[Excerpt] China’s economic rise has significant implications for the United States and hence is of major interest to Congress. On the one hand, China is a large (and potentially huge) export market for the United States. Many U.S. firms use China as the final point of assembly in their global supply chain networks. China’s large holdings of U.S. Treasury securities help the federal government finance its budget deficits. However, some analysts contend that China maintains a number of distortive economic policies (such as protectionist industrial policies and an undervalued currency) that undermine U.S. economic interests. They warn that efforts by the Chinese government to promote indigenous innovation, often through the use of subsidies and other distortive measures, could negatively affect many leading U.S. industries. This report surveys the rise of China’s economy, describes major economic challenges facing China, and discusses the implications of China’s economic rise for the United States.