China Naval Modernization: Implications for U.S. Navy Capabilities—Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The question of how the United States should respond to China's military modernization effort, including its naval modernization effort, has emerged as a key issue in U.S. defense planning. The issue is of particular importance to the U.S. Navy, because many U.S. military programs for countering improved Chinese military forces would fall within the Navy's budget.

Decisions that Congress and the executive branch make regarding U.S. Navy programs for countering improved Chinese maritime military capabilities could affect the likelihood or possible outcome of a potential U.S.-Chinese military conflict in the Pacific over Taiwan or some other issue. Some observers consider such a conflict to be very unlikely, in part because of significant U.S.-Chinese economic linkages and the tremendous damage that such a conflict could cause on both sides. In the absence of such a conflict, however, the U.S.-Chinese military balance in the Pacific could nevertheless influence day-to-day choices made by other Pacific countries, including choices on whether to align their policies more closely with China or the United States. In this sense, decisions that Congress and the executive branch make regarding U.S. Navy programs for countering improved Chinese maritime military forces could influence the political evolution of the Pacific, which in turn could affect the ability of the United States to pursue goals relating to various policy issues, both in the Pacific and elsewhere.

China's naval modernization effort, which began in the 1990s, encompasses a broad array of weapon acquisition programs, including anti-ship ballistic missiles (ASBMs), submarines, and surface ships. China's naval modernization effort also includes reforms and improvements in areas such as maintenance and logistics, naval doctrine, personnel quality, education, training, and exercises.

DOD and other observers believe that the near-term focus of China's military modernization effort has been to develop military options for addressing the situation with Taiwan. Consistent with this goal, observers believe that China wants its military to be capable of acting as a so called anti-access force—a force that can deter U.S. intervention in a conflict involving Taiwan, or failing that, delay the arrival or reduce the effectiveness of intervening U.S. naval and air forces. Some observers believe that China's military modernization effort, including its naval modernization effort, is increasingly oriented toward pursuing additional goals, such as asserting or defending China's claims in maritime territorial disputes, protecting China's sea lines of communications, displacing U.S. influence in the Pacific, and asserting China's status as a major world power.

Placing an increased emphasis on U.S. Navy programs for countering improved Chinese maritime military capabilities in coming years could lead to one more of the following: developing and procuring highly capable ships, aircraft, and weapons for defeating Chinese anti-access systems; assigning a larger percentage of the Navy to the Pacific Fleet (and, as a result, a smaller percentage to the Atlantic Fleet); homeporting more of the Pacific Fleet's ships at forward locations such as Hawaii, Guam, and Japan; increasing training and exercises in operations relating to countering Chinese maritime anti-access forces, such as antisubmarine warfare (ASW) operations; and increasing activities for monitoring and understanding developments in China's navy, as well as activities for measuring and better understanding operating conditions in the Western Pacific.


Date of Report: June 23, 2010
Number of Pages: 59
Order Number: RL33153
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U.S. Sanctions on Burma

Michael F. Martin
Specialist in Asian Affairs

Existing U.S. sanctions on Burma are based on various U.S. laws and Presidential Executive Orders. This report provides a brief history of U.S. policy towards Burma and the development of U.S. sanctions, a topical summary of those sanctions, and an examination of additional sanctions that have been considered, but not enacted, by Congress, or that could be imposed under existing law or executive orders. The report concludes with a discussion of options for Congress.

The current U.S. sanctions on Burma are the result of a general, but uneven decline in U.S. relations with Burma and its military, the Tatmadaw, since World War II. For the most part, the decline is due to what the U.S. government sees as a general disregard by the Burmese military for the human rights and civil liberties of the people of Burma.

In general, Congress has passed Burma-specific sanctions following instances of serious violation of human rights in Burma. These began following the Tatmadaw's violent suppression of popular protests in 1988, and have continued through several subsequent periods in which Congress perceived major human rights violations in Burma. The result is a web of overlapping sanctions subject to differing restrictions, waiver provisions, expiration conditions, and reporting requirements.

The United States currently imposes sanctions specifically on Burma via five laws and four presidential Executive Orders (E.O.s). These sanctions can be generally divided into several broad categories, such as visa bans, restrictions on financial services, prohibitions of Burmese imported goods, a ban on new investments in Burma, and constraints on U.S. assistance to Burma.

In addition to the targeted sanctions, Burma is currently subject to certain sanctions specified in U.S. laws based on various functional issues. In many cases, the type of assistance or relations restricted or prohibited by these provisions are also addressed under Burma-specific sanction laws. The functional issues include the use of child soldiers, drug trafficking, human trafficking, money laundering, failure to protect religious freedoms, violations of workers' rights, and threats to world peace and the security of the United States.

Past Congresses have considered a variety of additional, stricter sanctions on Burma. With a pending parliamentary election supposedly to be held in Burma, the 111th Congress may consider either the imposition of additional sanctions or the removal of some of the existing sanctions, depending on the conduct and outcome of the parliamentary election and other developments in Burma.


Date of Report: June 16, 2010
Number of Pages: 28
Order Number: R41336
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U.S.-China Counterterrorism Cooperation: Issues for U.S. Policy

Shirley A. Kan
Specialist in Asian Security Affairs

After the terrorist attacks on September 11, 2001, the United States faced a challenge in enlisting the full support of the People's Republic of China (PRC) in the counterterrorism fight against Al Qaeda. This effort raised short-term policy issues about how to elicit cooperation and how to address PRC concerns about the U.S.-led war (Operation Enduring Freedom). Longer-term issues have concerned whether counterterrorism has strategically transformed bilateral ties and whether China's support was valuable and not obtained at the expense of other U.S. interests.

The extent of U.S.-China counterterrorism cooperation has been limited, but the tone and context of counterterrorism helped to stabilize—even if it did not transform—the closer bilateral relationship pursued by President George Bush in late 2001. China's military, the People's Liberation Army (PLA), has not fought in the U.S.-led counterterrorism coalition. The Bush Administration designated the PRC-targeted "East Turkistan Islamic Movement" (ETIM) as a terrorist organization in August 2002, reportedly allowed PRC interrogators access to Uighur detainees at Guantanamo in September 2002, and held a summit in Texas in October 2002.

Since 2005, however, U.S. concerns about China's extent of cooperation in counterterrorism have increased. In September 2005, Deputy Secretary of State Robert Zoellick acknowledged that "China and the United States can do more together in the global fight against terrorism" after "a good start," in his policy speech that called on China to be a "responsible stakeholder" in the world. The summits of the Shanghai Cooperation Organization (SCO) in 2005 and 2006 raised U.S. concerns. Since the summer of 2007, U.S. officials have expressed more concern about China-origin arms that have been found in the conflict involving U.S. forces in Afghanistan, as part of the broader threat posed by Iran and its arms transfers.

Congress has oversight over the closer ties with China and a number of policy options. U.S. policy has addressed law-enforcement and intelligence ties; oppressed Uighur (Uyghur) people in western Xinjiang whom China claims to be linked to "terrorists"; detained Uighurs at Guantanamo Bay prison; Olympic security in August 2008; sanctions that ban exports of arms and security equipment; weapons nonproliferation; port security; military-to-military contacts; China's influence and support in Central Asia through the SCO; and China's arms transfers to Iran. Also, Congress has concerns about suspected PRC harassment of Uighurs and others in the United States, the President's efforts to transfer the Uighurs detained at Guantanamo, and efforts to seek China's counterterrorism cooperation (with U.S. assessments of mixed implications). The United States detained 22 Uighurs and rejected China's demand to take them while seeking a third country to accept them. In 2006, Albania accepted five of them. In June 2009, Bermuda accepted four. In November 2009, Palau accepted six. In February 2010, Switzerland accepted two Uighurs. The five Uighurs remaining in detention had been taken into custody in Pakistan. On February 26, 2010, the House passed H.R. 2701 (Reyes), with Section 351 which would require an unclassified summary of intelligence on any threats posed by the Uighurs who were detained at Guantanamo. Other relevant bills in the 111th Congress include: H.R. 2346 (P.L. 111- 32); H.Res. 417 (Baldwin); H.Res. 624 (Delahunt); H.Res. 774 (Hastings); H.Res. 953 (McGovern); H.R. 2294 (Boehner); S.Res. 155 (Brown); and S. 1054 (Inouye). The Obama Administration has proposed that China increase contributions and coordination in investments and assistance to help stabilize Pakistan and Afghanistan. With concerns about military operations in Central Asia, the United States also has concerns about dealing with China in its northwestern region of Xinjiang. On July 8, 2010, Norway arrested three men reportedly connected with the Turkistan Islamic Party (another name for ETIM) and Al Qaeda.


Date of Report: June 15, 2010
Number of Pages: 40
Order Number: RL33001
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U.S.-Vietnam Relations in 2010: Current Issues and Implications for U.S. Policy

Mark E. Manyin
Specialist in Asian Affairs

After communist North Vietnam's victory over U.S.-backed South Vietnam in 1975, U.S.- Vietnam had minimal relations until the mid-1990s. Normal diplomatic relations were established on July 11, 1995. Since then, bilateral ties have expanded to the point where leaders on both sides describe each other as partners on a number of issues. The maturation of relations has been particularly marked since the mid-2000s, when Vietnam made a decision to upgrade the relationship; since then, overlapping strategic and economic interests have compelled the United States and Vietnam to improve ties across a wide spectrum of issues. Congress played a significant role in the normalization process and continues to influence the state of relations.

In the United States, voices favoring improved relations have included those reflecting U.S. business interests in Vietnam's reforming economy and U.S. strategic interests in expanding cooperation with a populous country—Vietnam has 88 million people—that has an ambivalent relationship with China. Others argue that improvements in bilateral relations should be conditioned upon Vietnam's authoritarian government improving its record on human rights. Vietnam is asserting itself on the regional stage; for instance, in 2010 it is the chair of the Association of Southeast Asian Nations (ASEAN). The population of more than 1 million Vietnamese-Americans, as well as legacies of the Vietnam War, also drive continued U.S. interest.

Vietnamese leaders have sought to upgrade relations with the United States in part due to the desire for continued access to the U.S. market and to worries about China's expanding influence in Southeast Asia. That said, Sino-Vietnam relations are Vietnam's most important bilateral relationship and Vietnamese leaders must tiptoe carefully along the tightrope between Washington and Beijing, such that improved relations with one capital not be perceived as a threat to the other. Also, some Vietnamese remain suspicious that the United States' long-term goal is to erode the Vietnamese Communist Party's (VCP) monopoly on power.

Economic ties are the most mature aspect of the U.S.-Vietnam bilateral relationship. The United States is Vietnam's largest export market and in 2009 was its largest source of foreign direct investment. Bilateral trade has grown more than fivefold since the United States extended "normal trade relations" (NTR) treatment to Vietnam in 2001. Increased bilateral trade also has been fostered by Vietnam's market-oriented reforms and the resulting growth in its foreigninvested and privately-owned sectors. From 1987-2007, Vietnam's annual gross domestic product (GDP) growth averaged over 7%. Since then, Vietnam's economy has been buffeted by economic difficulties that have lowered growth rates and raised inflation. Vietnam is one of the largest recipients of U.S. assistance in East Asia; since the late 2000s, annual U.S. aid typically surpasses $100 million, much of it for health-related activities. The Obama Administration is debating whether to add Vietnam to the Generalized System of Payments (GSP) program, which extends duty-free treatment to certain products that are imported from designated developing countries. The United States and Vietnam are two of eight countries negotiating a Trans-Pacific Strategic and Economic Partnership (TPP) regional free trade agreement (FTA).

Human rights are the biggest thorn in the side of the relationship. Vietnam is a one-party, authoritarian state ruled by the Vietnamese Communist Party (VCP), which appears to be following a strategy of permitting most forms of personal and religious expression while selectively repressing individuals and organizations that it deems a threat to the party's monopoly on power. Most observers argue that the government, which already had tightened restrictions on dissent and criticism since 2007, intensified its suppression in 2009 and early 2010.


Date of Report: July 12, 2010
Number of Pages: 37
Order Number: R40208
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China’s Currency: An Analysis of the Economic Issues

Wayne M. Morrison
Specialist in Asian Trade and Finance

Marc Labonte
Specialist in Macroeconomic Policy

Over the past several years, the Chinese government has maintained a policy of intervening in currency markets to limit or halt the appreciation of its currency, the renminbi (RMB) against other major currencies, especially the U.S. dollar. This policy appears to be largely intended to keep China's export industries competitive internationally and to attract FDI, which have been major factors behind China's rapid economic growth. Critics charge that this policy constitutes a form of currency manipulation that is intended to make Chinese exports cheaper, and imports into China more expensive, than they would be under a floating exchange system. Some claim that China's currency policy is a major cause of the large U.S. trade imbalance with China and the loss of numerous U.S. jobs. Many Members have urged the Obama Administration to designate China as a "currency manipulator" in order to pressure it to let the RMB appreciate, and several bills have been introduced (including H.R. 2378, S. 1254, S. 1027, and S. 3134) which seek to address China's currency policy.

The current global economic crisis has further complicated the currency issue for both China and its trading partners. From July 2005 to July 2008, the RMB was allowed to gradually appreciate against the dollar, rising by about 21% over this period. However, once the effects of the global economic crisis began to become apparent, China halted appreciation of the RMB to the dollar in an effort to limit job losses in industries dependent on trade. From July 2008 to late June 2010, China kept the exchange rate of the RMB at roughly 6.83 yuan (the base unit of the RMB) to the dollar. On June 19, 2010, the Chinese central bank stated that, based on current economic conditions, it had decided to "proceed further with reform of the RMB exchange rate regime and to enhance the RMB exchange rate flexibility." Events following the announcement demonstrate that a flexible RMB exchange rate could move both up and down over short periods of time. On June 22, the RMB appreciated by 0.43% against the dollar to 6.80 yuan over the previous day, the largest daily rise since reforms were implement in 2005, but it depreciated to 6.81 the next day.

Many economists have argued that RMB appreciation is an important factor in helping to rebalance the world economy. They have also urged China to implement policies to make consumer demand, rather than exports and fixed investment, the main sources of economic growth. Some see RMB appreciation as a way of boosting China's imports, which could contribute to a faster global economic recovery. While Chinese officials acknowledge the need to rebalance the economy, they have strongly resisted international pressure to appreciate and reform the currency, calling it "protectionism." Some attribute this policy to concerns by the Chinese government that implementing policy changes too rapidly could lead to social instability.

The U.S. federal budget deficit has increased rapidly since FY2008, causing a sharp increase in the amount of Treasury securities that must be sold. While the Obama Administration has pushed China to appreciate its currency, it has also encouraged it to continue purchasing U.S. Treasury securities. China is the largest foreign holder of U.S. Treasury securities, which totaled $900 billion as of April 2010. Some analysts contend that, although an appreciation of China's currency could help boost U.S. exports to China, it could also lessen China's need to buy U.S. Treasury securities, which could push up U.S. interest rates. It could result in higher prices of Chinese made goods for U.S. consumers, as well as for Chinese-made inputs that U.S. firms use in their production. Many economists contend that, even if China significantly appreciated its currency, the United States would still need to increase its savings and reduce domestic demand (particularly the budget deficit), and China would have to lower its savings and increase consumption, in order to reduce trade imbalances in the long-run.


Date of Report: July 13, 2010
Number of Pages: 36
Order Number: RS21625
Price: $29.95

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