U.S. - China Relations

In recent years, tensions between the United States and China have introduced new challenges—especially related to economic and defense issues. China is a critical trading partner for the United States, but it is also a major competitor. China’s harmful and unfair economic practices, including trade in illicit goods, use of forced labor, and theft of sensitive technologies pose risks to U.S. economic interests. The U.S. government has programs to mitigate such risks, including export controls, tariffs, and other import restrictions.

Federal agencies have also identified emerging issues that threaten U.S. national security, including China’s developments in dual-use technologies and weapons. Through its military modernization and investments, China may challenge U.S. access to air, space, cyberspace, and maritime domains.

Federal agencies could improve how they address such issues related to U.S.-China relations. 

For example:

• Defense industrial base and critical materials. The Department of Defense (DOD) relies on a global network of suppliers to produce weapons systems, as well as noncombat goods like batteries and manufacturing equipment. DOD has reported that its dependence on certain foreign suppliers is a national security risk because they could cut off U.S. access to critical materials that are the building blocks for weapons systems. For example, in 2024, China imposed export restrictions on gallium and germanium—two elements critical for military-grade electronics. However, the federal government’s primary procurement database provides little visibility into where these weapons systems and noncombat goods are manufactured or whether materials and parts suppliers are domestic or foreign.
• Export controls. The U.S. government has increasingly used export controls to address national security risks by curtailing the export of sensitive “dual-use” items, such as advanced semiconductors and radars, that could be used for both civilian and military purposes. For example, the U.S. has recently restricted certain technology exports to China that could aid its efforts to develop advanced military systems powered by artificial intelligence. To protect national security while still facilitating trade, the Bureau of Industry and Security (BIS) issues export licenses, which are reviewed by the Departments of State, Defense, and Energy. But in light of its growing workload, BIS needs to assess its long-term workforce needs and better communicate with the other agencies.
• Foreign infrastructure investments. China’s Belt and Road Initiative (BRI) is the world’s largest infrastructure finance program—it funds roads, ports, and other projects around the world. The BRI is China’s signature foreign policy initiative that aims to strengthen its global standing and influence. Since 2013, China has provided over $680 billion for infrastructure projects in sectors like transportation and energy, while the U.S. has only provided $76 billion for these sectors. Experts have proposed options to increase U.S. foreign assistance for international infrastructure efforts, including attracting more private-sector investment.
• Foreign investment risks. Foreign investment in U.S. companies benefits the economy and helps create jobs, but it can also pose national security risks—such as by giving foreign investors access to sensitive data. The interagency committee authorized to review these investments enters into agreements with companies to address risks. However, the number of agreements has quadrupled over the last decade, and the work of monitoring and enforcement has grown. But agencies on this committee don’t regularly coordinate their staffing needs; it is also unclear how they make enforcement decisions.
• National defense. The 2022 National Defense Strategy prioritizes deterring aggression from China in the Indo-Pacific region. China has transformed what was an obsolete military into one that can challenge the U.S. military across the board. There are a number of actions that DOD could take to better position itself to address challenges posed by China—such as strengthening cybersecurity and addressing F-35 and Navy maintenance issues.
• Drug manufacturing. China was one of the countries with the most establishments manufacturing drugs for the U.S. market in 2021. The Food and Drug Administration (FDA) inspects foreign and domestic drug manufacturers to ensure drug safety and effectiveness. But FDA temporarily postponed almost all inspections of foreign manufacturing establishments in March 2020 due to COVID-19. While the agency has since resumed inspections in China and other countries, it faces an inspection backlog.

Number of Establishments in the U.S. and the 10 Countries with the Most Foreign Establishments Manufacturing Drugs for the U.S. Market as of January 2024

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