 
was assured by large, politically loyal security  and military forces; a 
government apparatus responsive to party direction; and ranks of  party members 
in labor, women's, and other mass organizations.  

The "Great Leap Forward" and the Sino-Soviet Split  

In 1958, Mao broke with the Soviet model and announced a new economic program, 
the  "Great Leap Forward," aimed at rapidly raising industrial and agricultural 
production above  the impressive gains already attained. Mao believed that 
China's latent potential could be  tapped by industrial decentralization and a 
greater degree of collectivization. Giant  cooperatives (communes) were formed, 
and "backyard factories" dotted the Chinese  landscape. The results were 
disastrous. Normal market mechanisms were disrupted, and  China's people 
exhausted themselves producing what turned out to be shoddy, unsalable  goods. 
Within a year, starvation appeared even in fertile agricultural areas, and the 
Chinese  leadership retreated, blaming poor planning and the weather. Later, 
they also blamed the  Soviets for economic sabotage.  

The already strained Sino-Soviet relationship deteriorated sharply in 1959, when the  Soviets started to restrict the flow of scientific and technological 
information to China. The  dispute escalated, and the Soviets withdrew all of 
their personnel from China in August  1960. In 1960, the Soviets and the Chinese began to have disputes openly in international  forums.  

The Cultural Revolution  

In the early 1960s, State President Liu Shaoqi and his protege, Party General 
Secretary  Deng Xiaoping, took over direction of the party and adopted pragmatic economic policies at  odds with Mao's revolutionary vision. Dissatisfied with China's new direction and his own  reduced authority, Party Chairman Mao launched a massive political attack on Liu, Deng,  and other pragmatists in the spring of 1966. The new movement, the "Great Proletarian  Cultural Revolution," was unprecedented in Communist history. For the first time, a  section of the Chinese Communist leadership sought to rally popular opposition against  another leadership group. China was set on a course of political and social anarchy which  lasted the better part of a decade.  

In the early stages of the Cultural Revolution, Mao and his "closest comrade in 
arms,"  National Defense Minister Lin Biao, charged Liu, Deng, and other top 
party leaders with  dragging China back toward capitalism. Radical youth 
organizations, called Red Guards,  attacked party and state organizations at all levels, seeking out leaders who would not bend  to the radical wind. In reaction to this turmoil, some local People's Liberation Army (PLA)  commanders and other officials maneuvered to outwardly back Mao and the radicals while  actually taking steps to rein in local radical activity.  

Gradually, Red Guard and other radical activity subsided, and the Chinese 
political  situation stabilized along complex factional lines. The leadership 
conflict came to a head in  September 1971, when Party Vice Chairman and Defense Minister Lin Biao reportedly  tried to stage a coup against Mao; Lin Biao allegedly later died in a plane crash in Mongolia.  

In the aftermath of the Lin Biao incident, many officials criticized and 
dismissed during  1966-69 were reinstated. Chief among these was Deng Xiaoping, 
who reemerged in 1973  and was confirmed in 1975 in the concurrent posts of 
Politburo Standing Committee  member, PLA Chief of Staff, and Vice Premier. Deng and other veteran officials dominated  the fourth National People's Congress, held in January 1975. As Premier Zhou Enlai's  health deteriorated, Deng acted as Zhou's alter ego.  

The conflict between veteran party officials and the radicals re-emerged with a 
vengeance in  late 1975. Mao's wife, Jiang Qing, and three close Cultural 
Revolution-era associates (later  dubbed the "Gang of Four") launched a media 
campaign against Deng. When Zhou died in  January 1976, it was assumed that Deng would take over the premiership. Instead,  Minister of Public Security Hua 
Guofeng was named Acting Premier in February. Then on  April 5, when the Beijing populace staged a spontaneous demonstration in Beijing's  Tiananmen Square in Zhou's memory--with strong political overtones in support of Deng-- the authorities forcibly suppressed the demonstration. Deng was blamed for the 
disorder  and stripped of all official positions, although he retained his party membership. An event  interpreted by many Chinese as a sign that Mao's "reign" was near its end was the  Tangshan earthquake, which caused 800,000 casualties in July 1976.  

The Post-Mao Era  

Mao's death in September 1976 removed a towering figure from Chinese politics 
and set  off a scramble for succession. Hua Guofeng was quickly confirmed as 
Party Chairman and  Premier. A month after Mao's death, Hua, backed by the PLA, 
arrested Jiang Qing and  other members of the "Gang of Four."  After extensive 
deliberations, the Chinese  Communist Party leadership reinstated Deng Xiaoping 
to all of his previous posts at the  11th Party Congress in August 1977. This 
symbolized the growing consolidation of  control by veteran party officials 
opposed to the radical excesses of the previous two decades.  

The new, pragmatic leadership emphasized economic development and renounced mass  political movements. At the pivotal December 1978 Third Plenum (of the 11th Party  Congress Central Committee), the leadership adopted new agrarian policies aimed at  expanding rural income and incentives, endorsed experiments in enterprise autonomy and  reduced central planning, and approved direct foreign investment in China. The plenum  also decided to accelerate the pace of legal reform, culminating in the passage of several  new legal codes by the National People's Congress in June 1979.  

After 1979, the Chinese leadership moved toward more pragmatic positions in 
almost all  fields. The party encouraged artists, writers, and journalists to 
adopt more critical  approaches, although open attacks on party authority were 
not permitted. In late 1980, the  Cultural Revolution was finally officially 
proclaimed to have been a catastrophe. Hua  Guofeng was replaced as Premier in 
1980 by reformist Sichuan party chief Zhao Ziyang  and as party General 
Secretary in 1981 by the even more reformist Communist Youth  League chairman Hu Yaobang.  

The 12th Party Congress in September 1982 highlighted the importance of the 
economic  modernization drive by adopting a goal of quadrupling the nation's 
gross domestic product  by the year 2000, and a new state constitution adopted 
in December 1982--the fourth since  1949--provided a legal framework for ongoing reforms in China's social and economic  institutions and practices.  

Reform policies brought great improvements in the standard of living, especially for urban  workers and for farmers who took advantage of opportunities to diversify crops and  establish village industries. Literature and the arts blossomed, and Chinese intellectuals  established extensive links with scholars in other countries. At the same time, however,  political dissent as well as social problems like inflation, urban migration, and prostitution  re-emerged, and party elders increasingly questioned the pace and ultimate goals of the reform program.  

Efforts to reform the political structure, however, have been less successful. 
Student  demonstrators protested the slow pace of political reform in December 
1986. Deng's effort  to institutionalize the leadership succession also received a major blow when Hu Yaobang,  a protege of Deng and a leading advocate of reform, was forced to resign as CCP General  Secretary in January 1987. Premier Zhao Ziyang was made General Secretary and Li Peng,  former Vice Premier and Minister of Electric Power and Water Conservancy, was made  Premier.  

Reform and Tiananmen Square Repression, June 4, 1989  

After Zhao was moved to party General Secretary, the economic and political 
reforms he  had championed came under increasing attack. His proposal in May 
1988 to accelerate price  reform led to widespread popular complaints about 
rampant inflation and gave opponents  of rapid reform the opening to call for 
greater centralization of economic controls and  stricter prohibitions against 
Western influence. This precipitated a political debate which  grew more heated 
through the winter of 1988-89.  

The death of Hu Yaobang on April 15, 1989, provided students, intellectuals, and other  supporters of continued political reform the opportunity to express their desire for greater  freedom. Students at Beijing University marched to Tiananmen Square in order both to  mourn Hu's death and to protest against those who would slow reform. Their protests,  which grew despite government efforts to halt them, called for an end to official corruption  and for defense of freedoms guaranteed by the Chinese Constitution. Protests also spread  through many other cities, including Shanghai and Guangzhou.  

After several attempts to persuade the students to abandon their protests 
failed, Zhao's  strategy of reasoning with the students was overruled, and 
martial law was declared on  May 20, 1989. After several efforts by the military to clear Tiananmen Square failed,  additional units were brought into the Square and surrounding streets early on the morning  of June 4. The result was the death of hundreds--some claim thousands--of people.  

While foreign governments expressed the horror of the world at this brutal 
suppression of  basic human rights, the Chinese central government moved in the 
weeks and months after  June 4 to eliminate any remaining sources of organized 
opposition, detaining large numbers  of protesters, removing Zhao supporters 
from office, and requiring political reeducation not  only for students but also for large numbers of party cadre and government officials.  

Following the resurgence of hard-liners in the aftermath of June 4, economic 
reform  slowed until given new impetus by Deng Xiaoping's dramatic visit to 
southern China in  early 1992. Deng's renewed push for a market-oriented economy received official sanction  at the 14th Party Congress later in the year as a number of younger, reform-minded leaders  rose to top positions. Also subsequent to the visit, China's politburo publicly issued an  endorsement of Deng's policies of economic openness, stating that the policies should be  followed for the next century.  

Deng's campaign marked a new round in the debate over what policies are more 
likely to  maintain the Chinese Communist Party in power over the long run. Deng and his  supporters argued that managing the economy in a way that increases living standards  should be China's primary policy objective, even if 
"capitalist" measures are adopted.  Though not totally inattentive to political 
progress, China has consistently subordinated  political reform to the opening 
of its economy.  

15th Party Congress  

During the 15th Party Congress held in September 1997, President Jiang 
reasserted  China's commitment to economic reform, opening to the outside world, and adhering to  Deng Xiaoping theory. He called for further reform of state-owned industry, including  layoffs of unneeded workers; plans to expand "public ownership" (privatization in  euphemistic terms); and the sale, merger, or closing of many state-owned enterprises.  

The newly-elected Central Committee did not include two members of the outgoing  
Politburo Standing Committee: the National People's Congress Standing Committee  
Chairman, Qiao Shi, and the Central Military Commission Vice Chairman, Liu 
Huaqing.  The retirement of Qiao, currently the third ranking figure in China, 
removes from the  leadership a powerful, independent voice on both personnel and policy issues, and may  signal a significant enhancement in the General 
Secretary's power. Liu was the only  military official on the Standing 
Committee.  

GOVERNMENT  

State Structure  

The Chinese government has always been subordinate to the Chinese Communist 
Party  (CCP); its role is to implement party policies. The primary organs of 
state power are the  National People's Congress (NPC), the President, and the 
State Council. Members of the  State Council include Premier Li Peng (slated to 
step down in early 1998 when his term  expires), a variable number of vice 
premiers (now six), nine state councilors (protocol  equal of vice premiers but 
with narrower portfolios), the heads of ministries (now thirty  one), and the 
heads of other commissions and special agencies attached to the State  Council.  

Under the Chinese Constitution, the NPC is the highest organ of state power in 
China. It  meets annually for about 2 weeks to review and approve major new 
policy directions,  laws, the budget, and major personnel changes. These 
initiatives are presented to the NPC  for consideration by the State Council 
after previous endorsement by the Communist  Party's Central Committee. Although the NPC generally approves State Council policy and  personnel recommendations, various NPC committees hold active debate in closed  sessions, and changes may be made to accommodate alternate views.  

When the NPC is not in session, its permanent organ, the Standing Committee, 
exercises  state power.  

Chinese Communist Party  

The 58 million member CCP, authoritarian in structure and ideology, continues to dominate  government and society. Nevertheless, China's population, geographical vastness, and  social diversity frustrate attempts to rule by fiat from Beijing. Central leaders must  increasingly build consensus for new policies among party members, local and regional  leaders, influential non-party members, and the population at large.  

In periods of relative liberalization, such as between 1978 and 1989, the 
influence of  people and organizations outside the formal party structure has 
tended to increase,  particularly in the economic realm. This phenomenon is 
apparent today in the rapidly  developing coastal region. Nevertheless, in all 
important government, economic, and  cultural institutions in China, party 
committees work to see that party and state policy  guidance is followed and 
that non-party members do not create autonomous organizations  that could 
challenge party rule. Party control is tightest in government offices and in 
urban  economic, industrial, and cultural settings; it is considerably looser in the rural areas, where  80% of the people live.  

Theoretically, the party's highest body is the Party Congress, which is supposed to meet at  least once every five years. The 14th Party Congress, which met in October 1992, elected a  new central committee with an expanded politburo, and abolished the central advisory  commission of party elders.  

The primary organs of power in the Communist Party include:  

-- The seven-member Politburo Standing Committee; -- The Politburo, consisting 
of 22 full members (including the members of the Politburo Standing Committee); 
-- The Secretariat, the principal administrative mechanism of the CCP, headed by the  General Secretary; 
-- The Military Commission; 
-- The Central Advisory Commission; and 
-- The Discipline Inspection Commission, which is charged with 
rooting out corruption and  malfeasance among party cadres.  

Principal Government and Party Officials  

President--Jiang Zemin 
Vice President--Rong Yiren 
Premier, State Council--Li Peng  

Vice Premiers

Zhu Rongji
Zou Jiahua
Qian Qichen
Li Lanqing
Wu Bangguo
Jiang Chunyun

Politburo Standing Committee

Jiang Zemin (General Secretary)
Zhu Rongji
Li Ruihuan
Hu Jintao
Wei Jianxing
Li Lanqing

Full Politburo Members

Chi Haotian
Ding Guangen
Huang Ju
Jia Qinglin
Jiang Chunyun
Li Changchun
Li Tieying
Luo Gan
Qian Qichen
Tian Jiyun
Wen Jiabao
Wu Bangguo
Wu Guangzheng
Xie Fei
Zhang Wannian

Alternate Politburo Members

Wu Yi
Zeng Qinghong

Legal System  

After the Cultural Revolution, China's leaders aimed to develop a legal system 
to restrain  abuses of official authority and revolutionary excesses. In 1982, 
the National People's  Congress adopted a new state constitution that emphasized the rule of law under which  even party leaders are theoretically held accountable. In keeping with the emphasis on  predictability and the rule of law, the NPC delegates also passed a number of new statutes.  Several sought to assure foreigners doing business with China that agreements and  contracts would be honored and that arbitrary behavior would not be tolerated.  

In other legal developments, the first civil procedure law in the history of the People's  Republic of China was promulgated for provisional use in 1982, filling a major gap in the  legal system. Since 1979, when the drive to establish a functioning legal system began,  more than 300 laws and regulations, most of them in the economic area, have been  promulgated. The use of mediation committees--informed groups of citizens who resolve  about 90% of China's civil disputes and some minor criminal cases at no cost to the parties- -is one innovative device. There are more than 800,000 such committees in both rural and  urban areas. The 1994 Administrative Procedure Law allows citizens to sue officials for  abuse of authority or malfeasance.  

The training of lawyers and trained legal aides is now a high priority in China, but the  continued scarcity of such professionals complicates the delivery of legal services in the  courts. In addition, many lawyers, like other Chinese, generally depend on their work units  for housing and many other aspects of their lives. As a result, they often are reluctant to be  seen as overzealous in defending individuals accused of political offenses.  

EDUCATION  

Education has been rapidly developed since the founding of the People's Republic of  China. In 1949, only 20% of China's people were literate. In great contrast, the literacy  rate today is 82%, and about 98.8% of eligible children were enrolled in first grade in  1996. In 1986, the NPC enacted its first national compulsory education law, mandating the  implementation of a nine-year 
compulsory education system for school-age children. While  progress has been 
made in this regard, the rural reforms of the late 1970s and early 1980s  had 
the unanticipated effect of making it profitable for rural families to put 
children to work  as soon as possible; this has hampered efforts to reduce the 
elementary school drop-out  rate.  

A wide gap between China's rural and urban areas exists in secondary education.  
Secondary schools with the best facilities and budgets are nearly all located in the cities.  These include many elite schools that serve as feeder schools for the university system. In  1996, there were about 86,000 secondary schools (both general and vocational) enrolling  over 61 million students.  

China's higher education system was severely damaged during the decade of the 
Cultural  Revolution (1966-76); many colleges and universities were closed 
during this period.  Restoration of the higher education system did not begin 
until 1978, when China's colleges  and universities chose new entrants on the 
basis of standardized entrance examinations and  academic criteria, rather than 
on political criteria. A major effort also was begun to restore  the facilities 
and personnel resources of colleges and universities to the pre-1966 level. In  
1996, there were 1100 institutions of higher learning in China, with a total of 
over three  million students.  

The results of the education reforms have been difficult to measure, but their 
long-term  success seems to depend largely on two key questions: whether local 
authorities devote the  necessary resources to the new system and whether it 
attracts the quality of teachers and  administrators it needs. The pro-democracy movement of 1989, which started on Chinese  campuses, appears to have spurred efforts by conservatives to increase the ideological  content of education, first at the university level and increasingly in secondary education. It remains to be seen whether these efforts will endure.  

China has sent students to the West since the early 1970s, and the numbers have 
increased  dramatically in recent years. Between 1978 and 1996, more than 
270,000 Chinese students  studied abroad. About 50,000 students were studying in the United States in 1992.  President Bush's executive order of late 1989 
concerning Chinese nationals in the U.S.  protected these students from being 
involuntarily repatriated before January 1, 1994. The  Chinese Student 
Protection Act of 1992 allows these Chinese to apply for permanent  residency.  

The Party Central Committee and the State Council issued "Guidelines for 
Educational  Reform and Development in China by 2000" in 1993 and promulgated a 
development  strategy of "invigorating the nation through science and education" in 1995.  

Adult education in various forms has been flourishing in China. Higher learning  
institutions for adults include radio and TV universities, workers' colleges, 
farmers'  colleges, correspondence colleges, and evening universities. Radio and TV universities  totaled 46 in 1994, and enrollment exceeded half a million 
students. In 1996, there were  2.7 million people studying in adult higher 
learning institutions.  

At present, China is focusing its energies on carrying out the 211 Project, 
whose goal is to  cultivate 100 major universities and promote key disciplines 
that will make Chinese  students more competitive in the 21st century.  

HUMAN RIGHTS  

China has acknowledged in principle the importance of human rights and has begun a  limited dialogue with its foreign critics. However, its human rights 
practices remain  repressive, falling short of internationally accepted norms. 
The government restricts  freedom of assembly, expression, and the press and 
represses most dissent. The most  obvious of these efforts was the violent 
suppression of the demonstrators in Tiananmen  Square in 1989 and the subsequent imprisonment of many of the demonstrators, who were  charged with offenses such as "counter-revolutionary incitement."  

Although China attempts to control religion through state-sponsored 
organizations,  unofficial religious practice is flourishing. Catholics and 
Protestants have been prosecuted  for maintaining foreign ties, proselytizing, 
or conducting "illegal" religious services.  

In recent years, exposure to international norms and legal systems has played a 
role in  China's legal reform effort. Recent reforms include the 1994 
Administrative Procedure  Law, which broadens citizen rights, and 1997 
amendments to the Criminal Procedure Law,  which imposes limits on police 
detention of suspected criminals.  

ECONOMY  

Trends and Policies: 1949-81  

When the People's Republic of China was established in 1949, its economy was 
suffering  from severe dislocations caused by decades of war and inflation. The 
new government's  immediate concerns were to consolidate power, restore public 
order, and eliminate  widespread starvation and unemployment--all of which were 
accomplished by 1952.  

Following the example of the early Soviet experience, China created a centrally 
planned  economy which emphasized defense needs and the rapid buildup of heavy 
industry.  China's involvement in the Korean war and the resulting UN trade 
embargo against it led to  further reliance upon Soviet rather than Western 
assistance. Blueprints for many facilities  were imported from the then Soviet 
Union, which also provided technicians.  

Despite major disruptions stemming from political turmoil and poor economic 
planning,  China's economy averaged a growth rate of almost 6% per year during 
1957-81. The  "Great Leap Forward" (1958-60) had a disastrous effect upon the 
economy. Economic  experiments during this period included rural 
collectivization, abandonment of wage  incentives, "backyard" steel plants, and 
great leeway for local government initiative. Such  experiments plunged China 
into a depression in the early 1960s, resulting in famine and the  death of 
millions of Chinese. Compounding these domestic difficulties were increasingly  
strained relations with the Soviets, who withdrew all assistance and technicians in August  1960.  

In response to these traumas, Beijing reemphasized its traditional determination to be "self- reliant" and began to invest in its agricultural sector. After a brief period of economic  growth, the Cultural Revolution (1966-76) reintroduced ideology into economic planning,  severely damaging educational and training systems and disrupting foreign trade.  

In 1975, then Premier Zhou Enlai outlined a new set of economic goals to elevate China to  the status of a "front rank" economic power by the year 2000. This multi-staged effort,  described as the "Four Modernizations," aimed to achieve ambitious levels of production in  Chinese agriculture, industry, science and technology, and national defense. It echoed a  century-long  search for means to restore the country to relative wealth and power in a  world of technologically advanced civilizations.  

After Mao died in 1976, a more pragmatic perspective on political and 
socioeconomic  problems led to a sharp reduction in the role of ideology in 
economic policy. Consumer  welfare, economic productivity, and political 
stability were considered indivisible. The  government emphasized raising 
personal income and consumption and introducing new  management systems to help 
increase productivity. The government also began to expand  foreign trade--by 
1978, China was over-extended, having committed itself to purchases  totaling $7 billion.  

After poor economic performance in 1978, the government's "readjustment" plan 
for 1979- 81 focused on moderate, short-term goals to remedy the ailing domestic economy.  Hundreds of industrial capital construction projects were canceled or postponed to shift  resources away from heavy industry to light industry and agriculture. Efforts were made to  foster economic development by improving energy production and transportation and other  infrastructure. At the same time, the government delegated more economic decision-making  power to the local governments and state-owned enterprises (SOEs).  

In 1981, continuing budget deficits, excessive capital construction (largely 
generated by  local governments and SOEs), and inflation led to an even more 
stringent austerity  program. Many contracts for imported plants and equipment 
were canceled or postponed,  some inefficient state factories were closed, and 
foreign technology was acquired more  judiciously. Tighter central control over 
some aspects of economic planning also was  reintroduced.  

The 1980s  

The 5-year plans for 1981-85 and 1986-90 increasingly reduced the overall role 
of central  management in favor of a mixed "planned commodity" economy. China 
tried to combine  central planning with market-oriented reforms to increase 
productivity, living standards,  and technological quality without exacerbating 
inflation, unemployment, and budget  deficits. China pursued agricultural 
reforms (including long-term leases on land and  permission to specialize in 
cash crops) and engaged in non-agricultural activities that led to  the demise 
of the commune system. The government encouraged more self-management  for 
state-owned enterprises, increased competition in the marketplace, and 
facilitated direct  contact between Chinese and foreign trading enterprises. To 
meet plan targets, China also  relied more upon foreign financing and imports.  

During the 1980s, these reforms led to average annual rates of growth of 10% in  
agricultural and industrial output. Rural per capita real income doubled. China 
became self- sufficient in grain production; rural industries accounted for 23% 
of agricultural output,  helping absorb surplus labor in the countryside. The 
variety of light industrial and  consumer goods increased. Reforms began in the 
fiscal, financial, banking, price setting,  and labor systems.  

However, by the late 1980s, the economy had become overheated with increasing 
rates of  inflation. At first, the government reacted to economic pressures by 
adopting a variety of  fiscal and administrative measures and working toward 
creating the appropriate political  environment in which such reforms could 
thrive.  

1989 - Mid-1990s  

At the end of 1988, however, in reaction to a sudden surge of inflation, the 
leadership  introduced a severe austerity program. Political struggle and 
economic instability fueled  popular unrest. The resulting economic slump was 
compounded by the immediate foreign  reaction to the violence at Tiananmen 
Square. Resource flows from abroad dropped  dramatically, accelerating the 
deterioration in China's current account balance and raising  debt service 
requirements. The World Bank terminated consideration of new loans, and  
bilateral assistance programs were frozen. Foreign commercial lending slowed 
down, and  foreign investors postponed projects. Tourism declined sharply. The 
official trade deficit  reached $6.7 billion by the end of 1989.  

China's economy regained momentum in 1990. The government shifted its focus from  austerity to restructuring the state-owned enterprises. It relied heavily on promoting exports  (while reducing or eliminating export subsidies) and 
restricting imports to stimulate  economic recovery. By the end of 1990, China 
had a record $9 billion official trade  surplus. Its gross domestic product grew by 5%; inflation was at 2%. Tourism recovered.  The World Bank and most 
bilateral assistance donors other than the U.S. resumed former  relationships 
with the country. Notably, Japan restarted a 5-year bilateral aid program which 
helped revive foreign commercial bank lending.  

According to the 14th Party Congress in late 1992, China's key task in the 1990s is to  create a "socialist market economy."  Continuity in the political system but bolder reform in  the economic system were announced as the hallmarks of the 10-year development plan for  the 1990s. The 5-year plan for 1991-95 emphasized development of agriculture, basic  industries, transportation, and  telecommunications. Chinese leaders were cautious in  stressing a need for  greater efficiency and appeared to reject radical changes in the  economic  system. The new plan seemed to focus on reducing uncertainties and on fine- tuning some existing policies with respect to prices, finance, taxation, banking, planning,  investment, and labor. It did not target the structural price distortions influenced by  government subsidies to large, inefficient state-owned enterprises and the privileged urban  population (in the form of housing and food). Moreover, the plan did not address the huge  amount of resources needed to acquire raw materials and technology to fulfill development plans.  

1993-Present  

During 1993, output and prices were accelerating, investment outside the state 
budget was  soaring, and economic expansion was fueled by the introduction of 
more than two  thousand special economic zones (SEZs) and the influx of foreign 
capital that the SEZs  facilitated. Fearing hyperinflation, Chinese authorities 
called in speculative loans, raised  interest rates, and re-evaluated investment projects. The growth rate was thus tempered,  and the inflation rate dropped from over 17% in 1995 to 8% in early 1996.  

China experienced growth of 9.5% in the first half of 1997; inflation has 
remained low, but  may increase in the latter part of the year. Continued 
economic reform is critical to  continued growth, and the government needs to 
carefully manage the new challenges-- economic and political--that often 
accompany growth and reform.  

Over half of China's state-owned enterprises reported losses in 1996. During the 15th  National Congress of the Chinese Communist Party that met in September 1997, President  Jiang Zemin called for the sale, merger, or closing of the vast majority of SOEs; plans for  "public ownership" (privatization in euphemistic terms) are currently being promoted.  

AGRICULTURE  

Most of China's labor force is engaged in agriculture, even though only 10% of 
the land is  suitable for cultivation. Virtually all arable land is used for 
food crops, and China is among  the world's largest producer of rice, potatoes, 
sorghum, millet, barley, peanuts, tea, and  pork. Major non-food crops, 
including cotton, other fibers, and oil seeds, furnish China  with a large 
proportion of its foreign trade revenue. Agricultural exports, such as  
vegetables and fruits, fish and shellfish, grain and grain products, and meat 
and meat  products, are exported to Hong Kong. Yields are high because of 
intensive cultivation, but  China hopes to further increase agricultural 
production through improved plant stocks,  fertilizers, and technology.  

Output of key agricultural commodities has remained strong in the past few 
years. The  1996 grain harvest of 490 million tons exceeded even optimistic 
expectations, and despite  significant flooding this year, oversupply of grain 
is a problem. A July estimate places the  1997 summer grain harvest at an 
expected 115-118 million tons, 3.5% above that of 1996.  

At an agricultural conference in July, Vice Premier Zhu Rongji emphasized the 
importance  of purchasing grain from farmers at subsidized procurement prices 
rather than at the  currently lower market prices and ordered the financial 
sector to ascertain that sufficient  funds exist for such purchases. The policy 
promoted by Zhu illustrates that China has  priorities which may run counter to 
market concepts.  

INDUSTRY  

Major state industries are iron, steel, coal, machine building, light industrial 
products,  armaments, and textiles. These industries completed a decade of 
reform (1979-89) with  little substantial management change. China's 1996 steel 
output totaled 100.03 million  tons.  

Although the central government depends upon income from state-owned 
enterprises, their  productivity has been falling while costs of production and 
debt levels have been increasing  sharply. The government recognizes the need 
for substantial reforms, and during the 15th  National Congress of the Chinese 
Communist Party that met in September 1997, President  Jiang announced plans to 
sell, merge, or close the vast majority of SOEs in his call for  increased 
"public ownership" (privatization).  

The 1996 industrial census revealed that there were 7,342,000 industrial 
enterprises at the  end of 1995; total employment in industrial enterprises was 
approximately 147 million. The  automobile industry is expected to grow rapidly, as is electric power generation. Machinery  and electronic products have become China's main exports.  

ENERGY AND MINERAL RESOURCES  

The Chinese have high energy needs but limited capital. As in other sectors of 
the state- owned economy, the energy sector suffers from low utilization and 
inefficiencies in  production, transport, conversion, and consumption. Other 
problems include declining real  prices, rising taxes and production costs, 
spiraling losses, high debt burden, insufficient  investment, low productivity, 
poor management structure, environmental pollution, and  inadequate 
technological development. Demand for energy has risen steadily in response to  
the rapid expansion of the economy over the last 10 years. The Ministry of 
Electric Power  estimates that about 15-20 percent of the nation's demand for 
electricity is not being  satisfied; shortages and blackouts greatly reduce 
industrial productivity. To mitigate these  problems, China's seeks to increase 
electric generating capacity to a target level of 290  gigawatts by 2000. An 
estimated 15,000 megawatts of generating capacity will be added  each year, at 
an annual cost of about $15 billion. China has imported new power plants  from 
the West to increase its generation capacity, and these units account for 
approximately  20% of total generating capacity.  

Coal  

Coal provides 75% of China's energy. With around 900 billion metric tons (MT) of  identified and recoverable reserves, China's total coal resources are more than three times  the reserves in the U.S. or in the former Soviet republics. Over 1.37 billion tons of coal  were produced in 1996. Coal exports that year of 29 million tons were worth $1.1 billion.  Ironically, China must import coal to meet demand in the industrial south because of  shipping difficulties in the 
north-central regions where the coal is mined. 3.2 million tons  of coal were 
imported in 1996. Between 1996 and 2000, coal production is planned to rise  at 
an annual average rate of 2.3%.  

Oil  

China became a net importer of petroleum (crude oil plus products) in 1993, 
after years of  growth in consumption and stagnant production. China imported 
745,000 barrels per day  (b/d) (454,000 b/d of crude oil and 291,000 b/d of 
petroleum products) and exported  465,000 b/d (408,000 b/d of crude oil and 
57,000 b/d of petroleum products) in 1996.  

The refining industry was transformed during the 1980s. A number of smaller 
refineries  were shut down and most of the larger ones were consolidated in 1983 under Sinopec  (China National Petrochemical Corporation). At a cost of about $10 billion, China  upgraded refineries to shift output from fuel oil to more valuable products like gasoline,  kerosene, diesel, and components for 
petrochemicals.  

China's primary distillation capacity of over 2.4 million b/d, is fifth largest 
in the world;  China is second only to the U.S. in the ratio of upgrading 
capacity to distillation.  Production of non-energy-use products including raw 
materials, lubricants, asphalt, coke,  paraffin, and solvents has also increased significantly. Demand still exceeds production of  many petroleum products, however, which has necessitated a growing level of imports.  

Oil production remains dependent on the output of the Daqing oil field, which 
has produced  50 million tons per year for the past two decades. In 1996, the 
Daqing, Shenglie, and  Liaohe oil fields accounted for more than three-fourths 
of the 158 million tons of oil  produced. Keremai and Tarim, oil fields in the 
West, produced only 20 million tons.  Offshore production is expanding but 
remains small (less than ten percent of total  production).  

In September 1997, China signed an agreement with Kazakhstan under which it will gain  60 percent ownership of the national oil company in return for investing $4.3 billion in  Kazak oil fields over the next two decades.  

Hydroelectric Power  

China is believed to have the world's greatest hydropower potential, though it 
is not fully  developed. A number of hydropower projects are planned or 
underway, including plans for  the world's largest dam at the Three Gorges site 
on the Yangtze River. Construction was  initiated in 1994 and will take fifteen 
years to complete. The estimated cost is at least $12  billion, for which 
Beijing must seek foreign loans, technology, and parts.  

Natural Gas  

Most natural gas is used by industry. Two-thirds of the commercial volume is 
consumed as  raw material to make fertilizer or fuel. Over 5.3 million people 
are served by natural gas in  the cities of Beijing, Tianjin, Shenyang, Dalian, 
Zhengzhou, Chengdu, and Chongqing.  

China's natural gas production is small in relation to its potential reserve 
base and crude oil  production. Forty percent of China's gas production comes 
from major fields in Sichuan  province. Arco Petroleum (in a joint venture with 
Kuwaiti and Chinese oil companies)  discovered a large natural gas field in the 
South China Sea and has embarked on a $1  billion project to build the world's 
longest undersea pipeline to deliver the gas to a power  plant under 
construction in Hong Kong. An offshoot of the pipeline will deliver gas to  
Hainan Island.  

The current five-year plan sets an annual production target of 25 billion cubic 
meters  (approximately 882 billion cubic feet) by 2000.  

Nuclear Power  

There are currently three nuclear power stations, producing only 1% of national 
power  output. By the end of the Ninth Five-Year Plan, there will be eight 
plants with a total  generating capacity of 6.6 million kilowatts, up from 2.1 
million kilowatts at present.  

Minerals  

China's metal and mineral resources, believed to be substantial, are largely 
unexplored.  China is a major producer and exporter of tin, antimony, tungsten, 
and fluorspar. China  also exports strategic metals such as molybdenum, 
titanium, tantalum, and vanadium.  China lacks reserves of copper, chromite, 
nickel, and zinc.  

ENVIRONMENT  

A harmful by-product of China's rapid industrial development in the 1980s has 
been  increased pollution. Although China has passed environmental legislation 
and has  participated in some international anti-pollution conventions, 
pollution will be a serious  problem in China for years to come.  

China is an active participant in the UN Environment Program and a signatory to 
the Basel  Convention governing the transport and disposal of hazardous waste. 
China also signed the  Montreal Convention for the Protection of the Ozone Layer in 1991.  

The head of China's National Environmental Protection Agency (NEPA) proclaimed 
in  1991 that environmental protection was one of China's basic national 
policies, at the same  time cautioning that environmental protection must be 
coordinated with economic  development. According to NEPA, $3.2 billion was 
spent on pollution prevention and  environmental rehabilitation from 1981-85, 
$8.8 billion from 1986-1990, and about $15  billion for the eighth five-year 
plan (1991-95). The National Action Program for  Environmental Publicity and 
Education, announced at the Fifth Plenary Session of the 14th  Central Committee in 1992, seeks to "do a better job of publicity and education in  environmental protection and enhance the environmental consciousness of the entire  nation."  

China has sought to contain its increasing industrial pollution largely through 
administrative  procedures and efforts to increase public awareness. The 
heavily-polluted Pearl River delta  is one of the first major industrialized 
areas targeted for clean-up. Officials hope that new  sewage treatment plants 
for cities in the delta area will enable the river to support an edible  fish 
population by the year 2000. A small environmental protection industry has also  
emerged. However, in some areas of China, pollution has long been considered as 
one of  the costs associated with economic development.  

The question of environmental damage associated with the hydroelectric Three 
Gorges Dam  project concerns NEPA officials. While conceding that erosion and 
silting of the Yangtze  River threaten several endangered species, officials say the hydroelectric power generated  by the project will enable the region to 
lower its dependence on coal, thus lessening air  pollution.  

Overall, even NEPA characterizes the environmental situation in China as grim 
and  recognizes that increasing deforestation and desertification will threaten 
the base of China's  economic development.  

TRANSPORTATION  

Railways  

Total: 62,500 km Standard gauge (1.435 m): 58,900 km Narrow gauge (0.750 m) 
(1996 est.): 3,600 km  

Highways  

Total (1996 est.): 1.117 million km Paved (1996 est.): 239,500 km Unpaved (1996 
est.): 877,500 km  

Waterways  

Total: 138,600 km, about 110,600 km navigable.  

Pipelines (1990)  

Crude oil: 9,700 km Petroleum products, 1,100 km Natural gas: 6,200 km  

Major Ports and Harbors  

Dalian, Fuzhou, Guangzhou, Haikou, Lianyungang, Nanjing, Nantong, Ningbo,  
Qingdao, Qinhuangdao, Shanghai, Shantou, Tianjin, Xiamen, Yantian, Zhanjiang  

Merchant Marine  

Total: 1,736 ships (1,000 GRT (gross registered tons) or over) totaling 
16,749,069 GRT  (25,196,607 DWT (dead-weight tons)).  

Ships by type: Barge carrier (2), bulk (325), cargo (883), chemical tanker (16),  combination bulk (11), container (109), liquefied gas tanker (9), multifunction large-load  carrier (6), oil tanker (232), passenger (6), passenger-cargo (47), refrigerated cargo (24),  roll-on/roll-off cargo (22), short-sea passenger (43), specialized tanker (1).  

Note: China owns an additional 270 ships (1,000 GRT or over) totaling 8,754,413 
DWT  operating under the registries of Panama, Malta, Liberia, Vanuatu, Cyprus, 
Saint Vincent  and the Grenadines, Marshall Islands, and Singapore.  

Airports  

Total: 330 (260 with permanent-surface runways)  

COMMUNICATIONS  

Telephones  

Total (1996 est.): 61.8 million Pagers (1996 est.): 25.4 million Mobile 
telephones (1996 est.)  6.9 million  

System: Domestic and international services are increasingly available for 
private use; an  unevenly distributed internal system serves principal cities, 
industrial centers, and most  townships.  

Televisions  

Total: 75 million Number of broadcast stations: 202  

SCIENCE AND TECHNOLOGY  

At the end of 1996, China had 5,434 state-owned independent research and 
development  institutions at and above the county level. There were another 
3,400 research institutions  affiliated with universities, 13,744 affiliated 
with medium and large industrial enterprises,  and 726 affiliated with medium 
and large construction enterprises. A total of 2.8 million  people were engaged 
in scientific and technological activities in these institutions.  

Scientific and technological modernization has been a growing priority for 
Chinese leaders.  They aim to achieve 1980s Western levels by the year 2000 by 
rebuilding the educational  structure, sending students abroad, negotiating 
technological purchases and transfer  arrangements with the U.S. and others, and by developing ways to disseminate scientific  and technological information. Areas of most critical interest include microelectronics,  telecommunications, computers, automated manufacturing, and energy. China also has had a space program since the 1960s and has successfully launched 27 satellites. One particularly effective program plans to reinvest military resources in the civilian sector and  emphasizes bio-space information, laser and automation technology, and research in energy  and advanced materials. 

Expenditures in 1996 on scientific and technological activities totaled nearly 
90 billion  yuan, up 8.6% from the previous year. Although China has been 
funding its ambitious  science programs at a rate slightly higher than that 
accorded other priority programs, the  amount spent is still not commensurate 
with need. Consequently, the Chinese are  encouraging local industrial entities 
to finance and support research groups; they also have  sought to encourage 
foreign investors to pump money and technology into joint equity and  
cooperative ventures. China has made rapid progress in some areas and is 
starting to accept  that it does not always need state-of-the-art technology, 
since a lesser technology may  prove to be more appropriate, useful, and 
profitable.  

The U.S. has continued to extend the Agreement on Cooperation in Science and  
Technology (originally signed in 1979). A five-year agreement to extend and 
amend the  accord, including provisions for the protection of intellectual 
property rights, was signed in  May 1991, and the Agreement was again extended 
for five years in April 1996. Japan has  also continued to increase science and 
technology cooperation with China.  

In 1996, China made significant advancements in telecommunications, aviation, 
transgenic  crop research, and superconductor research. Also that year, China 
launched a high-tech  development program known as Project 863, which called for organizing top scientists and  engineers to follow the world's latest 
achievements in seven fields.  

TRADE AND INVESTMENT  

China's current leadership has recognized that foreign trade and technology play critical  roles in the country's modernization and has promulgated measures to improve the  investment climate.

China has experimented with decentralizing its foreign trading system and has 
sought to  integrate itself into the world trading system. In November 1991, 
China joined the Asia  Pacific Economic Cooperation (APEC) group, which promotes free trade and cooperation  in economic, trade, investment, and technology 
issues.
  
China is now in its 11th year of negotiations for accession to the World Trade 
Organization  (WTO)--formerly the General Agreement on Tariffs and Trade (GATT). China has  significantly reduced import tariffs. In 1996, China introduced cuts to more than 4,000  tariff lines, reducing average tariffs from 35% to 23%; further tariff cuts that took effect  October 1 1997 will decrease average tariffs to 17%.
 
To gain WTO entry, all prospective WTO members are required to comply with 
certain fundamental trading disciplines and offer substantially expanded market 
access to other  members of the organization. Securing China's accession to the 
WTO on these terms will  contribute to China's economic progress, spur economic 
growth in the U.S. and other  WTO-member economies, and support the integrity of the international trading system. The  United States continues to work with 
China and other WTO members toward a  commercially viable accession protocol.  


Many major trading entities--among them the United States, the European Union, 
and  Japan--have shared concerns with respect to China's accession. These 
concerns include  obtaining satisfactory market access offers for both goods and services, full trading rights  for all potential Chinese consumers and end-
users, nondiscrimination between foreign and  local commercial operations in 
China, the reduction of monopolistic state trading practices,  and the 
elimination of arbitrary or non-scientific technical standards. 
 

According to Chinese statistics, global trade totaled $290 billion in 1996; the 
trade surplus  stood at $12.3 billion. China's primary trading partners include 
Japan, Taiwan, the U.S.,  South Korea, Hong Kong, Germany, Singapore, Russia, 
and the Netherlands. In 1996,  China had a trade deficit with the United States 
of $39.5 billion.  

To increase exports, China has pursued policies such as fostering the rapid 
development of  foreign-invested factories which assemble imported components 
into consumer goods for  export.  

The U.S. is one of China's primary suppliers of power generating equipment, 
aircraft and  parts, computers and industrial machinery, raw materials, and 
chemical and agricultural  products. However, U.S. exporters continue to have 
concerns about fair market access due  to China's restrictive trade policies.  

FOREIGN INVESTMENT  

Foreign investment stalled in the aftermath of Tiananmen. In response, the 
government  introduced legislation and regulations designed to encourage 
foreigners to invest in high- priority sectors and regions.  

In 1990, the government eliminated time restrictions on the establishment of 
joint ventures,  provided some assurances against nationalization, and allowed 
foreign partners to become  the chairs of joint venture boards. In 1991, China 
granted more preferential tax treatment  for wholly foreign-owned businesses and  contractual ventures and for foreign companies  which invest in selected 
economic zones or in projects encouraged by the state, such as  energy, 
communications, and transportation. It also authorized some foreign  banks to  
open branches in Shanghai and allowed foreign investors to purchase special "B" 
shares of  stock in selected companies listed on the Shanghai and Shenzhen 
Securities Exchanges.  These "B" shares are sold to foreigners but carry no 
ownership rights in a company. This  resulted in more than 37,000 contracts 
worth nearly $46 billion in 1991. In 1996, China  approved 24,673 foreign 
investment projects and received over $42 billion in foreign direct  investment,  second only to the United States.  

Opening to the outside remains central to China's development. Foreign-invested  
enterprises produce about 40% of China's exports, and China continues to attract  large  investment inflows. Foreign exchange reserves have topped $130 billion this year. China's  trade continues to grow, reaching $290 billion in 1996, with a modest global surplus of  $14 billion.  

FOREIGN RELATIONS  

Since its establishment, the People's Republic has worked vigorously to win 
international  support for its position that it is the sole legitimate 
government of all China, including  Hong Kong, Macao, and Taiwan. In the early 
1970s, when it was recognized by most  world powers, Beijing made major 
breakthroughs toward this goal. Beijing assumed the  China seat in the United 
Nations in 1971 and became increasingly active in multilateral  organizations. 
Japan established diplomatic relations with China in 1972, and the U.S. did  so 
in 1979. The number of countries that have established diplomatic relations with  Beijing  has risen to 156, while 30 have diplomatic relations with Taiwan.  

After the founding of the P.R.C., China's foreign policy initially focused on 
solidarity with  the Soviet Union and other communist countries. In 1950, China 
sent the People's  Liberation Army into North Korea as "volunteers" to help 
North Korea halt the UN  offensive which was approaching the Yalu River. After 
the conclusion of the Korean war,  China sought to balance its identification as  a member of the Soviet bloc by establishing  friendly relations with India and neutralist countries, particularly in Southeast Asia.  

In the 1960s, due to disenchantment with the Soviet Union, Beijing competed with Moscow for political influence among communist parties and in the developing world  generally. Following the 1968 Soviet invasion of Czechoslovakia and clashes in 1969 on  the Sino-Soviet border, Chinese opposition to the Soviet Union increasingly reflected  concern over China's own strategic position.  

In late 1978, the Chinese also became concerned over Vietnam's efforts to 
establish open  control over Laos and Cambodia. In response to the Soviet-backed Vietnamese invasion of  Cambodia, China fought a brief border war with Vietnam (February-March 1979) with the  stated purpose of "teaching Vietnam a lesson."  

Chinese anxiety about Soviet strategic advances was heightened following the 
Soviet  Union's December 1979 invasion of Afghanistan. Sharp differences between China and the  Soviet Union persisted over Soviet support for Vietnam's 
continued occupation of  Cambodia, the Soviet invasion of Afghanistan, and 
Soviet troops along the Sino-Soviet  border and in Mongolia--the so-called 
"three obstacles" to improved Sino-Soviet relations.  

In the 1970s and 1980s China sought to create a secure regional and global 
environment for  itself and to foster good relations with countries that could 
aid its economic development.  To this end, China looked to the West for 
assistance with its modernization drive and for  help in countering Soviet 
expansionism--which it characterized as the greatest threat to its  national 
security and to world peace.  

China maintained its consistent opposition to "superpower hegemonism," focusing 
almost  exclusively on the expansionist actions of the Soviet Union and Soviet 
proxies such as  Vietnam and Cuba, but it also placed growing emphasis on a 
foreign policy independent of  both superpowers. While improving ties with the 
West, China continued to follow closely  economic and other positions of the 
Third World nonaligned movement, of which China  was not a formal member.  

Recently, China has become a more visible actor internationally. Chinese leaders  are  regular travelers to all parts of the globe, and China has sought a higher  profile in the UN  and other multilateral organizations. Closer to home, China  seeks to reduce tensions in Asia  through its relations with North and South  Korea and its broad range of ties with Japan.  China also has cultivated a more  cooperative relationship with members of the Association  of Southeast Asian  Nations (Brunei, Burma, Indonesia, Laos, Malaysia, Philippines,  Singapore,  Thailand, Vietnam) and has increased nonpolitical exchanges with India. These   efforts flowed in part from China's perception of itself as the historic great  power in East  Asia and as the world's largest developing country.  

China's International Position Since 1989  

By 1989, China's 10-year old program of economic and political reforms had 
increased  substantially its relations with the developed world. At the same 
time, China's need for  stability on its northern border coincided with the 
Soviet Union's interest in reducing the  military burden of its border 
confrontation with China. In May 1989, Soviet Communist  Party General Secretary  Gorbachev visited Beijing, attracting world-wide media coverage.  Reporters,  including large numbers from the U.S., found themselves in the middle of pro-  democracy demonstrations prompted by the death of former Communist Party General   Secretary Hu Yaobang. The violent suppression of the demonstrations in and  around  Tiananmen Square on June 4 provoked a world-wide condemnation of China's  violations of human rights.  

In the immediate aftermath of June 4, many countries reduced their diplomatic 
contacts with  China as well as their economic assistance programs. China 
countered with a sustained  effort to encourage resumption of normal relations. 
In the fall of 1990, this led to the  resumption of Japan's third yen loan to 
China. China also worked vigorously to expand its  relations with the countries 
of Southeast Asia. By late 1990, China had reestablished  normal relations with 
almost all nations. Following the collapse of the Soviet Union in late  1991, 
China also moved to open diplomatic relations with the republics of the former  
Soviet Union.  

China has a number of border and maritime disputes. China disputes the boundary 
with  Vietnam in the Gulf of Tonkin, and is also involved in a complex dispute 
with Vietnam,  Malaysia, Philippines, and Taiwan over the Spratly Islands. China  claims the Japanese- administered Senkaku-shoto (Senkaku Islands or Diaoyutai),  and occupies the Paracel  Islands claimed by Vietnam and Taiwan. A short section  of its border with Tajikistan (the  Pamir salient) is still in dispute. The  border with India is also disputed, but the two  governments have established a  working group, which started its fourth round of  discussions in February 1992.  Also in that month, China and Russia ratified an agreement  settling most of  their eastern border.  

DEFENSE  

Establishment of a professional military force equipped with modern weapons and 
doctrine  was the last of the "Four Modernizations" announced by Zhou Enlai and 
supported by  Deng Xiaoping. In keeping with Deng's mandate to reform, the 
People's Liberation Army  (PLA), which includes the strategic nuclear forces, 
army, navy, and air force, has  demobilized about 3 million men and women since 
1978 and has introduced modern  methods in such areas as recruitment and 
manpower, strategy, and education and training.  

Following the June 1989 Tiananmen crackdown, ideological correctness was 
temporarily  revived as the dominant theme in Chinese military affairs. Reform 
and modernization  appear to have since resumed their position as the PLA's 
priority objectives, although the  armed forces' political loyalty to the CCP 
remains a leading concern.  

The Chinese military is trying to transform itself from a land-based power, 
centered on a  vast ground force, to a smaller, mobile, high-tech military 
capable of mounting defensive  operations beyond its coastal borders. Since 
1985, China has reduced military personnel by  one million, to a total of less 
than three million today; another reduction of 500,000 is  under way.  

China's power-projection capability is limited. China has recently acquired some 
advanced  weapons systems, including SU-27s and Kilo-class diesel submarines 
from Russia.  However, the mainstay of the air force continues to be the 1960s-
vintage F-7, and naval  forces still consist primarily of 1960s-era technology.  

NUCLEAR WEAPONS AND ARMS CONTROL POLICY  

Nuclear Weapons  

In 1955, Mao Zedong's Chinese Communist Party decided to proceed with a nuclear  
weapons program; it was developed with Soviet assistance until 1960. After its 
first nuclear  test in October 1964, Beijing deployed a modest but potent 
ballistic missile force, including  land and sea-based intermediate-range and 
intercontinental ballistic missiles.  

China became a major international arms exporter during the 1980s, while 
claiming that it  had a "prudent and responsible" attitude toward arms sales. 
Beijing joined the Middle East  arms control talks, which began in July 1991 to 
establish global guidelines for conventional  arms transfers, but announced in 
September 1992 that it would no longer participate  because of the U.S. decision 
to sell F-16A/B aircraft to Taiwan. China's continued nuclear  assistance to 
Pakistan and Iran in recent years has raised international concern.  

The P.R.C. was the first state to pledge "no first use" of nuclear weapons. It 
joined the  International Atomic Energy Agency (IAEA) in 1984 and pledged to 
abstain from further  atmospheric testing of nuclear weapons in 1986. China 
acceded to the Nuclear  Nonproliferation Treaty (NPT) in 1992 and supported its 
indefinite and unconditional  extension in 1995. In 1996, it signed the 
Comprehensive Test Ban Treaty and agreed to  seek an international ban on the 
production of fissile nuclear weapons material.  

China attended the May 1997 meeting of the NPT Exporters (Zangger) Committee as 
an  observer and became a full member in October 1997. The Zangger Committee is 
a group  which meets to list items that should be subject to IAEA inspections if 
exported by  countries which have, as China has, signed the Non-Proliferation 
Treaty. In September  1997, China issued detailed nuclear export control 
regulations.  

Chemical Weapons  

Regarding chemical weapon proliferation, China is not a member of the Australia 
Group,  an informal and voluntary arrangement made in 1985 to monitor 
developments in the  proliferation of dual-use chemicals and to coordinate 
export controls on key dual-use  chemicals and equipment with weapons 
applications. However, in April 1997, China  ratified the Chemical Weapons 
Convention (CWC) and, in September 1997, promulgated a  new chemical weapons 
export control directive.  

Missiles  

In March of 1992, China formally undertook to abide by the guidelines and 
parameters of  the Missile Technology Control Regime (MTCR), the multinational 
effort to restrict the  proliferation of missiles capable of delivering weapons 
of mass destruction. China  reaffirmed its commitment to MTCR in 1994.  

U.S.-CHINESE RELATIONS  

From Liberation to the Shanghai Communique  

As the PLA armies moved south to complete the Communist conquest of China in 
1949,  the American embassy followed the Nationalist government headed by Chiang  Kai-shek,  finally moving to Taipei later that year. U.S. consular officials  remained in mainland  China. The new P.R.C. Government was hostile to this  official American presence, and all  U.S. personnel were withdrawn from the  mainland in early 1950. Any remaining hope of  normalizing relations ended when  U.S. and Chinese Communist forces fought on  opposing sides in the Korean conflict.  

Beginning in 1954 and continuing until 1970, the United States and China held 
136  meetings at the ambassadorial level, first at Geneva and later at Warsaw. 
Though some  progress was made in early years, by the 1960s the talks were 
stalemated. Finally, in the  late 1960s, U.S. and Chinese political leaders 
decided that improved bilateral relations were  in their common interest. In 
1969, the United States initiated measures to relax trade  restrictions and 
other impediments to bilateral contact. On July 15, 1971, President Nixon  
announced that his Assistant for National Security Affairs, Dr. Henry Kissinger,  had made  a secret trip to Beijing to initiate direct contact with the Chinese  leadership and that he, the  President, had been invited to visit China.  

In February 1972, President Nixon traveled to Beijing, Hangzhou, and Shanghai. 
At the  conclusion of his trip, the U.S. and Chinese Governments issued the 
"Shanghai  Communique," a statement of their foreign policy views. (For the 
complete text of the  Shanghai Communique, see the Department of State Bulletin,  March 20, 1972).  

In the Communique, both nations pledged to work toward the full normalization of  
diplomatic relations. Acknowledging that all Chinese on either side of the 
Taiwan Strait  maintain that there is only one China and that Taiwan is part of 
China, the U.S. agreed not  to challenge this position. The statement enabled 
the two sides temporarily to set aside the  "crucial question obstructing the 
normalization of relations"--Taiwan--and to open trade and  other contacts.  

Liaison Office, 1973-78  

In May 1973, in an effort to build toward the establishment of formal diplomatic  relations,  the U.S. and China established the United States Liaison Office  (USLO) in Beijing and a  counterpart Chinese office in Washington, D.C. In the  years between 1973 and 1978, such  distinguished Americans as David Bruce,  George Bush, Thomas Gates, and Leonard  Woodcock served as chiefs of the USLO  with the personal rank of Ambassador.  

President Ford visited China in 1975 and reaffirmed the U.S. interest in 
normalizing  relations with Beijing. Shortly after taking office in 1977, 
President Carter again reaffirmed  this interest expressed in the Shanghai 
Communique. The United States and China  announced on December 15, 1978, that 
the two governments would establish diplomatic  relations on January 1, 1979.  

Normalization  

In the Joint Communique on the Establishment of Diplomatic Relations dated 
January 1,  1979, the United States transferred diplomatic recognition from 
Taipei to Beijing. The U.S.  reiterated the Shanghai Communique acknowledgment 
of the common Chinese position  that there is only one China and that Taiwan is 
a part of China; Beijing agreed that the  American people would continue to 
carry on commercial, cultural, and other unofficial  contacts with the people of  Taiwan. The Taiwan Relations Act made the necessary changes  in U.S. domestic  law to permit such unofficial relations with Taiwan to flourish.  

U.S.-China Relations Since Normalization  

Vice Premier Deng Xiaoping's January 1979 visit to Washington, D.C. initiated a 
series of  important, high-level exchanges, which continued until the spring of 
1989. This resulted in  many bilateral agreements--especially in the fields of 
scientific, technological, and cultural  interchange and trade relations. Since 
early 1979, the United States and China have initiated  hundreds of joint 
research projects and cooperative programs under the Agreement on  Cooperation 
in Science and Technology, the largest bilateral program.  These programs  cover  diverse subjects, ranging from high-energy physics to earthquake studies.  

On March 1, 1979, the United States and China formally established embassies in 
Beijing  and Washington, D.C. During 1979, outstanding private claims were 
resolved, and a  bilateral trade agreement was concluded. Vice President Walter 
Mondale reciprocated Vice  Premier Deng's visit with an August 1979 trip to 
China. This visit led to agreements in  September 1980 on maritime affairs, 
civil aviation links, and textile matters, as well as a  bilateral consular 
convention.  

As a consequence of high-level and working-level contacts initiated in 1980, our  dialogue  with China broadened to cover a wide range of issues, including global  and regional  strategic problems, politico-military questions, including arms  control, UN and other  multilateral organization affairs, and international  narcotics matters.  

The expanding relationship that followed normalization was threatened in 1981 by  Chinese  objections to the level of U.S. arms sales to Taiwan. Secretary of 
State Alexander Haig  visited China in June 1981 in an effort to resolve Chinese  questions about America's  unofficial relations with Taiwan. Eight months of  negotiations produced the U.S.-China  joint communique of August 17, 1982. In  this third communique, the U.S. stated its  intention to reduce gradually the  level of arms sales to Taiwan, and the Chinese described  as a fundamental  policy their effort to strive for a peaceful resolution to the Taiwan  question.  Meanwhile, Vice President Bush visited China in May 1982.  

High-level exchanges continued to be a significant means for developing U.S.-
China  relations in the 1980s. President Reagan and Premier Zhao made reciprocal  visits in 1984.  In July 1985, President Li Xiannian traveled to the United  States, the first such visit by a  Chinese head of state. Vice President Bush  visited China in October 1985 and opened the  U.S. Consulate General in Chengdu,  this country's fourth consular post in China. Further  exchanges of cabinet- level officials occurred from 1985-89, capped by President Bush's  visit to  Beijing in February 1989.  

In the period before the June 3-4, 1989, assault on Tiananmen Square and 
subsequent  repression in China, a large and growing number of cultural exchange  activities undertaken  at all levels gave the American and Chinese peoples broad  exposure to each other's cultural,  artistic, and educational achievements.  Numerous Chinese professional and official  delegations visited the United  States each month. Many of these exchanges continued in the  wake of Tiananmen. 

More than 50,000 Chinese scholars and students are currently  studying or 
conducting research in the U.S.; roughly 2,000 Americans are studying or  
teaching in China, and approximately 17,000 Chinese citizens emigrate to the 
U.S. every  year.  

Bilateral Relations After Tiananmen  

Following the Chinese authorities' brutal suppression of supporters of political  reform in  June 1989, the U.S. and other governments enacted a number of  measures to express their  condemnation of Chinese action that violated the  basic human rights of its citizens. The  U.S. suspended high-level official  exchanges with China and weapons exports from the  U.S. to China. The U.S. also  imposed a series of economic sanctions. In the summer of  1990, at the G-7  Houston summit, Western nations called for renewed political and  economic  reforms in China, particularly in the field of human rights.  

The U.S.-China trade relationship was disrupted by Tiananmen, and U.S. 
investors'  interest in China dropped dramatically. The U.S. Government also 
responded to the  political repression by suspending certain trade and 
investment programs on June 5 and 20,  1989. Some sanctions were legislated; 
others were executive actions. Examples include:  

-- The Trade and Development Agency (TDA) and Overseas Private Insurance 
Corporation  (OPIC) --  new activities suspended since June 1989. -- Development  Bank Lending/IMF Credits -- The United States does not support  development bank  lending and will not support IMF credits to China except for projects  which  meet basic human needs. -- Munitions List Exports -- Subject to certain  exceptions, no licenses may be issued for the  export of any defense article on  to U.S. Munitions List. This restriction may be waived  upon a Presidential  national interest determination. -- Arms Imports -- Import of defense articles  from China was banned after the imposition  of the ban on arms exports to China.  The import ban was subsequently waived by the  Administration and re-imposed on  May 26, 1994. It covers all items on the Bureau of  Alcohol, Tobacco, and  Firearms' Munitions Import List.  

As of 1997, the U.S. retains in place sanctions on China, including the 
suspension of  military assistance. Bilateral diplomatic meetings in pursuit of 
U.S. vital interests have  occurred. Commercial relations have returned to pre-
Tiananmen levels, although bilateral  assistance programs generally remain 
suspended.  

President Jiang Zemin will visit the United States in October 1997, and 
President Bill  Clinton is due to visit China in 1998.  

U.S.-Chinese Economic Relations  

In the aftermath of Tiananmen, new contracted U.S. investment in 1990 was $357 
million,  44% lower than in the previous year. Since 1990, however, foreign 
direct investment  (FDI) rebounded strongly. From 1991 to 1995, the U.S. 
supplied approximately 7.6% of  the actual FDI to China. In 1995, over $3 
billion were invested. The United States is the  third largest overall single 
supplier of FDI to China.  

U.S. direct investment in China covers a wide range of manufacturing sectors, 
several  large hotel projects, and a heavy concentration in offshore oil and gas  development in the  South China Sea. U.S. companies have entered agreements  establishing more than 20,000  equity joint ventures, contractual joint  ventures, and wholly foreign-owned enterprises in  China. Over 100 U.S.-based  multinationals have projects, some with multiple investments.  

In 1996, U.S. exports to China rose 2% from the previous year to $12.0 billion, 
while  U.S. imports from China rose 13% to $51.5 billion. The 1996 trade deficit  of $39.5 billion  with China was the United States' second largest. Some of the  factors that influence the  U.S. deficit with China include:  

-- A shift of export industries to China from the newly-industrialized economies  (NIEs) in  Asia has increasingly become the last link in a long chain of value- added production. 
-- China's restrictive trade practices, which include a wide 
array of barriers to foreign  goods and services, often aim at protecting state- owned enterprises. These practices  include: high tariffs, lack of transparency,  requiring firms to obtain special permission to  import goods, unevenness of  application of laws and regulations, and leveraging  technology from foreign  firms in return for market access. -- China's domestic output of labor-intensive  goods exceeds China's demand, while U.S.  demand for labor intensive goods  exceeds domestic output.  

The increasingly important U.S. economic and trade relations with China are an 
important  element of the Administration's "comprehensive engagement" strategy. 
In economics and  trade, there are two main elements to the U.S. approach:  

-- First, the United States seeks to fully integrate China into the global, 
market-based  economic and trading system. China's participation in the global 
economy will nurture the  process of economic reform and increase China's stake 
in the stability and prosperity of  East Asia. -- Second, the United States 
seeks to expand U.S. exporters' and investors' access to the  Chinese market. As  China grows and develops, its needs for imported goods and services  will grow  even more rapidly.  

The United States and China maintain a very active dialogue on bilateral trade 
issues. In  1995, agreements were concluded on the protection of intellectual 
property rights (IPR),  textiles, and satellite launches. As a result of the IPR  agreement, more than 10 million  illegal or unauthorized LDs, CDs, and other  publications were seized, and 250 "major  criminals" were arrested for their  involvement in IPR-related activities in 1996.  

The United States continues to expand its export promotion efforts and its 
scientific and  technical exchange programs in China. The U.S. and China, in 
April 1996, renewed their  Bilateral Science and Technology Agreement for 
another five years.  

A new four-year U.S.-China Bilateral Agreement on Textile Trade was signed in 
February  1997. The United States is China's largest export market for textile 
and apparel products.  

In March 1997, the two countries held their first Sustainable Development Forum,  which  sought to expand cooperation in the environmental arena.  

At the September 1997 Joint Economic Committee meeting in Beijing, the U.S. 
continued  dialogue with the Chinese on macroeconomic issues. The Joint 
Commission on Commerce  and Trade, hosted in Beijing in October 1997, discussed 
expansion of long-term economic  and business ties between China and the United 
States. Agreements were made to set up  seminars on project finance and export 
controls, to establish a series of exchanges on  commercial law, and to further 
explore ways to assist small and medium-sized U.S.  businesses export to China.  

Economic Relations With Hong Kong  

Under the 1984 Sino-British Joint Declaration, Hong Kong became a Special  
Administrative Region (SAR) of the P.R.C. on July 1, 1997. Hong Kong has 
autonomy in  its international trade and economic relations. The United States 
has substantial economic  and social ties with Hong Kong, with an estimated $16 
billion invested there. There are  1,100 U.S. firms and 50,000 American 
residents in Hong Kong. The United States was  Hong Kong's second largest market  in 1996--the U.S. imported $9.9 billion. Hong Kong  was America's 14th-largest  export market in 1996, taking $14.0 billion in U.S. exports.  

China's Most Favored Nation (MFN) Status  

There has been intense debate in the U.S. regarding the extension of China's 
most-favored- nation status, which allows non-discriminatory tariff treatment 
for Chinese exports to the  U.S. The reciprocal granting of MFN treatment was 
the main pillar of the U.S.-China  Trade Agreement signed in 1979, which marked 
the beginning of normal commercial  relations between the two countries. As a 
non-market-economy country, China's MFN  status must be renewed annually by a 
U.S. presidential waiver stipulating that China meets  the freedom of emigration  requirements set forth in the Jackson-Vanik amendment to the  Trade Act of 1974.  

China had received the waiver routinely prior to 1989, but after  Tiananmen, 
although the presidential waiver continued, Congress began to exert strong  
pressure to oppose MFN renewal. In 1991 and 1992, Congress voted to place 
conditions  on MFN renewal for China, but those conditions were vetoed by the 
Bush Administration,  which stressed the importance of our relationship with 
China and the belief that MFN was  not the correct tool to exert pressure on 
China and would only result in isolating it.  

In 1994, President Clinton decided to decouple the annual MFN process from 
China's  human rights record. At the same time, the President decided to adopt a  new human rights  strategy, maintaining human rights concerns as an essential  part of the U.S. engagement  with China but in a broader context. The President  also ordered several additional steps to  support those seeking to foster the  rule of law and a more open civil society in China.  

Revoking or conditioning Most Favored Nation (MFN) -- i.e., normal -- trading 
status and  tariff treatment would remove a beneficial influence for creating a 
more open China. It  would undermine American leadership in the region and the 
confidence of our Asian allies;  it would damage our economy, harm Taiwan and 
especially Hong Kong, whose economies  are closely intertwined with that of the 
PRC; and it would damage our ability to work with  China on vital regional 
security issues such as North Korea and global security concerns  such as 
nonproliferation. MFN status for China will help further integrate China into 
the  international system and promote the interests of the American people.  
CHINESE DIPLOMATIC REPRESENTATION

Ambassador--Li Daoyu

Chancery address:
2300 Connecticut Avenue NW
Washington, D.C. 20008
Tel.: (202) 328-2500

There are Chinese Consulates General in Chicago, Houston, Los Angeles, New York, and 
San Francisco.

U.S. DIPLOMATIC REPRESENTATION

Ambassador--James R. Sasser

Embassy address:
Xiu Shui Bei Jie 3
Beijing 100600
Tel.: (86) (1) 532-3831

(Mailing address from U.S.: PSC 461, Box 50, FPO AP 96521-0002--use U.S. domestic 
postage rates)

There are U.S. Consulates General in Chengdu, Guangzhou, Shanghai, and Shenyang.

FURTHER INFORMATION

The Department of Commerce publishes the Overseas Business Reports and Foreign 
Economic Trends Reports, which contain information on market research, foreign trade  corporations, contract negotiations, shipping and insurance, P.R.C. tariffs, a section on  travel in China, and other topics of interest to Americans who want to do business with  China. The report may be obtained free of charge from the Department of Commerce.

Other U.S. Government documents on China include: the Annual Human Rights Report  and the National Trade Estimate.

U.S. Offices

Office of Chinese & Mongolian Affairs, U.S. Department of State
Washington, DC  20520
Tel.: (202) 647-6300
FAX: (202) 647-6820

American Embassy Beijing
Xiu Shui Bei Jie 3
Beijing 100600
People's Republic of China
Tel.: (86) (1) 6532-3831
FAX: (86) (1) 6532-3178

American Consulate General Guangzhou
No. 1 South Shamian Street
Guangzhou 200031
People's Republic of China
Tel.: (86) (20) 8188-8911
FAX: (86) (20) 8186-2341

American Consulate General Shanghai
1469 Huai Hai Zhong Lu
Shanghai 200031
People's Republic of China
Tel.: (86) (21) 6433-6880
FAX: (86) (21) 6433-4122

American Consulate General Shenyang
52 14th Wei Road
Heping District
Shenyang, Liaonong 110003
People's Republic of China
Tel.: (86) (24) 322-1198
FAX: (86) (24) 322-2374

American Consulate General Chengdu
4 Lingshiguan Road
Chengdu, Sichuan 610041
People's Republic of China
Tel.: (86) (28) 558-3992
FAX: (86) (28) 558-3520

When calling the phone or fax numbers of a post in another province from within the country, replace the country code (86) with a 0.

Chinese Offices

Embassy of the People's Republic of China
2300 Connecticut Avenue
NW Washington, DC 20008
Tel.: (202) 328-2500

Consulate General of the People's Republic of China, New York
520 12th Avenue
New York, New York 10036
Tel.: (212) 868-7752

Consulate General of the People's Republic of China, San Francisco
1450 Laguna Street
San Francisco, California 94115
Tel.: (415) 563-4885

Consulate General of the People's Republic of China, Houston
3417 Montrose Blvd.
Houston, Texas  77006
Tel.: (713) 524-4311

Consulate General of the People's Republic of China, Chicago
100 West Erie St.
Chicago, Illinois  60610
Tel.: (312) 803-0098

Consulate General of the People's Republic of China, Los Angeles
502 Shatto Place, Suite 300
Los Angeles, California  90020
Tel.: (213) 807-8088

U.S.-China Trade Advice

U.S. Department of Commerce
International Trade Administration, Office of China and Hong Kong Affairs
14th and E Streets NW
Rm. 2317 Washington, D.C. 20230
Tel.: (800) 872-8723; (202) 482-0543

U.S.-China Business Council
1818 N Street NW, Suite 500
Washington, D.C. 20036
Tel.: (202) 429-0340

Cultural Exchange

National Association for Foreign Student Affairs Special Projects
1860 19th Street, NW
Washington, D.C. 20009
Tel.: (202) 462-4811

National Committee on U.S.-China Relations
777 United Nations Plaza, Room 9B
New York, New York  10017
Tel.: (212) 645-9677

Electronic Information  

Consular Affairs Bulletin Board (CABB). Available by modem, the CABB provides  
Consular Information Sheets, Travel Warnings, and helpful information for 
travelers.  Access at (202) 647-9225 is free of charge to anyone with a personal  computer, modem,  telecommunications software, and a telephone line.  

Department of State Foreign Affairs Network (DOSFAN). Available on the Internet,   DOSFAN provides timely, global access to official U.S. foreign policy  information.  Updated daily, DOSFAN includes Background Notes; Dispatch, the  official weekly  magazine of U.S. foreign policy; daily press briefings;  directories of key officers of foreign  service posts; etc. The URL for DOSFAN's  World Wide Web site is:  http://www.state.gov; this site has a link to the  DOSFAN Gopher Research Collection,  which also is accessible at 
gopher://gopher.state.gov.  

U.S. Foreign Affairs on CD-ROM (USFAC). Published on a semi-annual basis by the  
U.S. Department of State, USFAC archives information on the Department of State  
Foreign Affairs Network, and includes an array of official foreign policy 
information from  1990 to the present. Priced at $48 ($60 foreign), one-year 
subscriptions include two discs  (MS-DOS and Macintosh compatible) and are 
available from the Superintendent of  Documents, U.S. Government Printing 
Office, P. O. Box 371954, Pittsburgh, PA 15250- 7954. To order, call (202) 512-
1800 or fax (202) 512-2250.  

Federal Bulletin Board (BBS). A broad range of foreign policy information also 
is carried  on the BBS, operated by the U.S. Government Printing Office (GPO). 
By modem, dial  (202) 512-1387. For general BBS information, call (202) 512-
1530.  

National Trade Data Bank (NTDB). Operated by the U.S. Department of Commerce, 
the  NTDB contains a wealth of trade-related information, including Country 
Commercial  Guides. It is available on the Internet (http://www.stat-usa.gov) 
and on CD-ROM. Call the  NTDB Help-Line at (202) 482-1986 for more information.  

Following are some other useful web sites.  

Department of State: -- China homepage at 
http://www.state.gov/www/current/debate/china.html  

Non-Department of State: -- China Internet Information Center homepage at 
http://www.chinanews.org -- Chinese Embassy homepage at http://www.china-
embassy.org  

TRAVEL NOTES  

Visas  

To enter the People's Republic of China, a U.S. citizen must have a visa. You 
may apply  for a visa either in person or by mail at the Chinese Embassy in 
Washington, D.C., or at a  Chinese consulate in Chicago, Houston, Los Angeles, 
New York, or San Francisco.  Below is information on tourist visas for various 
"Number of Entries" categories.  

Single Entry/Transit:
-- Visa Duration = 3 months
-- Minimum Passport Validity = 6 months
-- Cost for U.S. citizens (visa + handling fee) = $30

Double Entry/Transit:
-- Visa Duration = 6 months
-- Minimum Passport Validity = 9 months
-- Cost for U.S. citizens (visa + handling fee) = $40

Multiple:
-- Visa Duration = 6 months
-- Minimum Passport Validity = 9 months
-- Cost for U.S. citizens (visa + handling fee) = $60

Multiple:
-- Visa Duration = 1 year
-- Minimum Passport Validity = 15 months
-- Cost for U.S. citizens (visa + handling fee) = $80

Visas can take up to 10 working days to process. An additional fee of $30 may be  paid for  one-day service, $20 for two-day service, and $10 for three-day 
service.  

To apply for a visa, the following items are necessary: a completed visa 
application form, a  valid passport, a passport-sized photograph (2" x 2", 
either black-and-white or color), and  the appropriate fee. Contact the Embassy 
or nearest consulate for detailed payment  information. Proof of intended 
travel, such as airline tickets or hotel reservations, is also  required.  

Visas for tour group members are usually obtained by the travel agencies as part of the tour  package. China International Travel Service (CITS) has exclusive  responsibility for all  foreign tourism in China. You may book a CITS tour  through a number of travel agencies  and airlines in the United States and  abroad. You may contact the China National Tourist  Office at: 354 5th Avenue,  Room 6413; Empire State Building; New York, NY 10118;  (212) 760-9700. Tour  members with special interests, such as visits to hospitals or  universities,  should notify the tour organizer to arrange such visits.  

Business visas are issued on the basis of an invitation from one of the Chinese 
foreign  trade organizations. Should you wish to visit China for business 
purposes, correspond  directly with the appropriate organization in China.  

Persons transiting China must have in their possession a valid Chinese visa, 
even if they do  not leave the airport or carrier; otherwise, they may be 
subject to a $1,000 fine.  

Further visa information is available from China's embassy on the Internet at:  
http://www.china-embassy.org/visa/visa.htm.  

AIDS Test  

In addition to the requirements above, long-term (6 months or longer) visitors 
to China  must have an AIDS test. Tests can be given in China. If you have the 
test done in the  United States, the results must indicate the test was given by  a government facility such as  your state's health department; if done at a 
private health facility, the results must be  notarized by a notary public.  

Immunizations  

Information on health precautions for travelers can be obtained in the United 
States from  the Centers for Disease Control (888) 232-3228, the U.S. Public 
Health Service, private  physicians, and inoculation centers.  

The U.S. Public Health Service recommends diphtheria/tetanus and polio vaccines 
for all  travelers abroad. For China, most health warnings are directed at those  who plan extended  travel or travel outside major urban areas.  

A Hepatitis A vaccine or a dose of immune globulin (IG) is recommended before 
travel for  person two years of age or older. In addition, immunizations for 
Japanese B encephalitis  (JE) are recommended during the epidemic summer months 
for visitors planning to stay in  rural farming areas for four weeks or more.  

Depending on the season and destination, you may need to use insect repellent 
and take  other measures to reduce contact with mosquitoes. A yellow fever 
vaccination certificate is  required from travelers coming from infected areas.  

Visitors are advised not to drink tap water in China. Hotel rooms are almost 
always  supplied with boiled water, which is safe to drink. Water purification 
tablets might also  prove useful in other situations.  

General Travel Information  

The U.S. Department of State's Consular Information Program (see 
http://travel.state.gov)  provides Travel Warnings and Consular Information 
Sheets. Travel Warnings are issued  when the State Department recommends that 
Americans avoid travel to a certain country.  Consular Information Sheets exist 
for all countries and include information on immigration  practices, currency 
regulations, health conditions, areas of instability, crime and security,  
political disturbances, and the addresses of the U.S. posts in the subject 
country. A booklet  entitled Health Information for International Travel (HHS 
publication number CDC-95- 8280, price $14.00) and publications on obtaining 
passports and planning a safe trip are  available from the Superintendent of 
Documents, U.S. Government Printing Office,  Washington, D.C. 20402, tel. (202) 
512-1800.  

Travelers can check the latest health information with the U.S. Centers for 
Disease Control  and Prevention in Atlanta, Georgia. A hotline at (404) 332-4559  provides (via recorded  voice or fax) the most recent health advisories,  immunization recommendations or  requirements, and advice on food and drinking  water safety for regions and countries.  Information is also available on the  Internet at: http://www.cdc.gov.  

Upon their arrival in a country, U.S. citizens are encouraged to register at the  U.S.  Embassy or nearest Consulate General. This may help family members contact  you in case  of an emergency. Emergency information concerning Americans  traveling abroad may be  obtained from the Office of Overseas Citizens Services at (202) 647-5225.  

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