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Report to Congressional Committees: 

March 2004: 

WORLD TRADE ORGANIZATION: 

U.S. Companies' Views on China's Implementation of Its Commitments: 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-508]: 

GAO Highlights: 

Highlights of GAO-04-508, a report to the Chairman and Ranking Minority 
Member, Senate Committee on Finance, and to the Chairman and Ranking 
Minority Member, House Committee on Ways and Means 

Why GAO Did This Study: 

As the second largest source of foreign direct investment in China, 
U.S. companies continue their keen interest in China’s implementation 
of its World Trade Organization (WTO) commitments. China’s 2001 WTO 
commitments include specific pledges to increase market access, 
liberalize foreign investment, continue fundamental market reforms, and 
improve the rule of law. In 2002, GAO reported on selected U.S. 
companies’ views, finding that many commitment areas, particularly 
those related to rule of law, were important to U.S. companies. GAO 
also found that company representatives expected China’s reforms would 
have a positive impact on their business operations but expected some 
difficulties during implementation.

In 2003, GAO continued to analyze companies’ views about (1) the extent 
to which China has implemented its WTO commitments and (2) the impact 
of China’s implementation of its WTO commitments on U.S. companies’ 
business operations. GAO collected the views of representatives from 82 
U.S. companies with a presence in China. GAO focused on companies in 
the agriculture, banking, machinery, and pharmaceutical industries. 
Results reflect a response rate of 60 percent of the study population. 
These responses may not reflect the views of all U.S. companies with 
activities in China.

What GAO Found: 

U.S. company representatives who completed GAO’s 2003 questionnaire 
thought that China had implemented most of the 26 listed WTO commitment 
areas on average only to some or little extent. When respondents 
assessed five areas found to be of greatest importance to their 
companies overall -- (1) standards, certifications, registration, and 
testing requirements; (2) customs procedures and inspection practices; 
(3) intellectual property rights; (4) tariffs, fees, and charges; and 
(5) consistent application of laws, regulations, and practices – 
responses were mixed, but they reported that China had taken at least 
some steps to implement these commitment areas. Our analysis showed 
that the importance placed on specific areas differed among the 
agriculture, banking, machinery, and pharmaceutical industries. For 
example, agricultural respondents identified tariffs as important while 
banking respondents identified scope of business restrictions for 
services as important. Few respondents were able to assess all of 
China’s commitment areas for reasons that varied depending on each 
company’s experience and operations in China.

More than two thirds of respondents reported that China’s 
implementation of its WTO commitments had a positive impact on their 
companies’ ability to do business in China. However, some respondents 
indicated that China’s reform efforts had created difficulties for 
their company operations in China. Overall, company representatives 
reported that company activities, such as volume of production in China 
and company revenue stream, have increased since China joined the WTO. 
However, respondents noted that changes in business activities cannot 
be directly attributed to China’s WTO accession.

www.gao.gov/cgi-bin/getrpt?GAO-04-508.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Loren Yager at (202) 
512-4128 or yagerl@gao.gov.

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

Companies Report Progress Made in China's WTO Implementation: 

Most Respondents Reported a Positive Impact from China's WTO 
Implementation: 

Concluding Observations: 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

Data Collection: 

Industry Selection: 

Sample Development: 

Questionnaire Administration: 

U.S. Companies Responding to the Questionnaire: 

Limitations: 

Appendix II: Questionnaire of U.S. Companies in China (and U.S. 
Nonprofit Agricultural Organizations) on China-WTO Issues: 

Appendix III: Profile of U.S. Investment and Trade with China: 

U.S. Investment in China: 

U.S. Trade with China: 

Sources and Methods: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: 2002 Survey Respondents' Views on Difficulty of Implementation 
for China's WTO Commitment Areas Most Important to Them: 

Table 2: Ranking of Commitment Areas by Importance to GAO Questionnaire 
Respondents: 

Table 3: GAO Questionnaire Respondents' Views on the Most Important 
Commitment Areas, by Industry: 

Table 4: Results of Requests for Interviews from U.S. Companies: 

Table 5: List of GAO Industry Groupings from Census Goods Trade Data: 

Figures: 

Figure 1: Reported Extent of China's Implementation in 26 Commitment 
Areas: 

Figure 2: Comparison of Number of Respondents Who Assessed China's 
Implementation of Commitment Areas and Those with No Basis to Judge: 

Figure 3: Impact of China's WTO Implementation on GAO Questionnaire 
Respondents' Companies: 

Figure 4: U.S. Company Business Activities Since China Joined the WTO: 

Figure 5: Number of Companies Responding to GAO's Questionnaire, by 
Industry: 

Figure 6: Location of Facilities or Other Presence of GAO Questionnaire 
Respondents: 

Figure 7: Number and Types of Respondents' Business Relationships in 
China: 

Figure 8: Stock of U.S. Direct Investment in China, 2002 ($10 billion): 

Figure 9: Stock of U.S. Direct Investment Worldwide, 2002 ($1.5 
trillion): 

Figure 10: U.S. Exports and Imports of Goods with China, by Industry, 
2003: 

Figure 11: U.S. Exports of Goods to China, Share by Industry, 2003: 

Figure 12: U.S. Imports of Goods from China, Share by Industry, 2003: 

Figure 13: U.S. Exports and Imports of Services with China, by 
Category, 2002: 

Abbreviations: 

BEA: Bureau of Economic Analysis: 

FAS: Free-Alongside-Ship: 

IPR: Intellectual property rights: 

N: Number of questionnaire respondents: 

NAICS: North American Industry Classification System: 

WTO: World Trade Organization: 

Letter March 24, 2004: 

The Honorable Charles Grassley: 
Chairman:
The Honorable Max Baucus: 
Ranking Minority Member: 
Committee on Finance: 
United States Senate: 

The Honorable William M. Thomas: 
Chairman: 
The Honorable Charles B. Rangel: 
Ranking Minority Member: 
Committee on Ways and Means: 
House of Representatives: 

The 2001 conclusion of 15 years of China's intense negotiations to join 
the World Trade Organization (WTO) raised expectations for U.S. 
companies' opportunities to trade with and invest in China. In 2002, we 
reported on selected U.S. companies' views about their expectations for 
China's implementation of its WTO commitments related to their 
companies doing business in China. The report revealed that a wide 
range of commitments were important to U.S. companies, their belief 
that WTO commitments would positively impact their businesses, and 
their expectation that implementation would include difficulties as 
well as successes. China's first two years of WTO membership repeatedly 
confirmed the accuracy of these expectations.

In continuation of your request that we undertake a long-term body of 
work regarding China's membership in the WTO, we again analyzed 
selected U.S. companies' views about (1) the extent to which China has 
implemented its WTO commitments in key industries and (2) the impact of 
China's implementation of its WTO commitments on these U.S. companies' 
business operations.

To perform our work in 2003, we developed a questionnaire and used it 
to conduct structured interviews with representatives of U.S. companies 
with a presence in China. We selected participants from a commercial 
database listing U.S. companies in China, focusing our company 
selection on those within four industries: agriculture, banking, 
machinery, and pharmaceuticals. Out of a study population of 149 
companies, we received 79 questionnaires, for an overall adjusted 
response rate of 60 percent. In addition, we received three 
questionnaires from companies we interviewed in 2002 and 11 
questionnaires from representatives of nonprofit agricultural 
organizations. Unless otherwise indicated, results include the 79 
respondents from the study population plus the three respondents 
interviewed in 2003 and 2002. We do not generalize results to the 
larger population of U.S. companies doing business in China. Appendix I 
contains a more detailed description of our scope and methodology; 
responses to the questionnaire are included in appendix II. We 
performed our work from October 2002 to January 2004 in accordance with 
generally accepted government auditing standards.

Results in Brief: 

U.S. company representatives we interviewed who did business in China 
reported that China had made some progress in implementing its WTO 
commitments. We found that for most of the 26 listed areas in which 
China had made commitments, respondents reported that China had made 
reforms on average only to some or little extent when asked to 
characterize China's WTO implementation. Respondents noted higher 
scores in some areas, however, such as reductions in tariffs, fees, and 
charges. Our analysis found that the five specific commitment areas of 
greatest importance to respondents were: (1) standards, certifications, 
registration, and testing requirements; (2) customs procedures and 
inspection practices; (3) intellectual property rights; (4) tariffs, 
fees, and charges; and (5) consistent application of laws, regulations, 
and practices. Respondents had mixed views of China's implementation of 
these important commitment areas. Industry-specific views differed in 
terms of the specific areas identified as most important to respondents 
based on the nature of their businesses. Overall, many respondents 
reported that they had no basis to judge certain commitment areas due 
to respondents' lack of experience in areas not applicable to their 
businesses, lack of understanding about specific WTO commitment areas, 
and/or inability to differentiate between China's general economic 
reforms and Chinese government actions taken to implement WTO 
commitments.

More than two thirds of respondents reported that China's 
implementation of its WTO commitments had a positive impact on their 
companies, for example, by reducing tariffs and increasing transparency 
(openness) of laws, regulations, and practices, which ultimately 
furthered business opportunities. A number of respondents also expected 
that China's progress in the next 2 years would result in a positive 
impact on their businesses. However, some company representatives 
stated that China's WTO reforms had actually had negative consequences 
for their business operations to date. Specifically, some respondents 
stated that China had increased registration and testing requirements, 
and that provinces and levels of government had varied approaches to 
WTO implementation. Overall, the majority of respondents reported that 
specific business activities such as revenue and total investments in 
China had increased, but they could not directly tie these results to 
China's having joined the WTO.

Background: 

After 15 years of negotiations to join the WTO, on December 11, 2001, 
China bound itself to open and liberalize its economy and offer a more 
predictable environment for trade and foreign investment in accordance 
with WTO rules. U.S. investment and trade with China is of substantial 
interest to U.S. companies and has increased during the past 10 years. 
Our 2002 survey of U.S. company views revealed companies' expectation 
of a positive impact from China's implementation of WTO commitments as 
well as anticipation of difficulties during implementation.

China's WTO Commitments: 

The results of China's negotiations to join the WTO are described and 
documented in China's final accession agreement, the Protocol on the 
Accession of the People's Republic of China, which includes the 
accompanying Report of the Working Party on the Accession of China, the 
consolidated market access schedules for goods and services, and other 
annexes. China's WTO commitments are complex and broad in 
scope.[Footnote 1] Some commitments related to reforming China's trade 
regime require a specific action from China, such as reporting 
particular information to the WTO, while others are more general in 
nature, such as those that affirm China's adherence to WTO principles.

The accession agreement includes market access commitments regarding 
goods and services. These include commitments that will reduce tariffs 
on products, as well as commitments to reduce or eliminate many other 
trade barriers such as quotas or licensing requirements on some of 
these products. Further, China made commitments to allow greater market 
access in 9 of 12 general service sectors. In the banking sector, for 
example, China has agreed to reduce licensing requirements and has 
removed restrictions on foreign currency services.

To improve its trade regime, China has generally agreed to make 
numerous rule of law-related reforms such as publishing and translating 
trade-related laws and regulations and applying them uniformly at all 
levels of government and throughout China. China committed to adhere to 
internationally accepted norms to protect intellectual property rights 
and enforce relevant laws and regulations related to patents, 
trademarks, and copyrights. Moreover, China made a substantial number 
of other rule of law-related commitments regarding transparency of law, 
judicial review, and nondiscriminatory treatment of businesses.

U.S.-China Investment and Trade: 

In the past 10 years, U.S. investment and trade with China have 
increased significantly. At the end of 2002, U.S. companies had total 
direct investments of $10.3 billion in China, largely in the 
manufacturing sector. This amount represents more than 10 times the 
approximately $900 million invested a decade earlier in 1993. In 
addition, U.S. goods exports and services to China grew at an average 
annual rate of 12 percent since 1993, totaling $27 billion in 2002, 
according to the Department of Commerce. While the United States holds 
a large bilateral trade deficit with China, it has a bilateral goods 
surplus in areas such as transportation equipment and agricultural 
products. Appendix III provides additional details regarding U.S. 
investment and trade with China.

GAO's Previous Survey of U.S. Companies: 

In 2002, we conducted a study of U.S. companies' views about the 
importance of, the anticipated effects of, and the prospects for, 
China's implementing its WTO commitments.[Footnote 2] Our analysis of 
responses from 191 of 551 surveyed companies[Footnote 3] revealed that 
most of China's WTO commitments were important to the companies, with 
rule of law-related reforms the most important. Specifically, at least 
three quarters of the respondents selected intellectual property 
rights; consistent application of laws, regulations, and practices; and 
transparency of laws, regulations, and practices as the most important 
commitment areas for their companies. Other than those related to rule 
of law, respondents most frequently selected trading rights; tariffs, 
fees, and charges; and scope of business restrictions as important 
commitments.

We also found that most companies expected that China's implementation 
of its WTO commitments would have a positive impact on their business 
operations, although many anticipated impediments to implementation of 
China's WTO reforms. More than three quarters of the companies reported 
that they expected China's implementation of its WTO commitments would 
lead to an increase in their companies' activities in China, including 
their export volume to China, market share in China, and distribution 
of products there. However, many respondents also expected that many 
WTO commitments, particularly in rule of law-related commitment areas 
regarding consistent application of laws, regulations, and practices, 
and intellectual property rights, would be difficult for Chinese 
officials to implement. (See table 1 for 2002 survey respondents' views 
on the expected level of difficulty of China's implementation of 
commitment areas that were most important to them.): 

Table 1: 2002 Survey Respondents' Views on Difficulty of Implementation 
for China's WTO Commitment Areas Most Important to Them: 

Commitment areas of highest importance: Consistent application of laws, 
regulations, and practices; 
Expected difficulty of implementation: High.

Commitment areas of highest importance: Intellectual property rights; 
Expected difficulty of implementation: High.

Commitment areas of highest importance: Enforcement of contracts and 
judgments/settlement of disputes in Chinese court system; 
Expected difficulty of implementation: High.

Commitment areas of highest importance: Independence of judicial 
bodies; 
Expected difficulty of implementation: High.

Commitment areas of highest importance: Equal treatment between Chinese 
and foreign entities; 
Expected difficulty of implementation: High.

Commitment areas of highest importance: Transparency of laws, 
regulations, and practices; 
Expected difficulty of implementation: High.

Commitment areas of highest importance: Trading rights; 
Expected difficulty of implementation: High.

Commitment areas of highest importance: Tariffs, fees, and charges; 
Expected difficulty of implementation: High. 

Source: [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-02-1056], p. 
24.

Note: These represent 8 of the 30 commitment areas listed in the 2002 
survey.

[End of table]

Companies Report Progress Made in China's WTO Implementation: 

Overall, in 2003, respondents thought that China had implemented most 
of the 26 specific WTO commitment areas to at least some extent when 
asked to characterize China's reform efforts along a four-point scale 
ranging from no extent to great extent.[Footnote 4] Responses were 
mixed when company representatives assessed the commitment areas that 
we found to be of greatest importance to their businesses. In addition, 
the importance placed on specific commitment areas differed among 
respondents of the four industry groups--agriculture, banking, 
machinery, and pharmaceuticals. It is also important to note that many 
respondents reported they had no basis to judge the extent to which 
China had made reforms related to some WTO commitment areas, for 
reasons that varied depending on each company's experience and 
operations in China.

Overall, Companies Report Low and Moderate Marks for the 26 WTO 
Commitment Areas: 

Respondents' assessments of each area varied widely, but they generally 
reported low and moderate ratings of China's implementation.[Footnote 
5] See figure 1 for respondents' views on the extent of China's 
implementation of the 26 commitment areas, excluding those with no 
basis to judge. Many respondents had no basis to judge the extent of 
China's WTO reforms in certain commitment areas. This indicates that 
few companies have an in-depth knowledge of Chinese reforms across all 
26 areas, as discussed in further detail later. Consequently, the 
number of company representatives evaluating each individual commitment 
area varied from 14 to 67.

Figure 1: Reported Extent of China's Implementation in 26 Commitment 
Areas: 

[See PDF for image]

Note: The weighted means shown for each commitment area are based on 
the number of company representatives that had a basis to judge each 
individual commitment area. To calculate the means, "Great extent" 
responses were given a weight of 4, "Moderate extent" responses were 
given a weight of 3, "Some or little extent" responses were given a 
weight of 2, and "No extent" responses were given a weight of 1. The 
number of respondents used to calculate each weighted mean is shown in 
the column labeled "N".

[End of figure]

On average, respondents assigned lower marks when assessing the 
implementation of 19 of the 26 listed commitment areas.[Footnote 6] For 
example, company representatives thought that China had made reforms to 
only some or little extent when assessing China's trading rights 
reforms[Footnote 7] (right to import or export products) and price 
controls.[Footnote 8] Company representatives said they eagerly awaited 
the implementation of China's trading rights commitments in late 2004. 
Several company representatives noted that implementation of these 
commitments would provide more control over their business 
relationships in China and reduce or eliminate the need to rely on 
third parties such as distributors and trading companies. Although 
China had agreed to stop using price controls to restrict the level of 
imports, one company representative derided China's price control 
reforms and others noted their concern regarding the Chinese 
government's continuing control of prices on specific products.

Respondents on average assigned higher marks to the remaining 7 
commitment areas.[Footnote 9] For example, respondents thought that 
China had made reforms to a moderate extent when assessing China's 
reforms to tariffs, fees, and charges; requirements stipulating a 
minimum amount of production that must be exported; and restrictions on 
partnerships and joint ventures. Several respondents described China's 
efforts in lowering tariffs, fees, and charges including one respondent 
who noted that China had reduced tariffs for an agricultural product 
from 35 to 15 percent since joining the WTO. Company representatives 
also discussed China's allowance for greater market access for 
services, stated that WTO has allowed companies to provide after-sales 
service, and one said that "China is doing a good job" in addressing 
this area.

Respondents Had Mixed Views on Important Commitment Areas: 

Respondents' assessments of the most important commitment areas provide 
further detail regarding companies' views on China's progress. See 
table 2 for the ranking of the commitment areas by importance to 
respondents, which we calculated using weighted responses. More than 
half of respondents reported that China had made reforms to a moderate 
or great extent when asked to assess China's overall progress in 
implementing reforms that were important to their companies. However, 
when asked to assess China's implementation of specific commitment 
areas, responses for four of the five most important areas fell in the 
"some or little extent" category. Company representatives from the four 
industries assigned varied levels of importance to specific commitment 
areas.

Table 2: Ranking of Commitment Areas by Importance to GAO Questionnaire 
Respondents: 

Rank: 1; Commitment area: Standards, certifications, registration, & 
testing requirements (product safety, animal, plant, & health 
standards, etc.); Weighted score: 51.

Rank: 2; Commitment area: Customs procedures & inspection practices; 
Weighted score: 42.

Rank: 3; Commitment area: Intellectual property rights; Weighted score: 
40.

Rank: 4; Commitment area: Tariffs, fees, & charges; Weighted score: 39.

Rank: 5; Commitment area: Consistent application of laws, regulations, 
& practices (within & among national, provincial, & local levels); 
Weighted score: 36.

Rank: 6; Commitment area: Trading rights (ability to import & export); 
Weighted score: 31.

Rank: 7; Commitment area: Market access for services; Weighted score: 
27.

Rank: 8; Commitment area: Scope of business restrictions for services 
(types you can provide, customers you can do business with, number of 
transactions you can conduct, & where you can conduct business 
geographically); Weighted score: 24.

Rank: 9; Commitment area: Foreign exchange restrictions (including 
balancing & repatriation of profits); Weighted score: 23.

Rank: 9; Commitment area: Transparency of laws, regulations, & 
practices (publishing and making publicly available); Weighted score: 
23.

Rank: 9; Commitment area: Enforcement of contracts & judgments/
Settlement of disputes in Chinese court system; Weighted score: 23.

Rank: 12; Commitment area: Distribution rights; Weighted score: 18.

Rank: 13; Commitment area: Quotas and other quantitative import 
restrictions; Weighted score: 15.

Rank: 14; Commitment area: Scope of business restrictions for goods 
(types you can provide, customers you can do business with, number of 
transactions you can conduct, & where you can conduct business 
geographically); Weighted score: 13.

Rank: 15; Commitment area: Government requirements stipulating minimum 
amount of production that must be exported; Weighted score: 11.

Rank: 16; Commitment area: Restrictions on partnerships & joint 
ventures (choice of partner & equity limits); Weighted score: 7.

Rank: 17; Commitment area: Price controls including dual and 
discriminatory pricing; Weighted score: 5.

Rank: 18; Commitment area: Establishment & employment requirements 
(capital, deposit, years in practice, threshold sales, forced 
investment, & nationality/residency requirements); Weighted score: 4.

Rank: 18; Commitment area: Equal treatment (in taxation, access to 
funding, and under Chinese law); Weighted score: 4.

Rank: 18; Commitment area: Operation of state-owned enterprises; 
Weighted score: 4.

Rank: 18; Commitment area: Export restrictions; Weighted score: 4.

Rank: 22; Commitment area: Independence of judicial bodies; Weighted 
score: 3.

Rank: 22; Commitment area: Subsidies; Weighted score: 3.

Rank: 24; Commitment area: Local content requirements; Weighted score: 
2.

Rank: 25; Commitment area: Technology transfer requirements; Weighted 
score: 1.

Rank: 26; Commitment area: China's application of safeguards against 
U.S. exports (antidumping and other legal actions against import 
surges); Weighted score: 0.

Source: GAO analysis of responses to GAO 2003 Questionnaire of U.S. 
Companies in China on China-WTO Issues, question 5b.

Note: The weighted score is the sum of weighted votes by respondents 
identifying each commitment area as one of the three most important 
areas for their companies (3, 2, 1 values assigned to top, second, and 
third choices, respectively). The five most important commitment areas 
are shown in bold type.

[End of table]

Respondents Rated Progress in Five Most Important Commitment Areas: 

The five specific commitment areas ranked as most important to 
respondents overall were (1) standards, certifications, registration, 
and testing requirements; (2) customs procedures and inspection 
practices; (3) intellectual property rights; (4) tariffs, fees, and 
charges; and (5) consistent application of laws, regulations, and 
practices. Among these five areas, tariffs, fees and charges received 
higher marks, with respondents reporting on average that China had made 
reforms to a moderate extent. Respondents noted that it was relatively 
easy to assess China's implementation of tariffs, fees, and charges 
because China had set time schedules for tariff reductions on various 
products. Many respondents told us that China's efforts to achieve 
tariff reductions were on schedule, allowing companies to pay lower 
tariffs on imported products.

Respondents provided lower ratings on average for the four other 
important commitment areas and indicated that China had only 
implemented these reforms to some or little extent. In the area of 
standards, certifications, registration, and testing requirements, for 
example, some respondents discussed continuing requirements such as 
product registrations that require approval from multiple Chinese 
government agencies, delays and bureaucratic bottlenecks in processing 
product registration, and the use of product standards to protect 
Chinese agricultural producers. When evaluating China's reforms made in 
customs procedures and inspection practices, company representatives 
discussed the "hassles" and inefficiencies created by an unpredictable 
and slow customs system characterized by inconsistent application of 
standards and duties. In addition, numerous company representatives 
discussed the limitations of China's efforts to address intellectual 
property rights. Respondents cited specific experiences with generic 
copies of pharmaceutical products, products illegally copied to look 
like those of U.S. companies, and false labeling of Chinese products. 
Some respondents even commented on the Chinese government's inadequate 
enforcement of intellectual property rights. Furthermore, some 
respondents noted inconsistency in China's application of laws, 
regulations, and practices within and among national, provincial, and 
local levels of government. For example, one banking representative 
said that different local governments each have different explanations 
of China's laws and regulations. This issue illustrates a larger rule 
of law-related problem discussed by company representatives: the 
Chinese national government's commitment to WTO implementation did not 
always coincide with local governments' interpretation and 
implementation of China's commitments.

Industries Placed Importance on Different Commitment Areas: 

Respondents among the four selected industries (agriculture, banking, 
machinery, and pharmaceuticals) had different views on the commitment 
areas most important to their companies. For example, representatives 
of agricultural companies and organizations noted the significance of 
quota reductions while representatives of banking firms emphasized 
commitments related to market access for services and foreign exchange 
restrictions. Moreover, machinery company representatives identified 
customs procedures and inspection practices as an important area for 
their transport of goods. For pharmaceutical companies, intellectual 
property and trading rights stood out as among the most important 
commitments. Table 3 shows respondents' views on the most important 
commitment areas by industry.

Table 3: GAO Questionnaire Respondents' Views on the Most Important 
Commitment Areas, by Industry: 

Agriculture (Company representatives = 5; Agricultural organization 
representatives = 10).

(1) Standards, certifications, registration, and testing requirements.

(2) Tariffs, fees, and charges.

(3) Quotas and other quantitative import restrictions.

Banking (Company representatives = 10).

(1) Consistent application of laws, regulations, and practices.

(2) Scope of business restrictions for services.

(2) Market access for services.

(3) Foreign exchange restrictions.

Machinery (Company representatives = 48).

(1) Customs procedures and inspection practices.

(2) Tariffs, fees, and charges.

(2) Standards, certifications, registration, and testing requirements.

(3) Intellectual property rights.

Pharmaceuticals (Company representatives = 12).

(1) Intellectual property rights.

(2) Standards, certifications, registration, and testing requirements.

(3) Trading rights.

Source: GAO analysis of responses to GAO 2003 Questionnaire of U.S. 
Companies in China on China-WTO Issues and GAO 2003 Questionnaire of 
U.S. Nonprofit Agricultural Organizations, question 5b.

Note: Representatives from each industry and agricultural organizations 
selected the commitment areas included above as the three most 
important commitment areas for their companies. The same ranking number 
is shown when the responses were the same for multiple commitment 
areas. These results include those responding from the study population 
of 79 company representatives, the 11 representatives of agricultural 
organizations, and one agricultural company interviewed in 2003 and 
2002.

[End of table]

The relative importance that respondents from the four industries 
assigned to each of the 26 commitment areas reflected the nature of 
their businesses. Company representatives also described the importance 
of these commitment areas in terms of their experiences with China's 
reform efforts. First, for example, agricultural companies identified 
the tariff-rate quota system[Footnote 10] as well as China's 
application of sanitary and phytosanitary measures and inspection 
requirements as important. Similarly, other agriculture respondents 
emphasized the importance of tariffs and one company representative 
noted that some agricultural tariffs applicable to his company had 
declined as much as 40 percent. A representative of an agricultural 
organization also noted that although China had increased trading 
rights, continued quota restrictions undermined this effort. Second, 
key issues for banking firms (a service industry) included China's 
market access commitments to fully open the industry to foreign banks 5 
years after China's accession to the WTO. Banking industry 
representatives also identified scope of business restrictions, which 
can limit the types of services offered to clients, as important. 
However, company representatives also told us that market access 
obstacles, such as branch licensing that limits the ability of foreign 
banks to offer additional products and to expand geographically, 
continue to exist. Next, machinery companies identified the importance 
of China's tariff rates and product certification system that sometimes 
involves on-site inspection of manufacturing facilities outside of 
China. Some machinery company representatives discussed the importance 
of timely product certification at the ports, the importance of an 
efficient product registration process for new products imported into 
China, and the need for testing procedures at customs that allow 
products to enter the country without damage caused by product testing. 
Finally, representatives from pharmaceutical companies identified 
protection of intellectual property rights as important and said that 
they continue to face challenges in this area. Specifically, several 
pharmaceutical company representatives discussed the continued need for 
patent protection to prevent counterfeiting of drugs sold at a fraction 
of the price charged for the genuine product. A few representatives of 
pharmaceutical firms noted that the Chinese government had allowed 
counterfeit generic drugs to be sold and believed that China displayed 
discrimination favoring Chinese products rather than complying with the 
principle of national treatment, under which imported foreign products 
and services are treated no less favorably than domestic products or 
services. As described by one company representative, although 
protection of intellectual property rights is getting better, the 
situation is still bad. Another respondent said simply that "piracy is 
everywhere" in China.

Many Respondents Could Not Assess Progress of China's WTO 
Implementation: 

Another notable finding of our questionnaire is that many respondents 
were unable to assess certain commitment areas listed in our 
questionnaire. Company representatives provided a number of 
explanations for their limited ability to evaluate China's progress in 
implementing specific WTO commitment areas. Specifically, for 13 of the 
26 specific commitment areas we asked about, more than half of the 
respondents said they had no basis to judge the extent to which China 
had made reforms in these commitment areas. Most notably, for four 
commitment areas, at least three quarters of the respondents selected 
"no basis to judge" when asked to assess the extent to which China had 
actually made reforms in these commitment areas. These areas included 
export restrictions, such as eliminating taxes and charges on exports; 
China's application of safeguards against U.S. exports, which includes 
antidumping[Footnote 11] measures and other legal actions against 
import surges; local content requirements; and government requirements 
stipulating a minimum amount of production that must be exported. See 
figure 2 for the number of respondents who indicated they had no basis 
to judge China's reforms and those who assessed China's implementation 
of its WTO commitment areas.

Figure 2: Comparison of Number of Respondents Who Assessed China's 
Implementation of Commitment Areas and Those with No Basis to Judge: 

[See PDF for image]

[End of figure]

The reasons for a "no basis to judge" response could result from any 
number of factors, including the irrelevance of specific commitment 
areas to particular companies, lack of experience with commitment 
areas, and lack of knowledge about China's WTO commitments. Some 
company representatives told us that they could not assess commitment 
areas that simply did not apply to their companies. For example, 
representatives of machinery companies had no basis to judge "scope of 
business restrictions for services" because they did not provide 
services. Other respondents stated that their companies did not have 
experience with particular commitment areas, such as one respondent's 
inability to comment on "independence of judicial bodies" because the 
respondent's company had not accessed the Chinese judicial system. 
Moreover, some respondents noted that they did not have sufficient 
awareness and understanding of the exact terms of China's WTO 
commitments and/or did not actively track specific Chinese 
implementation efforts. Several respondents told us that they often 
could not distinguish between China's broad economic reforms and its 
actions taken to implement specific WTO commitments. Other respondents 
said that the WTO did not apply to their company's business model, did 
not really matter to their business, or did not have relevance to 
current market conditions that affected their business.

Most Respondents Reported a Positive Impact from China's WTO 
Implementation: 

Most respondents reported that China's implementation of its WTO 
commitments had had a positive impact on their companies, even though 
some company representatives indicated that China's reform efforts 
would continue to present challenges for their company operations in 
China. For example, one respondent noted the success of his company's 
overall operations in China but stated that implementation of China's 
WTO commitments remained slow and problematic. Another company 
representative noted that although actual changes are happening very 
slowly, the overall pressure to reform is having a positive effect. 
Companies also provided information on whether various business 
activities had increased, stayed about the same, or decreased since 
China joined the WTO in December 2001. The majority of respondents 
reported that most of the 13 business activities such as revenue stream 
and volume of production in China had increased. Company 
representatives described a broad range of increased company activities 
including new lines of business and new products, expansion of existing 
business to meet growing demand, and the opening of new branch offices 
and factories. Some respondents discussed the broad range of factors 
that influence company business activities. Respondents cited other 
factors, such as the business environment in China and general market 
and economic conditions, as more direct influences on company 
activities than China's WTO membership.

Company Representatives Reported Positive Impact on Business in China: 

Overall, company representatives reported a generally positive impact 
from implementation. More than two thirds of the 80 company 
representatives responding to this question reported that China's 
implementation of its WTO commitments had had a positive impact on 
their companies, as shown in figure 3. Some respondents noted that 
China's accession to the WTO had increased business opportunities for 
their companies through changes such as decreased tariffs and increased 
transparency of laws and regulations. Respondents also noted that the 
lower tariffs helped to improve business in China and had had an 
immediate impact on their bottom line because of reduced costs, 
ultimately helping their companies increase profits. One company 
representative told us that the prevalence of government officials with 
a pro-business attitude and the ability to speak English proficiently 
had contributed to the positive impact on company operations in China.

Figure 3: Impact of China's WTO Implementation on GAO Questionnaire 
Respondents' Companies: 

[See PDF for image]

Note: N = 80. Two respondents had no basis to judge.

[End of figure]

Responses regarding the impact of China's WTO implementation on their 
companies varied when analyzed by company size and industry. First, 
when analyzed by company size, a majority of representatives of small-
and medium-sized enterprises reported little, no, or a negative impact 
from WTO implementation. Large company representatives responded more 
positively, with nearly three quarters selecting either "very positive" 
or "generally positive" when asked what impact China's WTO 
implementation had on their company's ability to do business in China. 
Second, a majority of respondents in three of the four industries 
reported a positive impact on company operations. Specifically, most of 
the representatives of agricultural companies reported little, no, or a 
negative impact from China's implementation efforts. Agriculture 
respondents discussed negative consequences resulting from WTO-
inspired testing requirements that ultimately resulted in the rejection 
of U.S. shipments to China. In contrast to agriculture, almost all of 
the banking industry respondents reported either a very positive or 
generally positive impact on their companies' ability to do business in 
China. One representative from a banking company stated that his 
company has a positive view of market development in China--the rules 
seem much clearer for banks and there is an increased sense of 
assurance that the company can be successful as a result of China's WTO 
implementation. A majority of the manufacturing and pharmaceutical 
company respondents also reported more positive than negative responses 
regarding the impact of China's WTO implementation on their companies.

Impact from China's Reforms Expected to Continue: 

A number of company representatives reported a positive outlook for 
their future in China when asked about the likely impact that China's 
WTO implementation would have in 2 years' time, but they also noted the 
challenges they expect to continue. Some respondents said they expected 
the overall business environment in China would improve significantly. 
Others specifically discussed WTO commitments that would have an impact 
on their ability to do business in China. For example, some respondents 
stated that additional tariff cuts would reduce product costs and 
result in increased profits. However, other respondents discussed 
obstacles hindering reform efforts. One company representative noted 
that China's regulatory reforms may be fine on paper, but speculated 
that actual implementation could invalidate the intent of the reforms. 
Some company representatives noted that different interpretations of 
laws and regulations as well as varied approaches to implementation 
between provinces and levels of government create challenges for 
foreign companies in China. Several company representatives discussed 
ongoing delays to business operations resulting from Chinese 
requirements for product registration and testing. Generally, company 
representatives said that progress is continuing, that their parent 
companies would continue investing in business operations in China, and 
that they expected the overall business climate to improve, but reforms 
could take time.

Company Business Activities in China Increasing: 

Overall, our questionnaire respondents reported that their company 
activities have increased since China joined the WTO. Respondents 
indicated whether their companies' business activities in 13 areas had 
increased, stayed about the same, or decreased since China joined the 
WTO in December 2001. Specifically, at least 70 percent of respondents 
reported that their companies' business activities had increased for 9 
of the 13 listed activities, as shown in figure 4. Some company 
representatives told us that China's WTO membership helps to attract 
foreign investment, which in turn helps their businesses. In contrast, 
most respondents reported that the other four activities had stayed the 
same or decreased. Activities that had stayed the same or decreased 
included the number and value of their ventures with Chinese partners. 
None of the respondents to our questionnaire reported a decrease in the 
number of products distributed in China, the scope of product 
distribution in China, or the number of services provided in China. But 
almost one third of respondents indicated that the number of company 
employees in the United States had decreased while about one sixth 
reported an increase. Respondents told us that the number of employees 
in the United States depends on factors other than China's WTO 
accession, such as current economic conditions, corporate 
restructuring, changes in the company's industry, and/or a change in 
company strategy. Some respondents also discussed the difficulty of 
identifying a link between other company activities and China's WTO 
membership. Company representatives cited a number of possible 
influences on changes in company activity levels, such as China's 
ongoing economic reforms, an improving business environment in China, 
and market development opportunities in China.

Figure 4: U.S. Company Business Activities Since China Joined the WTO: 

[See PDF for image]

Note: Percentages for the individual activities are based on the number 
of respondents who made a judgment about each business activity. 
Therefore, the percentages do not include respondents who checked "No 
basis to judge" or "No answer," or did not provide an answer. 
Percentages may exceed 100 percent due to rounding. Appendix II 
provides a breakdown of these responses.

[End of figure]

Concluding Observations: 

Our analysis of U.S. companies' responses to our questionnaire provides 
findings and lessons that have important implications for policymakers 
who rely on private sector input in order to judge China's progress in 
opening its market. As noted in our March 2003 report, the private 
sector plays an important role in monitoring and enforcement 
activities. Our results indicate areas where China has made progress in 
carrying out WTO-related reforms and areas that might need more 
attention. Our results also show that despite the problems U.S. 
companies are facing in China's implementation of specific commitment 
areas, more than two thirds of respondents indicated that China's WTO 
implementation had a positive impact on their companies' ability to do 
business in China.

Our work also provides a number of lessons regarding the use of private 
sector input that could help shape best practices for U.S. government 
efforts to monitor and enforce China's compliance with its commitments. 
First, because company experiences and assessments varied, both overall 
and among companies in the same industry, policymakers are well advised 
to seek input from a number of companies with interests in an area of 
concern and not just a few companies. Doing so increases the 
representativeness of the information gathered for monitoring purposes, 
because views are often company-specific and one company in an industry 
cannot be assumed to speak for all.

Second, we found that the number of company representatives who report 
they have a basis to judge China's implementation of specific WTO 
commitment areas varies greatly. Broad input from a wide range of 
companies assures policymakers that monitoring is authoritative and 
complete because relatively few individual companies believed they had 
a basis to judge all 26 commitment areas. Furthermore, in some cases, 
like Chinese export restrictions, application of safeguards, and/or 
subsidies, very few U.S. companies reported they had a basis to judge 
implementation. This observation raises the question of whether U.S. 
government officials can rely on private sector input to identify the 
full range of China's compliance problems. Instead, for some commitment 
areas, alternative strategies that reach out to specific companies or 
that rely on economic or legal information to identify problems, for 
example, may be needed to monitor China's implementation.

Finally, we report that respondents cited a number of factors that 
influence company activities in addition to China's efforts to 
implement specific WTO commitments. These results reaffirm the 
importance of ongoing private sector education about China's WTO 
obligations and the market access opportunities that the private sector 
should expect. Furthermore, it indicates that any monitoring strategy 
benefits from collecting and reviewing information about what companies 
may consider solely "commercial problems" but that may actually involve 
WTO-related issues, where the U.S. government can clearly take action.

Nevertheless, knowledge of U.S. company views remains fundamental for 
policymakers to judge the degree to which the benefits of China's WTO 
membership are being realized. We will consider the implications of 
this work as we conduct our current review of U.S. government 
monitoring and enforcement activities.

We are sending copies of this report to interested congressional 
committees. We will make copies available to others on request. In 
addition, the report will be available at no charge on the GAO Web site 
at [Hyperlink, http://www.gao.gov].

If you or your staff have any questions about this report, please 
contact me at (202) 512-4128. Other GAO contacts and staff 
acknowledgments are listed in appendix IV.

Signed by: 

Loren Yager: 
Director, International Affairs and Trade: 

[End of section]

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

The Chairman and the Ranking Minority Member of the Senate Finance 
Committee and the Chairman and the Ranking Minority Member of the House 
Committee on Ways and Means asked us to undertake a long-term body of 
work relating to China's membership in the World Trade Organization 
(WTO). This work began in 2001 and includes examining, through annual 
surveys, the experience of U.S. firms doing business in China. Our 
objectives for this report were to assess the views and experiences of 
selected U.S. companies with a presence in China regarding (1) the 
extent to which China has implemented its WTO commitments in key 
industries and (2) the impact of China's implementation of its WTO 
commitments on these U.S. companies' business operations. To respond to 
our objectives, we collected the views of 82 U.S. companies and 11 
representatives of U.S. agricultural associations with offices in 
China.

Data Collection: 

To answer our two objectives, we gathered company views primarily via 
in-person interviews in China; we also conducted some interviews by 
telephone in instances when it was logistically impossible to schedule 
in-person meetings. We used this approach because the work we conducted 
for our 2002 report on U.S. company views indicated that this method 
would yield better response rates than mail or Web surveys and would 
allow us to contact the corporate representatives who were most 
knowledgeable about WTO implementation issues. We selected the 
participants from a commercial database listing U.S. companies that 
were identified as being in China as of 2003. We purchased the 
database, Foreign Companies in China 2003, from Commercial Intelligence 
Service, a division of Business Monitor International. Our research 
indicated that this database best met our need for identifying U.S.-
nationality companies and their respective contact information in China 
by industry. However, the database likely does not include all U.S. 
companies in China, because foreign investors present a constantly 
changing population, some companies in China may not wish to publicize 
their presence, and/or because it is not always clear who is the 
ultimate parent of corporate subsidiaries.

Industry Selection: 

We selected industries that encountered implementation issues, had key 
commitments implemented during China's first year of WTO membership, 
and industries with concentrations of U.S. foreign investment in China. 
The four industries included: agriculture, banking, machinery, and 
pharmaceuticals. Although fewer U.S. agriculture-related companies 
have a physical presence in China than the other three selected 
industries, agriculture emerged as a key implementation issue in 2002, 
and its importance continued in 2003. In addition to interviewing the 
agricultural firms listed in the purchased database, we also conducted 
structured interviews with a judgmental selection of 11 representatives 
of nonprofit agricultural associations in China. The representatives of 
these associations promote U.S. agricultural exports to China for 
various commodities. We interviewed them to gain a more complete 
understanding of U.S. agricultural interests in China and do not 
generalize their responses to the full universe of nonprofit 
agricultural associations. Funding for representative offices of these 
associations in China is in part provided by the U.S. government 
through the Department of Agriculture's Foreign Market Development 
Cooperator Program.[Footnote 12] We administered the same questionnaire 
we used for the private sector firms, with slight modifications to 
acknowledge the nature of these cooperators as nonprofit associations 
rather than companies. Data for these associations are presented 
separate from company representative responses in the report. Next, the 
banking industry provided an opportunity to explore the experiences of 
firms that provide services in China. Banking issues also emerged as a 
concern for U.S. government officials during the first year of China's 
WTO membership. Third, machinery is an industry with representation 
from a broad range of U.S. companies. Finally, for the pharmaceutical 
industry, numerous commitments were scheduled for implementation during 
China's first 2 years of WTO membership. In addition, this industry 
provided an opportunity for us to explore the experience of companies 
with an interest in intellectual property rights, a key issue during 
the first year of China's WTO membership.

Sample Development: 

Companies from the four selected industries were identified in the 
aforementioned electronic database, Foreign Companies in China 2003, 
purchased from the Commercial Intelligence Service. The database 
contained a total of 243 contacts for companies in the four selected 
industries. We reviewed the list of contacts in order to judgmentally 
identify primary, secondary and tertiary contacts for each company. In 
addition, we confirmed U.S. incorporation for each company, leaving a 
total of 149 companies in our study population.

During the scheduling process, it became apparent that positive 
responses from companies on the invited list of 149 companies might not 
fill our itinerary for the planned 2-week data-gathering trip to China 
in October 2003. Consequently, we supplemented the list of 149 
companies with the list of 48 companies that had completed interviews 
with us in China in 2002. Three of these 48 companies accepted the 
interview invitation and completed structured interview 
questionnaires. These companies are included in our data analysis of 82 
questionnaire responses. See table 4 for an explanation of the results 
of requests for interviews with the 149 companies from the four 
selected industries.

Table 4: Results of Requests for Interviews from U.S. Companies: 

Result: Usable response received; Number of companies: 79.

Result: Refusal; Number of companies: 38.

Result: Contact information could not be located; Number of companies: 
18.

Result: Parent company incorporated outside the U.S.; Number of 
companies: 7.

Result: Company name identified as duplicate listing; Number of 
companies: 5.

Result: Other (out of business or no longer invested in China); Number 
of companies: 2.

Source: GAO analysis of U.S. companies in agriculture, banking, 
machinery, and pharmaceutical industry listings from Commercial 
Intelligence Service database.

Note: The study population included 149 companies. GAO received 
responses from 82 of these companies. However, we interviewed 3 of 
these companies in 2002, but their names did not appear in the 
purchased database. Consequently, these three responses are not 
included in the study population results shown in table 4.

[End of table]

Questionnaire Administration: 

We conducted structured interviews with representatives of U.S. firms 
and agricultural organizations in the United States and Beijing, 
Shanghai, and Hong Kong, China, in October 2003.[Footnote 13] 
Structured interviews provided an opportunity to discuss questionnaire 
responses in greater detail as well as gain an understanding for the 
context of these responses. We discussed topics during the interviews 
that included the importance of China's WTO commitment areas, the 
extent to which China had implemented reforms in WTO commitment areas, 
and the impact of China's reforms on respondents' companies.

We restricted our analysis to the subset of firms that responded to our 
questionnaire, and we did not make estimates about the larger 
population of all U.S. companies with a presence in China. From the 
study population of 149 U.S. companies with a presence in China, we 
received 79 questionnaires, for an overall response rate of 60 
percent.[Footnote 14]

As the response rate was 60 percent, and some key questions had a high 
frequency of "no basis to judge" responses, we did not calculate 
sampling errors, and we present questionnaire results in this report in 
unweighted form. The unweighted responses represent the responses 
received and are not projected to the population of U.S. companies with 
a presence in China nor the four selected industries.

U.S. Companies Responding to the Questionnaire: 

Respondents to our questionnaire from the study population represented 
four industries: agriculture, banking, machinery, and pharmaceuticals. 
The largest number of respondents represented machinery companies, 
followed by pharmaceuticals, banking, and agriculture. Figure 5 
displays the number of respondents from each of the four industries.

Figure 5: Number of Companies Responding to GAO's Questionnaire, by 
Industry: 

[See PDF for image]

Note: N=80. The number of company respondents reflected in the figure 
includes the 79 respondents from the four industries selected in 2003 
plus one agricultural company not listed in the purchased database that 
we interviewed in 2003 and 2002. The other two companies interviewed in 
2003 and 2002 were not in any of the four selected industries.

[End of figure]

Location of Respondents in China: 

Questionnaire respondents reported that they carry out their business 
activities in facilities and offices across all of China. Shanghai, 
Beijing, and Guangzhou were the most frequent responses to the question 
of where companies had a facility or other presence among all of the 
Chinese locations listed in our questionnaire (listed in order of 
frequency of responses). In fact, only a few respondents (less than 
five) did not have a facility or other presence in Shanghai, Beijing, 
or Guangzhou. About one third of respondents reported having facilities 
or some other presence in all three of these locations, while about two 
thirds of respondents reported having a presence in locations beyond 
Shanghai, Beijing, and Guangzhou. Figure 6 shows the number of 
companies that reported having a facility or other presence in each 
location in China listed in our questionnaire.

Figure 6: Location of Facilities or Other Presence of GAO Questionnaire 
Respondents: 

[See PDF for image]

Note: N=82. Respondents could select multiple locations.

[End of figure]

Respondents' Business Relationships in China: 

Respondents reported that they engage in a range of business 
relationships in their many locations throughout China. More than two 
fifths of respondents reported having one type of business 
relationship; about one third of the respondents had two types of 
relationships; and about one quarter of the respondents reported three 
or more types of business relationships there. Wholly owned foreign 
enterprises, joint ventures, and representative offices were the most 
frequently reported types of business relationships, respectively. 
Figure 7 displays the number of respondents that reported each type of 
business relationship.

Figure 7: Number and Types of Respondents' Business Relationships in 
China: 

[See PDF for image]

Note: N=82. Respondents could select all business relationships that 
applied.

[End of figure]

Respondents' Company Size: 

Respondents also varied in terms of the number of employees in the 
United States and the number of employees in China. The number of 
employees in the United States varied from none (such as a company 
incorporated in the United States but with all employees in China) to 
90,000. Most of the companies that completed our questionnaire, 
however, were large companies. Less than 15 percent of respondents 
reported that they had 500 or fewer employees in the United States. The 
number of employees that companies reported having in China ranged from 
zero to 8,000. Almost two thirds of respondents reported that they had 
500 or fewer employees in China.

Limitations: 

All firms that responded to our questionnaire were assured that their 
responses would remain confidential. In spite of this, due to the 
sensitive and/or proprietary nature of the topics discussed, it is 
possible that the data presented in this report reflect the views of 
respondents only to the extent to which they felt comfortable sharing 
them with an agency of the U.S. Congress. In addition, respondents 
reported varied knowledge of China's WTO commitments and their 
application to their companies.

Measures Taken to Address Limitations: 

Other potential sources of errors associated with the questionnaire, 
such as question misinterpretation and question nonresponse, may be 
present. We included steps in the development of the questionnaire, the 
data collection, and data analysis to reduce possible nonsampling 
errors. We developed this questionnaire based on the experience we 
gained administering the instrument for our 2002 survey of U.S. 
companies with a presence in China. In addition, we solicited feedback 
from internal and external parties on a draft of this year's 
questionnaire. We pre-tested the questionnaire with eligible 
representatives of U.S. companies with a presence in China to help 
ensure that our questions were interpreted correctly and that the 
respondents were willing to provide the information required.

We addressed possible interviewer bias, including the fact that we 
conducted some interviews by telephone, by ensuring that all 
respondents had copies of the instrument in front of them when we 
conducted our interviews. We compared the results of our questionnaire 
to those of recent surveys of U.S. companies in China that were 
conducted by the U.S.-China Business Council and the American Chambers 
of Commerce in China and in Shanghai. While these surveys targeted 
different populations of U.S. companies in China and had low response 
rates, we noted that both had a few questions that were similar to ones 
we used and that both obtained results that were broadly similar to 
ours.

We did our work in the Washington, D.C., area, and in Beijing, Hong 
Kong, and Shanghai, China. We performed our work from October 2002 to 
January 2004 in accordance with generally accepted government auditing 
standards.

[End of section]

Appendix II: Questionnaire of U.S. Companies in China (and U.S. 
Nonprofit Agricultural Organizations) on China-WTO Issues: 

[See PDF for image]

[End of figure]

[End of section]

Appendix III: Profile of U.S. Investment and Trade with China: 

U.S. investment and trade with China have grown significantly over the 
past decade. As a result of significant new investments from Hong Kong, 
the United States, Japan, and Taiwan; China surpassed the United States 
as the world's largest recipient of foreign direct investment flows in 
2002. However, China still represents a very small share of the total 
stock of U.S. investments worldwide. In terms of trade in goods and 
services, China is the United States' fourth largest trading partner, 
after Canada, Mexico, and Japan. Both U.S. exports to China and imports 
from China have risen rapidly over the past decade. However, the United 
States imports significantly more from China than it exports to China, 
resulting in a U.S. bilateral trade (goods and services) deficit with 
China of $102 billion in 2002, according to U.S. trade 
statistics.[Footnote 15]

U.S. Investment in China: 

As of the end of 2002, U.S. companies had a total stock of direct 
investments in China of $10.3 billion--more than 10 times the 
approximately $900 million invested a decade earlier in 1993. However, 
compared to the $1.5 trillion of accumulated U.S. direct investments 
worldwide, China accounts for less than 1 percent of total U.S. 
investment.[Footnote 16] In terms of new investment inflows, though, 
China receives significant investments from several countries, in 
addition to the United States. In 2002, according to Chinese 
statistics, nearly $53 billion in foreign direct investment flowed into 
China, making it the world's top investment destination (rather than 
the United States) for the first time.[Footnote 17] Hong Kong was by 
far the largest supplier of foreign direct investment to China, with 
about 34 percent of the total, followed by the United States (over 10 
percent), Japan (8 percent), and Taiwan (about 8 percent).[Footnote 18]

U.S. direct investment in China has largely focused on manufacturing 
sectors, particularly computer and electronic products and chemicals. 
Mining has also been a significant area of U.S. investment. Figure 8 
shows the distribution of the stock of U.S. direct investment in China 
as of 2002.

Figure 8: Stock of U.S. Direct Investment in China, 2002 ($10 billion): 

[See PDF for image]

Notes: 

Investment in this figure is U.S. direct investment position abroad on 
a historical-cost basis.

The U.S. Bureau of Economic Analysis has modified its industry 
classifications used for U.S. direct investment abroad since GAO's 
September 2002 report, G [Hyperlink, http://www.gao.gov/cgi-bin/
getrpt?GAO-02-1056] AO-02-1056. Therefore, a direct comparison between 
the statistics on U.S. investment abroad by industry presented in that 
report and the information provided in this figure cannot be made.

The industry classifications used in this figure do not correspond 
directly with the industry classification used in our questionnaire. 
For example, our questionnaire included firms classified as 
agriculture. However, these firms may have investments in China in 
wholesale trade (of agricultural products) and manufacturing (of 
fertilizers, processed foods, or other agriculturally related 
products). In addition, because of the limited number of responses that 
we received, the companies that did respond to our questionnaire in 
each area do not constitute a representative sample of their overall 
industry group.

[End of figure]

The pattern of U.S. investment in China, however, differs from the 
worldwide pattern of U.S. investment. Figure 9 shows that manufacturing 
accounts for about 26 percent of U.S. investments worldwide compared 
with about 60 percent of investments in China (fig. 8). Similarly, 
globally the United States has about one third (33 percent) of the 
stock of its investments in other industries (e.g., agriculture, 
construction, retail trade, and transportation and warehousing) 
compared with about 10 percent of its investments in China in the other 
industries category. Finance and depository institutions (except 
insurance) is the third largest area of U.S. global investments, 
accounting for about 20 percent in 2002, while in China, only about 3 
percent of U.S. investments are in this area. This difference in the 
pattern of U.S. investment in China compared to global patterns is not 
surprising, because China is a developing country, has an abundant 
supply of relatively low-cost labor, and is a growing producer of 
manufactured goods worldwide. In contrast, the European Union, Canada, 
and Japan, which accounted for well over half of the stock of U.S. 
direct investment abroad, are developed countries with economies 
similar to the United States.

Figure 9: Stock of U.S. Direct Investment Worldwide, 2002 ($1.5 
trillion): 

[See PDF for image]

Notes: 

Investment in this figure is U.S. direct investment position abroad on 
a historical-cost basis.

The U.S. Bureau of Economic Analysis has modified its industry 
classifications used for U.S. direct investment abroad since GAO's 
September 2002 report, G [Hyperlink, http://www.gao.gov/cgi-bin/
getrpt?GAO-02-1056] AO-02-1056. Therefore, a direct comparison between 
the statistics on U.S. investment abroad by industry presented in that 
report and the information provided in this figure cannot be made.

The industry classifications used in this figure do not correspond 
directly with the industry classification used in our questionnaire. 
For example, our questionnaire included firms classified as 
agriculture. However, these firms may have investments in China in 
wholesale trade (of agricultural products) and manufacturing (of 
fertilizers, processed foods, or other agriculturally related 
products). In addition, because of the limited number of responses that 
we received, the companies that did respond to our questionnaire in 
each area do not constitute a representative sample of their overall 
industry group.

[End of figure]

U.S. Trade with China: 

U.S. trade in goods and services with China has also grown 
significantly during the past decade. From 1993 to 2002, U.S. exports 
to China grew at an average annual rate of 12 percent, compared with 5 
percent for U.S. exports worldwide during the same time period. 
Similarly, U.S. imports from China grew at an average annual rate of 17 
percent, while overall U.S. imports grew at 8 percent annually. 
Consequently, China was the U.S.'s fourth largest trading partner in 
2002 (after Canada, Mexico, and Japan), with about $27 billion in U.S. 
exports (goods and services) and about $129 billion in U.S. imports 
from China (goods and services). In 2003, goods trade data show that 
this rapid growth continued, with U.S. exports to China at about $27 
billion, an increase of 30 percent from 2002. Similarly, U.S. imports 
from China in 2003 were about $152 billion, an increase of 21 percent 
from 2002. Services trade data for 2003 were not available as of the 
date of this report.[Footnote 19]

As a result of the difference between U.S. exports and imports, the 
United States has had a growing bilateral trade deficit with China. In 
2002, the U.S. bilateral trade deficit with China reached $102 billion, 
the largest with any country. The deficit resulted from the $104 
billion difference in goods trade (as opposed to services trade). The 
United States maintained about a $2 billion surplus in services trade 
with China in 2002.

In 2003, the U.S. bilateral goods trade deficit with China expanded 
further, to about $125 billion, an increase of about $21 billion. The 
increase was primarily due to an increase in the trade deficit in 
computers, electrical equipment, and appliances, as well as smaller 
increases in textiles, apparel, and leather; metal and machinery 
(except electric) products; and miscellaneous manufactured components, 
including furniture. However, the U.S. bilateral trade surplus with 
China in agriculture, food and tobacco products, and minerals rose from 
about $260 million in 2002 to about $2.8 billion in 2003. Figure 10 
shows U.S. exports and imports of goods by broad industry category in 
2003.

Figure 10: U.S. Exports and Imports of Goods with China, by Industry, 
2003: 

[See PDF for image]

Notes: 

Exports are domestic exports valued at free-alongside-ship (FAS) value. 
Imports are imports for consumption at customs value. Categories are 
based on the North American Industry Classification System (NAICS).

The industry classifications used in this figure do not correspond 
directly with the industry classification used in our questionnaire. 
For example, our questionnaire included firms classified as 
agriculture. However, these firms may have investments in China in 
wholesale trade (of agricultural products) and manufacturing (of 
fertilizers, processed foods, or other agriculturally related 
products). In addition, because of the limited number of responses that 
we received, the companies that did respond to our questionnaire in 
each area do not constitute a representative sample of their overall 
industry group.

[End of figure]

In terms of U.S. goods exports, China ranks sixth after Canada, Mexico, 
Japan, the United Kingdom, and Germany. Top U.S. goods exports to China 
in 2003 included: computers, electrical equipment, and appliances (23 
percent); agriculture, food and tobacco products, and minerals (20 
percent); metal and machinery (except electrical) products (16 
percent); petroleum and chemical products (16 percent); and 
transportation equipment (12 percent). U.S. goods exports to China 
increased by 30 percent from 2002 to 2003, compared to an increase of 3 
percent for U.S. goods exports worldwide during the same period. Figure 
11 shows the relative share of broad industry groups in U.S. exports to 
China in 2003.

Figure 11: U.S. Exports of Goods to China, Share by Industry, 2003: 

[See PDF for image]

Notes: 

Exports are domestic exports valued at free-alongside-ship (FAS) value. 
Categories are based on NAICS.

The industry classifications used in this figure do not correspond 
directly with the industry classification used in our questionnaire. 
For example, our questionnaire included firms classified as 
agriculture. However, these firms may have investments in China in 
wholesale trade (of agricultural products) and manufacturing (of 
fertilizers, processed foods, or other agriculturally related 
products). In addition, because of the limited number of responses that 
we received, the companies that did respond to our questionnaire in 
each area do not constitute a representative sample of their overall 
industry group.

[End of figure]

In terms of U.S. imports of goods, China is the second largest foreign 
supplier to the U.S. market after Canada and ahead of Mexico. Top U.S. 
goods imports from China in 2003 also included computers, electrical 
equipment, and appliances (36 percent). As previously noted, U.S. 
direct investment in China was relatively large in the computer and 
electronic products area. A share of trade in this area between the 
United States and China is likely to be intracompany trade, in which 
components are produced in one country and exported to the other 
country. The components are then used to produce final goods that are 
ultimately sold in each market, as well as other countries. Other 
important imports included miscellaneous manufactured components, 
including furniture (21 percent) and textiles, apparel, and leather (19 
percent). Figure 12 shows the relative share of broad industry groups 
in U.S. imports from China in 2003.

Figure 12: U.S. Imports of Goods from China, Share by Industry, 2003: 

[See PDF for image]

Notes: 

Imports are imports for consumption at customs value. Categories are 
based on NAICS.

The industry classifications used in this figure do not correspond 
directly with the industry classification used in our questionnaire. 
For example, our questionnaire included firms classified as 
agriculture. However, these firms may have investments in China in 
wholesale trade (of agricultural products) and manufacturing (of 
fertilizers, processed foods, or other agriculturally related 
products). In addition, because of the limited number of responses that 
we received, the companies that did respond to our questionnaire in 
each area do not constitute a representative sample of their overall 
industry group.

[End of figure]

Services trade with China is less significant to the United States 
relative to services trade with other partners. Unlike goods trade, 
China is not in the top 10 importers or exporters of services trade 
with the United States. In 2002, the United States exported about $6 
billion worth of services to China, compared with about $280 billion in 
exports worldwide.[Footnote 20] Other private services (such as 
education, insurance, telecommunications, and business, professional, 
and technical services) generated $2.6 billion in sales, followed by 
other transportation such as freight charges from transportation of 
goods by ocean, air, or land, and port charges ($1.4 billion). The 
United States imported about $4 billion in services from China in 2002, 
compared with about $205 billion worldwide. Top U.S. imports of 
services from China included other transportation ($2.3 billion) and 
travel services ($1.1 billion). Figure 13 shows the value of U.S. 
services exports and imports with China in 2002 by category.

Figure 13: U.S. Exports and Imports of Services with China, by 
Category, 2002: 

[See PDF for image]

Note: The industry classifications used in this figure do not 
correspond directly to the industry classification used in our 
questionnaire. For example, our questionnaire included firms also 
classified as financial services. However, these firms may or may not 
provide cross-border financial services (as opposed to providing 
financial services to China from their operations in China). In 
addition, because of the limited number of responses that we received, 
the companies that did respond to our questionnaire in each area do not 
constitute a representative sample of their overall industry group.

[End of figure]

Sources and Methods: 

In order to provide background on U.S. investment and trade with China, 
we collected and analyzed the most recently available direct investment 
abroad and cross-border private services trade data from the Bureau of 
Economic Analysis (BEA) as well as goods trade data from the Bureau of 
the Census. We collected the most recently available Census trade data 
through the U.S. International Trade Commission's Dataweb. We also 
collected information on worldwide investment in China from reports 
from the Organization for Economic Cooperation and Development and the 
Congressional Research Service (based on Chinese government data 
sources). Since these data are used solely in this appendix as 
background information to the report, we did not assess the reliability 
of these data. For more information on BEA's methodology for collecting 
U.S. direct investment abroad data, see "U.S. Direct Investment Abroad" 
in the September 2003 issue of the Survey of Current Business and "U.S. 
Direct Investment Abroad: 1994 Benchmark Survey, Final Results" located 
at BEA's Web site at [Hyperlink, http://www.bea.gov] www.bea.gov. For 
more information on BEA's methodology for collecting U.S. international 
services data, see "U.S. International Services" in the October 2003 
issue of the Survey of Current Business also available at BEA's Web 
site.

The industry categories that BEA and Census use do not correspond to 
the industry classifications used in our questionnaire. Because of 
this, and because the number of firms that responded to our 
questionnaire are not representative of all companies in China nor of 
all U.S. companies in China from these industries, these responses are 
not representative of the industry groups used in this profile of U.S. 
investment and trade with China. In addition, the industry categories 
used by BEA and Census have changed since our 2002 report.[Footnote 21] 
Therefore, the figures in this report and our prior GAO report are not 
comparable. In order to present broader industry groups, we combined 
some Census data categories. These groupings are presented in table 5. 
Census goods trade categories are based on the North American Industry 
Classification System (NAICS). We collected these data at the three-
digit level of aggregation and combined product categories into broader 
groups. These NAICS codes are listed in table 5. For services trade 
data from BEA, we separated the category "financial services" from the 
broader category of "other services.": 

Table 5: List of GAO Industry Groupings from Census Goods Trade Data: 

GAO industry group: Agriculture, food and tobacco products, and 
minerals; 
NAICS industry category: Agricultural products; 
NAICS 3-digit code: 111.

GAO industry group: Agriculture, food and tobacco products, and 
minerals; 
NAICS industry category: Livestock and livestock products; 
NAICS 3-digit code: 112.

GAO industry group: Agriculture, food and tobacco products, and 
minerals; 
NAICS industry category: Forestry products (not elsewhere specified); 
NAICS 3-digit code: 113.

GAO industry group: Agriculture, food and tobacco products, and 
minerals; 
NAICS industry category: Fish, fresh, chilled, or frozen, and other 
marine products; 
NAICS 3-digit code: 114.

GAO industry group: Agriculture, food and tobacco products, and 
minerals; 
NAICS industry category: Oil and gas; 
NAICS 3-digit code: 211.

GAO industry group: Agriculture, food and tobacco products, and 
minerals; 
NAICS industry category: Minerals and ores; 
NAICS 3-digit code: 212.

GAO industry group: Agriculture, food and tobacco products, and 
minerals; 
NAICS industry category: Food manufacturing; 
NAICS 3-digit code: 311.

GAO industry group: Agriculture, food and tobacco products, and 
minerals; 
NAICS industry category: Beverages and tobacco products; 
NAICS 3-digit code: 312.

GAO industry group: Textiles, apparel, and leather; 
NAICS industry category: Textiles and fabrics; 
NAICS 3-digit code: 313.

GAO industry group: Textiles, apparel, and leather; 
NAICS industry category: Textile mill products; 
NAICS 3-digit code: 314.

GAO industry group: Textiles, apparel, and leather; 
NAICS industry category: Apparel and accessories; 
NAICS 3-digit code: 315.

GAO industry group: Textiles, apparel, and leather; 
NAICS industry category: Leather and allied products; 
NAICS 3-digit code: 316.

GAO industry group: Wood, paper, and printing; 
NAICS industry category: Wood products; 
NAICS 3-digit code: 321.

GAO industry group: Wood, paper, and printing; 
NAICS industry category: Paper; 
NAICS 3-digit code: 322.

GAO industry group: Wood, paper, and printing; 
NAICS industry category: Printing, publishing, and similar products; 
NAICS 3-digit code: 323.

GAO industry group: Petroleum and chemical products; 
NAICS industry category: Petroleum and coal products; 
NAICS 3-digit code: 324.

GAO industry group: Petroleum and chemical products; 
NAICS industry category: Chemicals; 
NAICS 3-digit code: 325.

GAO industry group: Petroleum and chemical products; 
NAICS industry category: Plastics and rubber products; 
NAICS 3-digit code: 326.

GAO industry group: Petroleum and chemical products; 
NAICS industry category: Nonmetallic mineral products; 
NAICS 3-digit code: 327.

GAO industry group: Metal and machinery (except electric) products; 
NAICS industry category: Primary metal manufacturing; 
NAICS 3-digit code: 331.

GAO industry group: Metal and machinery (except electric) products; 
NAICS industry category: Fabricated metal products (not elsewhere 
specified); 
NAICS 3-digit code: 332.

GAO industry group: Metal and machinery (except electric) products; 
NAICS industry category: Machinery, except electrical; 
NAICS 3-digit code: 333.

GAO industry group: Computers, electrical equipment, and appliances; 
NAICS industry category: Computer and electronic products; 
NAICS 3- digit code: 334.

GAO industry group: Computers, electrical equipment, and appliances; 
NAICS industry category: Electrical equipment, appliances, and 
components; 
NAICS 3-digit code: 335.

GAO industry group: Transportation equipment; 
NAICS industry category: Transportation equipment; 
NAICS 3-digit code: 336.

GAO industry group: Miscellaneous manufactured components, including 
furniture; 
NAICS industry category: Furniture and fixtures; 
NAICS 3- digit code: 337.

GAO industry group: Miscellaneous manufactured components, including 
furniture; 
NAICS industry category: Miscellaneous manufactured commodities; 
NAICS 3-digit code: 339.

GAO industry group: Miscellaneous goods; 
NAICS industry category: Waste and scrap; 
NAICS 3-digit code: 910.

GAO industry group: Miscellaneous goods; 
NAICS industry category: Public administration; 
NAICS 3-digit code: 920.

GAO industry group: Miscellaneous goods; 
NAICS industry category: Goods returned to Canada or re-imported to the 
United States; 
NAICS 3-digit code: 980.

GAO industry group: Miscellaneous goods; 
NAICS industry category: Special classification provisions (not 
elsewhere specified); 
NAICS 3- digit code: 990. 

Source: GAO.

[End of table]

[End of section]

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Adam Cowles (202) 512-9637 Michelle Sager (202) 512-2712: 

Staff Acknowledgments: 

In addition to those named above, Martin de Alteriis, Shakira Edwards, 
Victoria Lin, Rona Mendelsohn, Beverly Ross, and Timothy Wedding made 
key contributions to this report.

[End of section]

Related GAO Products: 

World Trade Organization: Ensuring China's Compliance Requires a 
Sustained and Multifaceted Approach. Washington, D.C.: 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-172T]. 

GAO's Electronic Database of China's World Trade Organization 
Commitments. Washington, D.C.: 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-797R]. 

World Trade Organization: First-Year U.S. Efforts to Monitor China's 
Compliance. Washington, D.C.: 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-461]. 

World Trade Organization: Analysis of China's Commitments to Other 
Members. Washington, D.C.: 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-4]. 

World Trade Organization: Selected U.S. Company Views about China's 
Membership. Washington, D.C.: 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-02-1056]. 

World Trade Organization: Observations on China's Rule of Law Reforms. 
Washington, D.C.: 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-02-812T]. 


(320162): 

FOOTNOTES

[1] For more information, see U.S. General Accounting Office, World 
Trade Organization: Analysis of China's Commitments to Other Members, 
GAO-03-4 (Washington, D.C.: Oct. 3, 2002).

[2] For additional information on U.S. business views in 2002, see U.S. 
General Accounting Office, World Trade Organization: Selected U.S. 
Company Views about China's Membership, GAO-02-1056 (Washington, D.C.: 
Sept. 23, 2002).

[3] The results of our analysis were based on our survey of a random 
sample of 551 U.S. companies doing business in China and interviews 
with 48 judgmentally selected companies in four cities in China.

[4] The 2003 questionnaire listed 26 broad WTO commitment areas, 
whereas the 2002 survey listed 30 commitment areas. Some commitment 
areas were combined in 2003 in response to comments received during 
administration of the 2002 survey.

[5] In order to determine the extent to which respondents perceived 
that reforms were made in each of the 26 areas, we assigned values of 1 
to 4 to responses ranging from "no extent" to "great extent" on a four-
point scale. We then calculated average extent values for each of the 
commitment areas, where averages included the coded values from all 
respondents who expressed an opinion. 

[6] These 19 commitment areas had average scores from 1.8 to 2.4, where 
values ranging from 1.5 to 2.5 represent a response of "some or little 
extent."

[7] The WTO accession agreement committed China to phasing out the 
general limitations on companies' rights to trade--that is, to import 
or export--within 3 years of accession.

[8] Price controls in China primarily take two forms--direct state or 
government pricing and the more flexible government guidance pricing. 
Although China has liberalized price controls, imported goods that 
remain subject to state trading control also remain subject to price 
controls or government guidance on prices.

[9] These 7 commitment areas had average scores from 2.6 to 2.9, where 
values ranging from 2.5 to 3.5 represent a response of "moderate 
extent."

[10] China has committed to allow controlled access for imports of some 
bulk agricultural commodities using the tariff-rate quota system.

[11] Antidumping measures include a duty or fee imposed to neutralize 
the injurious effect of unfair pricing practices known as "dumping." 
Dumping refers to the sale of a commodity in a foreign market at a 
price lower than its fair market value.

[12] The Foreign Market Development Cooperator Program provides 
financial assistance to nonprofit U.S. agricultural trade organizations 
that have the broadest possible producer representation of U.S. 
agricultural commodities being promoted in foreign markets. The funds 
provided under the Commodity Credit Corporation Charter Act for this 
program (15 U.S.C. 714c(f)) are made available on a competitive basis 
for the promotion of generic activities that do not involve promotions 
targeted directly to consumers. The U.S. Department of Agriculture's 
Foreign Agricultural Service administers the Cooperator Program.

[13] Our work included a several-month suspension due to travel 
restrictions resulting from the outbreak of Severe Acute Respiratory 
Syndrome (SARS) in China in 2003.

[14] We calculated the response rate as (Responses received) / 
(Responses received + Refusals + estimated eligible 
nonrespondents)=(79/(79+38+15.29))=59.72 percent. Estimated eligible 
nonrespondents were calculated as the proportion of contacted companies 
that were eligible (79/(79+7+5+2)=94.95 percent), multiplied by the 
number of companies that could not be located, or 0.9495 x 18 = 15.29.

[15] The U.S. bilateral goods deficit continued to grow in 2003, 
reaching about $125 billion. However, data on U.S. bilateral services 
with China were not yet available for 2003. 

[16] Foreign direct investment statistics for the United States, unless 
otherwise noted, are from the Bureau of Economic Analysis (BEA), Survey 
of Current Business (Washington, D.C.: BEA, Sept. 2003). BEA defines 
U.S. direct investment abroad as the ownership or control, directly or 
indirectly, by one U.S. resident of 10 percent or more of the voting 
securities of an incorporated foreign business enterprise or the 
equivalent interest in an unincorporated foreign business enterprise.

[17] In past years, the United States has been the top recipient. 
Initial reports for 2003 indicate that the United States was again the 
top destination, though these are preliminary statistics. We did not 
independently assess the reliability of Chinese foreign direct 
investment data. We report these statistics here solely to provide 
background on U.S. trade and investment with China and not as a basis 
for any findings or recommendations. 

[18] See Congressional Research Service, China's Economic Conditions, 
Issue Brief IB98014 (Washington, D.C.: Jan. 23, 2004). Figures cited 
are based on Chinese government statistics.

[19] The U.S. Bureau of Economic Analysis publishes private services 
trade data by country annually (for the previous year) in the October 
issue of the Survey of Current Business.

[20] Data on U.S. bilateral services with China were not available for 
2003. The U.S. Bureau of Economic Analysis publishes private services 
trade data by country annually (for the previous year) in the October 
issue of the Survey of Current Business.

[21] GAO-02-1056.

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