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Overview of China

China Government

The 66.35 million member CCP, authoritarian in structure and ideology, continues to dominate government. 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 greater openness, the influence of people and organizations outside the formal party structure has tended to increase, particularly in the economic realm. This phenomenon is most 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 the majority of the people live.

Theoretically, the party's highest body is the Party Congress, which is supposed to meet at least once every 5 years. The primary organs of power in the Communist Party include:

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 (the head of state), and the State Council. Members of the State Council include Premier Wen Jiabao (the head of government), a variable number of vice premiers (now four), five state councilors (protocol equivalents of vice premiers but with narrower portfolios), and 22 ministers and four State Council commission directors.

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.

Principal Government and Party Officials

Political Conditions

The government's efforts to promote rule of law are significant and ongoing.

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. 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. Legal reform became a government priority in the 1990s. Legislation designed to modernize and professionalize the nation's lawyers, judges, and prisons was enacted.

The 1994 Administrative Procedure Law allows citizens to sue officials for abuse of authority or malfeasance. In addition, the criminal law and the criminal procedures laws were amended to introduce significant reforms. The criminal law amendments abolished the crime of "counter-revolutionary" activity, although many persons are still incarcerated for that crime. Criminal procedures reforms also encouraged establishment of a more transparent, adversarial trial process. The Chinese constitution and laws provide for fundamental human rights, including due process, but these are often ignored in practice. In addition to other judicial reforms, the Constitution was amended in 2004 to include the protection of individual human rights and legally-obtained private property, but it is unclear how those provisions will be implemented.

Human Rights

The State Department’s annual China human rights reports have noted China’s well-documented abuses of human rights in violation of internationally recognized norms, stemming both from the authorities’ intolerance of dissent and the inadequacy of legal safeguards for basic freedoms. Abuses reported have included arbitrary and lengthy incommunicado detention, forced confessions, torture, and mistreatment of prisoners as well as severe restrictions on freedom of speech, the press, assembly, association, religion, privacy, and worker rights. At the same time, China’s economic growth and reform since 1978 has improved dramatically the lives of hundreds of millions of Chinese, increased social mobility, and expanded the scope of personal freedom. This has meant substantially greater freedom of travel, employment opportunity, educational and cultural pursuits, job and housing choices, and access to information. In recent years, China has also passed new criminal and civil laws that attempt to provide additional safeguards to citizens.

Economy

Since 1979, China has reformed and opened its economy. The Chinese leadership has adopted a more pragmatic perspective on many political and socioeconomic problems, and has reduced the role of ideology in economic policy. China’s ongoing economic transformation has had a profound impact not only on China but on the world. The market-oriented reforms China has implemented over the past two decades have unleashed individual initiative and entrepreneurship. The result has been the largest reduction of poverty and one of the fastest increases in income levels ever seen. China today is the sixth-largest economy in the world. It is the fastest growing economy, and in 2004 its $1.65 trillion economy was about 1/7 the size of the U.S. economy.

In the 1980s, 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, dismantling the commune system and introducing a household-based system that provided peasants greater decision-making in agricultural activities. The government also encouraged nonagricultural activities such as village enterprises in rural areas, and promoted more self-management for state-owned enterprises, increased competition in the marketplace, and facilitated direct contact between Chinese and foreign trading enterprises. 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.

By the late 1980s, however, the economy had become overheated with increasing rates of inflation. At the end of 1988, in reaction to a surge of inflation caused by accelerated price reforms, the leadership introduced an austerity program. China's economy regained momentum in the early 1990s. During a visit to southern China in early 1992, China's paramount leader at the time, Deng Xiaoping, made a series of political pronouncements designed to reinvigorate the process of economic reform. The 14th Party Congress later in the year backed Deng's renewed push for market reforms, stating that China's key task in the 1990s was to create a "socialist market economy."

The 10-year development plan for the 1990s stressed continuity in the political system with bolder reform of the economic system. China’s economy grew at an average rate of 10% per year during the period 1990-2004, the highest growth rate in the world. China’s gross domestic product (GDP) grew 9.3% in 2003, and even faster, 9.5%, in 2004, despite attempts by the government to cool the economy. China’s total trade in 2004 surpassed $1.1 trillion, making China the world’s third-largest trading nation after the U.S. and Germany. Nevertheless, serious imbalances exist behind the spectacular trade performance, high investment flows, and high GDP growth. High numbers of non-performing loans weigh down the state-run banking system. Inefficient state-owned enterprises (SOEs) are still a drag on growth, despite announced efforts to sell, merge, or close the vast majority of SOEs. Social and economic indicators have improved since reforms were launched, but rising inequality is evident between the more highly developed coastal provinces and the less developed, poorer inland regions.

According to World Bank estimates, more than 152 million people in China in 2003 - mostly in rural areas of the lagging inland provinces - still live in poverty, on consumption of less than US$1 a day. Following the Chinese Communist Party’s Third Plenum, held in October 2003, Chinese legislators unveiled several proposed amendments to the state constitution. One of the most significant was a proposal to provide protection for private property rights. Legislators also indicated there would be a new emphasis on certain aspects of overall government economic policy, including efforts to reduce unemployment (now in the 8-10% range in urban areas), to rebalance income distribution between urban and rural regions, and to maintain economic growth while protecting the environment and improving social equity. The National People’s Congress approved the amendments when it met in March 2004.

Agriculture

China is the world’s most populous country and one of the largest producers and consumers of agricultural products. Roughly half of China's labor force is engaged in agriculture, even though only 10% of the land is suitable for cultivation. Its cropland area is only 75% of the U.S. total, but China still produces about 30% more crops and livestock than the U.S. because of intensive cultivation, China is among the world's largest producers of rice, potatoes, sorghum, millet, barley, peanuts, tea, and pork. Major non-food crops include cotton, other fibers, and oilseeds. China hopes to further increase agricultural production through improved plant stocks, fertilizers, and technology. Incomes for Chinese farmers are stagnating, leading to an increasing wealth gap between the cities and countryside.

Government policies that continue to emphasize grain self-sufficiency and the fact that farmers do not own - and cannot buy or sell - the land they work have contributed to this situation. In addition, inadequate port facilities and lack of warehousing and cold storage facilities impede both domestic and international agricultural trade.

Industry

Industry and construction account for about 50% of China’s GDP. Major industries are iron, steel, coal, machine building, light industrial products, armaments, textiles, shoes, toys, cement, and chemical fertilizers. China has become a preferred destination for the relocation of global manufacturing facilities. Its strength as an export platform has contributed to incomes and employment in China. The state-owned sector still accounts for about 40% of GDP. In recent years, authorities have been giving greater attention to the management of state assets – both in the financial market as well as among state-owned-enterprises – and progress has been noteworthy.

Energy

In 2003, China surpassed Japan to become the second-largest consumer of primary energy, after the United States. China is also the third-largest energy producer in the world, after the United States and Russia. China’s electricity consumption is expected to grow by over 4% a year through 2030, which will require more than $2 trillion in electricity infrastructure investment to meet the demand. China expects to add approximately 15,000 megawatts of generating capacity a year, with 20% of that coming from foreign suppliers.

Coal makes up the bulk of China’s energy consumption (64% in 2002), and China is the largest producer and consumer of coal in the world. As China’s economy continues to grow, China’s coal demand is projected to rise significantly. Although coal’s share of China’s overall energy consumption will decrease, coal consumption will continue to rise in absolute terms.

Due in large part to environmental concerns, Beijing would like to shift China's current energy mix toward greater reliance on oil, natural gas, renewable energy, and nuclear power. China has abundant hydroelectric resources; the Three Gorges Dam, for example, will have a total capacity of 18 gigawatts when fully on-line (projected for 2009). In addition, the share of electricity generated by nuclear power is projected to grow from 1% in 2000 to 5% in 2030. But while interest in renewable sources of energy is growing, except for hydropower, their contribution to the overall energy mix is unlikely to rise above 1%-2% in the near future.

Since 1993, China has been a net importer of oil. Net imports are expected to rise to 3.5 million barrels per day by 2010. China is interested in diversifying the sources of its oil imports and has invested in oil fields around the world. Beijing also plans to increase China's natural gas production, which currently accounts for only 3% of China’s total energy consumption. Analysts expect China’s consumption of natural gas to more than double by 2010.

Environment

One of the serious negative consequences of China's rapid industrial development has been increased pollution and degradation of natural resources.

A 1998 World Health Organization report on air quality in 272 cities worldwide concluded that seven of the world's 10 most polluted cities were in China.

According to China's own evaluation, two-thirds of the 338 cities for which air-quality data are available are considered polluted - two-thirds of them moderately or severely so. Respiratory and heart diseases related to air pollution are the leading cause of death in China.

Almost all of the nation's rivers are considered polluted to some degree, and half of the population lacks access to clean water. Ninety percent of urban water bodies are severely polluted.

Water scarcity also is an issue; for example, severe water scarcity in Northern China is a serious threat to sustained economic growth and the government has begun working on a project for a large-scale diversion of water from the Yangtze River to northern cities, including Beijing and Tianjin.

Acid rain falls on 30% of the country.

Various studies estimate pollution costs the Chinese economy 7-10% of GDP each year.

China's leaders are increasingly paying attention to the country's severe environmental problems. In March 1998, the State Environmental Protection Administration (SEPA) was officially upgraded to a ministry-level agency, reflecting the growing importance the Chinese Government places on environmental protection. In recent years, China has strengthened its environmental legislation and made some progress in stemming environmental deterioration. In 1999, China invested more than 1% of GDP in environmental protection, a proportion that will likely increase in coming years.

During the 10th Five-Year Plan, China plans to reduce total emissions by 10%. Beijing in particular is investing heavily in pollution control as part of its campaign to host a successful Olympiad in 2008. Some cities have seen improvement in air quality in recent years. China is an active participant in climate change talks and other multilateral environmental negotiations, taking environmental challenges seriously but pushing for the developed world to help developing countries to a greater extent. It is a signatory to the Basel Convention governing the transport and disposal of hazardous waste and the Montreal Protocol for the Protection of the Ozone Layer, as well as the Convention on International Trade in Endangered Species and other major environmental agreements.

The question of environmental impacts associated with the Three Gorges Dam project has generated controversy among environmentalists inside and outside China. Critics claim that erosion and silting of the Yangtze River threaten several endangered species, while Chinese officials say the dam will help prevent devastating floods and generate clean hydroelectric power that will enable the region to lower its dependence on coal, thus lessening air pollution. The United States and China have been engaged in an active program of bilateral environmental cooperation since the mid-1990s, with an emphasis on clean energy technology and the design of effective environmental policy. While both governments view this cooperation positively, China has often compared the U.S. program, which lacks a foreign assistance component, with those of Japan and several European Union (EU) countries that include generous levels of aid.

Science and Technology

Science and technology have always preoccupied Chinas leaders; indeed, China's political leadership comes almost exclusively from technical backgrounds and has a high regard for science. Deng called it "the first productive force." Distortions in the economy and society created by party rule have severely hurt Chinese science, according to some Chinese science policy experts. The Chinese Academy of Sciences, modeled on the Soviet system, puts much of China's greatest scientific talent in a large, under-funded apparatus that remains largely isolated from industry, although the reforms of the past decade have begun to address this problem.

Chinese science strategists see China's greatest opportunities in newly emerging fields such as biotechnology and computers, where there is still a chance for China to become a significant player. Most Chinese students who went abroad have not returned, but they have built a dense network of trans-Pacific contacts that will greatly facilitate U.S.-China scientific cooperation in coming years. The U.S. space program is often held up as the standard of scientific modernity in China. China's small but growing space program, which put an astronaut into orbit in October 2003, is a focus of national pride.

The U.S.-China Science and Technology Agreement remains the framework for bilateral cooperation in this field. A 5-year agreement to extend the Science and Technology Agreement was signed in April 2001. There are currently over 26 active protocols and 60 annexes under the Agreement, covering cooperation in areas such as marine conservation, renewable energy, and health. Biennial Joint Commission Meetings on Science and Technology bring together policymakers from both sides to coordinate joint science and technology cooperation. Executive Secretaries meetings are held biennially to implement specific cooperation programs. Japan and the European Union also have high profile science and technology cooperative relationships with China.

Trade

China's merchandise exports totaled $593 billion and imports totaled $561 billion in 2004. Its global trade surplus was up by about 25%, to $32 billion. China's primary trading partners include Japan, the EU, the United States, South Korea, Hong Kong, and Taiwan. According to U.S. statistics, China had a trade surplus with the U.S. of $162 billion in 2004.

China has taken important steps to open its foreign trading system and 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 the economic, trade, investment, and technology spheres. China served as APEC chair in 2001, and Shanghai hosted the annual APEC leaders meeting in October of that year.

China formally joined the WTO in December 2001. As part of this far-reaching trade liberalization agreement, China agreed to lower tariffs and abolish market impediments. Chinese and foreign businessmen, for example, gained the right to import and export on their own, and to sell their products without going through a government middleman. By 2005, average tariff rates on key U.S. agricultural exports dropped from 31% to 14% and on industrial products from 25% to 9%. The agreement also opens up new opportunities for U.S. providers of services like banking, insurance, and telecommunications. China has made significant progress implementing its WTO commitments, but serious concerns remain, particularly in the realm of intellectual property rights protection.

Export growth continues to be a major component supporting China's rapid economic growth. 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, and liberalizing trading rights.

The United States 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 strict testing and standards requirements for some imported products. In addition, a lack of transparency in the regulatory process makes it difficult for businesses to plan for changes in the domestic market structure.

Foreign Investment

China’s investment climate has changed dramatically in 24 years of reform. In the early 1980s, China restricted foreign investments to export-oriented operations and required foreign investors to form joint-venture partnerships with Chinese firms. Foreign direct investment (FDI) grew quickly during the 1980s, but stalled in late 1989 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. Since the early 1990s, China has allowed foreign investors to manufacture and sell a wide range of goods on the domestic market, and authorized the establishment of wholly foreign-owned enterprises, now the preferred form of FDI. However, the Chinese government’s emphasis on guiding FDI into manufacturing has led to market saturation in some industries, while leaving China’s services sectors underdeveloped. China is now one of the leading recipients of FDI in the world, receiving $64 billion in 2004, for a cumulative total of $563.8 billion.

As part of China’s accession to the World Trade Organization in 2001, China undertook to eliminate certain trade-related investment measures and to open up specified sectors that had previously been closed to foreign investment. New laws, regulations, and administrative measures to implement these commitments are being issued.

Major remaining barriers to foreign investment include opaque and inconsistently enforced laws and regulations and the lack of a rules-based legal infrastructure. Opening to the outside remains central to China's development. Foreign-invested enterprises produce about half of China's exports, and China continues to attract large investment inflows. Foreign exchange reserves totaled $610 billion in 2004.

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, Macau, and Taiwan. In the early 1970s, Beijing was recognized diplomatically by most world powers. 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 159, while 25 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 that was approaching the Yalu River. After the conclusion of the Korean conflict, China sought to balance its identification as a member of the Soviet bloc by establishing friendly relations with Pakistan and other Third World countries, particularly in Southeast Asia. In the 1960s, 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 competition with 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.

China fought a brief border war with Vietnam (February-March 1979) in response to the Soviet-backed Vietnamese invasion of Cambodia 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 hegemony," 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 the U.S. and the Soviet Union. While improving ties with the West, China continued to follow closely economic and other positions of the Third World nonaligned movement, although China was not a formal member.

In the immediate aftermath of Tiananmen crackdown in June 1989, many countries reduced their diplomatic contacts with China as well as their economic assistance programs. In response, China worked vigorously to expand its relations with foreign countries, and by late 1990, had reestablished normal relations with almost all nations. Following the collapse of the Soviet Union in late 1991, China also opened diplomatic relations with the republics of the former Soviet Union.

In recent years, Chinese leaders have been regular travelers to all parts of the globe, and China has sought a higher profile in the UN through its permanent seat on the United Nations Security Council and other multilateral organizations. Closer to home, China has made efforts to reduce tensions in Asia; it has contributed to stability on the Korean Peninsula through hosting and participating in the Six-Party Talks, cultivated a more cooperative relationship with members of the Association of Southeast Asian Nations (Brunei, Burma, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam), and participated in the ASEAN Regional Forum.

Its moves to play a greater regional leadership role in Asia and, especially, the success of its "charm offensive" in Southeast Asia are examples of a new, more mature diplomacy that China has begun to evince. China is also working hard to strengthen ties with countries in South Asia, including India. Premier Wen recently made a sweeping tour throughout South Asia. China has likewise improved ties with Russia. President Putin and President Jiang signed a Treaty of Friendship and Cooperation in July 2001 and the two countries plan a joint-military exercise in 2005. The two also joined with the Central Asian nations of Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan to establish the Shanghai Cooperation Organization (SCO) in June 2001. The SCO is designed to promote regional stability and cooperate to combat terrorism in the region.

China has a number of border and maritime disputes, including with Vietnam in the Gulf of Tonkin, with a number of countries in the South China Sea, as well as with Japan and India. Beijing has resolved many of its border and maritime disputes, notably including a November 1997 agreement with Russia that resolved almost all outstanding border issues and a 2000 agreement with Vietnam to resolve some differences over their maritime border, though disagreements remain over islands in the South China Sea.

Finally, China’s outreach extends to countries in the Middle East and Africa like Iran and Sudan, which are sources of oil and other resources and welcome China’s involvement in building their infrastructure.

Defence

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 millions of men and women since 1978 and 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.

China's power-projection capability is limited but has grown over recent years. China has acquired some advanced weapons systems, including Sovremmeny destroyers, SU-27 and SU-30 aircraft, 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. 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 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 Non-Proliferation Treaty (NPT) in 1992 and supported its indefinite and unconditional extension in 1995. In 1996, it signed the Comprehensive Test Ban Treaty (CTBT) and agreed to seek an international ban on the production of fissile nuclear weapons material. To date, China has not ratified the CTBT. In 1996, China committed not to provide assistance to un-safeguarded nuclear facilities. 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 that meets to list items that should be subject to IAEA inspections if exported by countries that have, as China has, signed the Non-Proliferation Treaty. In September 1997, China issued detailed nuclear export control regulations. China began implementing regulations establishing controls over nuclear-related dual-use items in 1998. China also has decided not to engage in new nuclear cooperation with Iran (even under safeguards), and will complete existing cooperation, which is not of proliferation concern, within a relatively short period. In May 2004, with the support of the United States, China became a member of the Nuclear Suppliers Group.Based on significant, tangible progress with China on nuclear nonproliferation, President Clinton in 1998 took steps to bring into force the 1985 U.S.-China Agreement on Peaceful Nuclear Cooperation.

Chemical Weapons

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. In April 1997, however, China ratified the Chemical Weapons Convention (CWC) and, in September 1997, promulgated a new chemical weapons export control directive. In October 2002, China promulgated updated regulations on dual-use chemical agents, and now controls all the major items on the Australia Group control list.

Missiles

While not formally joining the regime, in March 1992 China 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 this commitment in 1994, and pledged not to transfer MTCR-class ground-to-ground missiles. In November 2000, China committed not to assist in any way the development by other countries of MTCR-class missiles. On August 29, 2003, the U. S. government imposed missile proliferation sanctions on the Chinese company China North Industries Corporation (NORINCO) after determining that it was knowingly involved in the transfer of equipment and technology controlled under Category II of the Missile Technology Control Regime (MTCR) Annex that contributed to MTCR-class missiles in a non-MTCR country.

The penalties imposed are:

In December 2003, the P.R.C. promulgated comprehensive new export control regulations governing exports of all categories of sensitive technologies.