Background The Partnership Program is part of the Bureau’s Integrated Partnership and Communications (IPC) operation, which contains the Bureau’s varied partnership and outreach activities aimed at spreading the word about the importance of participating in the census. Specifically, the IPC operation is intended to: engage and motivate people to self-respond; raise and keep awareness high throughout the entire 2020 Census to encourage response; support field recruitment efforts for a diverse, qualified census workforce; and support dissemination of census data to stakeholders and the public. Several components of the IPC operation, including the Partnership Program, are described in more detail below. Figure 1 also demonstrates these components in example situations. Partnership Program The Partnership Program has two main components that deliver outreach at the national and local levels, respectively: the National Partnership Program (NPP) and the Community Partnership and Engagement Program (CPEP), as shown in table 1. NPP and CPEP are intended to complement and leverage their respective expertise to help maximize participation by partners. According to Bureau officials, the Bureau’s Census Open Innovation Labs is another important component that aims to integrate these partnership activities and provide guidance at the national and local levels on various strategies for messaging with partners. The roughly 1,500 Partnership specialists hired for 2020 are temporary Bureau employees who implement CPEP and are responsible for, among others things, establishing local partnerships and engaging those partners to host activities and events (known as “commitments”) within the communities they serve. These commitments could include activities and events such as conducting knowledge-sharing seminars, issuing press releases, providing questionnaire assistance, producing pamphlets, and hosting field recruiting events, among others. For the 2020 Census, the Bureau had a goal of establishing 300,000 community partners nationwide. In 2010, the Bureau secured approximately 256,000 local partners. The Partnership program also supports inter-governmental census outreach activities through state complete count commissions (SCCCs) at the state level and complete count committees (CCCs) at the tribal and local levels. These groups foster a collaborative partnership between political, business, and community leaders to deliver messages on the importance of participation in the census. The Bureau had a goal of encouraging every state to create an SCCC, formed at the highest level of state government, such as the governor’s office. SCCCs seek to leverage the state’s vested interest in a timely and complete population count. According to Bureau planning documentation, CCCs are usually formed by the highest elected official in that jurisdiction, such as a tribal leader, a mayor, county commissioner, or regional chairman. The Bureau notes that partnership specialists are the primary contact between the Bureau and the CCC. Partnership specialists may conduct workshops, train CCC members, and provide or direct CCCs to census promotional materials. Bureau officials noted that initial partnership specialists were hired earlier in the decennial cycle for 2020 in part to help form CCCs. Partnership specialists are also to play a role in assisting CCCs with identifying hard- to-count populations within their respective communities and assist in developing strategies to reach those communities. Paid Advertising Similar to previous censuses, for 2020, the Bureau plans to use multiple paid media outlets such as radio, television, newspapers, magazine, and billboards as one of its means to promote awareness and encourage participation in the census. Along with the traditional advertising, the Bureau also plans to use digital advertising such as web banner ads, video ads, digital extensions of traditional outlets, and social media channels. According to Bureau officials, they plan to be able to use paid advertising modes to target specific audiences including hard-to-count populations that may be more apt to trust such communication. For example, the Bureau’s 2020 communication plan cites research that states that the majority of Asian-Americans use traditional media— whether in print, online, or from a mobile device—as their primary source of local news. The Bureau plans to implement its 2020 paid media campaign in four phases (see table 2). As of early May 2020, the Bureau has not yet indicated the revised timeframes for the phases of paid advertising to reflect the COVID-19 disruptions. Bureau officials told us that they are planning to spend an additional $160 million on advertising as part of its public education and outreach campaign, originally estimated to cost over $500 million. According to the Bureau, its paid advertising campaign is designed to reach more than 99 percent of the nation’s 140 million households. Media Relations For the 2020 Census, to distribute these messages, the Bureau will conduct outreach to the media including providing talking points, media lists, news releases, fact sheets, frequently asked questions, and other scripts and messaging for multiple media platforms, such as a variety of radio, podcasts, and special events. Media-focused materials such as press kits and press releases will be available in the media section of 2020Census.gov. As part of its media relations effort, the Bureau has also developed a crisis communications plan for handling major events and potential messaging disturbances. According to the Bureau, its crisis communication plan is intended to allow it to respond quickly and effectively to any events or actions that jeopardize the public’s confidentiality or reduce its willingness to respond to the 2020 Census. For example, the Bureau stated that in response to the COVID-19 outbreak, it adapted part of its advertisement messaging to re-emphasize the importance of responding to the census online, avoiding the need for in-person follow-up interviews. Social Media Outreach The Bureau’s social media strategy for 2020 reflects the increased number of social media platforms that were not available during the last census, such as Snapchat, Instagram Live Stories, and Facebook Messenger. According to the Bureau, social media will play a critical role in raising awareness of the census—particularly among hard‐to‐count audiences—as well as enhancing customer service efforts, promoting recruiting efforts, driving online completion of the census, assisting with data dissemination, and mitigating disinformation. The Bureau’s social media outreach efforts are to leverage source material on the Bureau’s website. Such material includes prepared language for posts and graphics, lists of influential partners, messages for those partners, customer service-themed frequently asked questions that are tailored for social media, methods for sharing content across the Bureau’s regional offices, and social media events. Statistics in Schools In March 2020, the Bureau kicked off its Statistics in Schools (SIS) program. During the week of March 2-6, 2020, prior to the widespread closure of schools due to the COVID-19 outbreak, the Bureau provided daily modules to educators for dissemination to students. These modules included such topics as an introduction to the census, a virtual tour of the Bureau headquarters, and a take-home assignment in which students and their families were asked to summarize a discussion of what they want to see in their communities. According to the Bureau planning documentation, the SIS materials were to encourage students to pass along the importance of counting everyone to an adult in their home who will complete the census. SIS was also intended to raise awareness among students themselves, which can be important in instances where the presiding adult(s) have limited English proficiency and have to rely on children to translate or interpret information from English into their native language. The Bureau Has Taken Actions to Address Prior Challenges, but Issues for Continued Monitoring Remain We, the Bureau, and others, such as the Bureau’s National Advisory Committee, have previously identified several challenges the Bureau has faced related to its partnership and outreach efforts in prior censuses. While the Bureau has taken important actions to address these challenges, current events such as the COVID-19 outbreak provide a salient basis for which to continue to monitor these challenges and any effects they may have on the census. Challenge 1: Enumerating Hard-to-Count Groups Nature of Challenge. The Bureau strives to conduct an accurate count of the nation’s population. However, some degree of inaccuracy is inevitable. While the Bureau reported that the 2010 Census did not have a significant net undercount or net overcount nationally, the Bureau also reported that errors in coverage were unevenly distributed through the population, as figure 2 shows. In addition to the undercounted groups shown below, prior censuses, such as the 1990 Census, also showed statistically significant undercounts of Non-Hispanic Asians, American Indians off (as well as on) Reservations, and Native Hawaiian or Pacific Islanders. These errors are problematic because certain groups such as minorities, young children, and renters are more likely to be missed in the census, while other groups such as those who may own a second, seasonal home are more likely to be counted more than once. The Bureau has noted these historical trends and has classified these and other subpopulations as hard to count. According to the Bureau, hard-to-count groups can share some or all of the following characteristics: Hard to Locate: Some groups are hard to locate because where they live is unknown, or they move frequently. Hard to Persuade: Other groups are hard to persuade to participate in the census. Hard to Interview: Some groups may have communication barriers, such as limited English proficiency. Hard to Contact: Other groups may live in places with access barriers, such as residents of gated communities or renters with doormen and locked buildings. Adding to the challenge in 2020 is the possibility that, as the Bureau adapts its timing and procedures for outreach and promotion, as well as data collection, there is a possibility of uneven effects resulting on the participation rates of different groups. For example, messaging and operations that emphasize the importance of filling out the census online, in response to the COVID-19 outbreak, may not be applicable to communities or groups with limited internet access. If social distancing measures result in fewer successful interviews during Non-Response Follow-Up, for instance, then these groups with less internet access will be at relatively greater risk of being missed by the census. Adapting field enumeration procedures to implement social distancing might also be less effective in addressing respondent concerns about interacting with strangers in apartment buildings or other densely populated areas if a census worker cannot practically distance themselves from the door. Actions Taken. As part of its integrated communications plan, the Bureau’s lead communications contractor segmented the market and developed a series of strategic frameworks targeting advertising and messaging to hard-to-count subpopulations through demographic profiles. These groups include: persons experiencing homelessness; households with young children; lesbian, gay, bisexual, transgender, queer, and questioning persons; persons with disabilities; the young and mobile. In addition to demographic profiles for each of these groups, the contractor compiled lists of relevant community partners and consulted with stakeholders to construct a “day-in-the-life” analysis and develop advertising strategies to align tailored census advertising with the experiences of each group. According to Bureau documentation, these strategic frameworks provide the NPP data to decide how to best target related outreach resources. The Bureau also developed for 2020 a publicly-available tool that displays the areas of the country that are considered hard to count, according to an index of demographic indicators known as the Low Response Score. Using this index, the Bureau is able to monitor incoming census data for those areas, such as response rates and hiring and recruitment numbers, to see if efforts to reach hard-to-count areas are succeeding amid challenging current events, such as the COVID-19 outbreak, which could affect willingness of workers to participate in work taking them door-to- door to nonrespondents. Using funds appropriated under the Further Continuing Appropriations Act, 2020, the Bureau also developed a mobile questionnaire assistance (MQA) initiative to deploy census workers to specific locations, such as grocery stores, houses of worship, and community centers, or at specific events, such as festivals, to assist residents of low-response areas in filling out the census. For the beginning of the self-response period, partnership specialists identified the initial locations and times for the initiative within hardest-to-count census tracts. The Bureau plans to then monitor actual self-response data later in the operation to target those areas reporting the lowest response rates. In April 2020, the Bureau announced an indefinite delay of this latter stage of MQA in response to the outbreak of COVID-19. Basis for Continued Monitoring. Participation in the census and availability of nonrespondents for follow-up will help indicate whether the Bureau is successfully reaching hard-to-count groups. With self-response and follow-up for nonrespondents still ongoing, it is too early to know the effectiveness of the Bureau’s outreach efforts. However, multiple streams of data will provide indications of Bureau success in enumerating areas and demographic groups considered hard to count: As during the 2018 Census Test, the Bureau is monitoring active data on self-response rates at the local level, which it can compare across areas it deems hard to count. The Non-Response Follow-Up operation will yield data on interview rates—namely, the rate at which census workers are able to complete interviews with residents who had not yet responded to the census. These rates can also be compared across areas deemed hard to count. Demographic evaluation data and the Bureau’s post-enumeration survey will further provide insight into whether racial, ethnic, and other demographic groups were counted accurately. Challenge 2: Mobilizing Partnership and Outreach Resources Nature of Challenge. For its partnership and outreach strategies to be effective, the Bureau must have the necessary people and resources in the right places to execute those strategies. In prior censuses, we have reported on issues related to staffing and promotional materials faced by the Partnership Program. Specifically, during the 2000 Census we noted that partnership resources were stretched thin and in some cases took effect too late in the decennial cycle. We recommended that the Bureau review its staffing levels to ensure adequate support to partners, a recommendation the Bureau subsequently implemented. During the 2010 Census, partnership specialists expressed concern about the timely availability of promotional materials, and the impact on their ability to build relationships with potential partners. We recommended in December 2010 that the Bureau ensure that promotional materials are provided to partnership staff when they are hired, a recommendation that the Bureau agreed with but that remained open at the beginning of our audit work in December 2019. Similarly, in a 2012 Bureau evaluation of the 2010 NPP, the Bureau found that some national partners felt that promotional materials needed to be better tailored to target their audiences’ needs and that these partners had difficulty accessing relevant census data for their audiences. The Bureau also observed that improvements were needed in the distribution of promotional materials by region. Actions Taken. The Bureau increased its partnership specialist hiring from roughly 800 in 2010 to a little more than 1,500 in 2020. As figure 3 shows, collectively these partnership specialists were able to secure more than 307,000 community partners by the end of February 2020—higher than the Bureau’s goal of 300,000 and the roughly 256,000 local partners the Bureau had by the end of the 2010 Census. Partnership staff were also able to encourage the creation of state complete count commissions (SCCCs) in every state and territory except Nebraska and South Dakota. These SCCCs are complemented across the country by more than 10,000 complete count committees (CCCs) at the local level. The Bureau also set a priority of getting partners in the right places. In addition to the Bureau’s overall goal for community partners, the Bureau also set out to get at least one community partner in 100 percent of census tracts that, according to their predicted indicator of low response, are hardest to count. As of late March 2020, the Bureau had made progress towards this goal, establishing partnerships in 85 percent of such areas. The Bureau also provided partnership specialists a centralized website where they can access promotional materials for distribution to partners. These materials included fact sheets, brochures, and marketing messages translated into 13 languages. Bureau officials indicated that these materials were developed and published on the website prior to the completion of partnership specialist training. According to officials, the website was made available to partnership specialists when they started work. In addition to national and community partners, tribal, state, and local CCCs also have access to these materials. The Bureau also provided guidance on how to order hard copies of such materials through the U.S. Government Publishing Office. We found during the course of our audit work that these actions implemented our December 2010 recommendation. Basis for Continued Monitoring. The Bureau encountered some issues in onboarding partnership specialists and tracking the establishment of partnerships in hard-to-count areas. We will continue to monitor any effects of these issues as part of our ongoing work: The Bureau experienced delays in onboarding partnership specialists, which resulted in less time to form partnerships and meant less time for community engagement and education activities leading up to the census. While the Bureau was able to increase the number of partnership specialists from 2010, the Bureau did not get all of its more than 1,500 partnership specialists on board until November 2019, more than 4 months later than its initial goal. The Bureau successfully surpassed its nationwide goal for registering more than 300,000 community partners. However, we reported in February 2020 that the Bureau missed interim goals for getting at least 200,000 partners in place by January 1, 2020, and at least 250,000 partners in place by February 1, 2020. We reported during the 2000 Census on the benefits of having Partnership Program resources on the ground earlier in the decennial cycle. The Bureau varied by region in terms of getting community partners located in hard-to-count areas. As noted, the Bureau had a goal of getting at least one partner in each of the hardest-to-count census tracts by March 2020. Nationwide, the Bureau was able to achieve this in 85 percent of such areas as of late March 2020. According to Bureau data, five of the six regional offices reached at least 82 percent of this goal, with the Los Angeles region the farthest along at 90 percent as of late March 2020. On the other hand, only 70 percent of the hardest-to-count tracts in the Philadelphia region, which covers the Mid-Atlantic States, had at least one community partner. Bureau officials noted that partners in adjacent tracts can provide relevant services to the hardest-to-count tracts. Officials indicated that they would continue monitoring progress using this measure. Given the effect of the COVID-19 outbreak on partner activities, having partnership specialists on boarded and partnerships formed later than anticipated meant several months less time for in-person community engagement and education activities leading up to the census in some areas. In April 2020, Bureau officials told us that partnership specialists had been instructed to continue interactions with partners via conference calls, text, email, and other virtual means. Officials also cited the ability of partnership specialists to support virtual partner commitments such as radio interviews and virtual town halls, and officials noted that the Government Publishing Office could continue to directly supply hard copies of promotional materials to partners. Going forward, response rates the Bureau achieves in areas where the Bureau lagged in registering partners may shed light on whether or not having full partnership coverage in certain hard-to-count areas is associated with lower response rates. Additionally, the Bureau is conducting a survey of public awareness of and sentiment toward the 2020 Census, with a goal of evaluating the effectiveness of public communication efforts. This survey will also provide data that could help answer the question of whether having less time on the ground than anticipated for the full complement of partnership specialists and community partners affected community awareness of the census. Challenge 3: Coordinating Outreach across the Bureau’s Organization and Operations Nature of Challenge. Partnership and outreach activities, along with local enumeration activities, span numerous decennial operations and phases of data collection, and the Bureau has at times struggled to fully integrate these efforts. For instance, we reported in July 2018 that, during the planning stages for the 2020 Census, the Bureau’s management of initiatives aimed at enumerating hard-to-count groups was decentralized and not fully integrated across operations. We recommended that the Bureau take steps to ensure greater integration of efforts going forward. Coordination across regions of the country can also be a challenge. Bureau officials overseeing CPEP told us that during the initial staffing of partnership specialists, they observed variations in how job expectations were communicated across regional offices through training. The COVID-19 outbreak further complicates coordination across the country where state, tribal, and local public health rules, guidance, and enforcement may affect how partners in different locations need to interact with the census, and messaging to Bureau partnership staff and partners may not be amenable to a one-size-fits-all approach nationwide. The challenge of coordination can also have effects on how local managers of census activities perceive the efficiency of census efforts. Partnership specialists are expected in 2020 to work on initiatives, such as MQA, to which area census office staff also contribute. However, partnership specialists do not report to managers within the area census office, but directly report to the Bureau’s regional offices. As part of our December 2010 report on hard-to-count populations, we found that about half of all local census office managers we surveyed were dissatisfied with the level of coordination between local census office staff and partnership staff, noting duplication of effort in some cases. We recommended that the Bureau develop mechanisms to increase coordination between partnership and local census office staff, a recommendation that remains open. Actions Taken. In January 2020, in response to our July 2018 recommendation cited above, the Bureau provided us evidence of ongoing, multi-team discussions focused on integrating perspectives on decisions and planning for hard-to-count enumeration activities. In closing the July 2018 recommendation, we noted that the Bureau’s use of such an integrated approach will help ensure that the Bureau’s otherwise decentralized efforts to address hard-to-count challenges will be more effective. For field operations, the Bureau is holding a series of weekly teleconferences, to which area census office managers and all partnership specialists are invited to hear about updates from Bureau management on field operations and partnership and outreach activities. Bureau officials told us that having these calls, along with providing emailed summaries of the calls, helps to standardize any updates to guidance on field procedures or messaging across the area census office and partnership staff. For example, the Bureau sent an email in mid- March 2020 to partnership staff that included guidance on emphasizing the importance of internet self-response when responding to inquiries on the COVID-19 outbreak. The Bureau indicated taking steps to standardize partnership staff training and integrate partnership staff into field enumeration operations. Specifically, officials told us they convened a nationwide, standardized training curriculum after the Bureau had hired all of its partnership specialists. This curriculum replaced what had been a regional office- specific approach. The Bureau developed guidance for partnership specialists on how to provide direct feedback to area census offices when they become aware of a potential facility or location that should be added to the Bureau’s database for enumeration. Specifically, if partnership staff become aware of soup kitchens, homeless shelters, and other locations potentially being missed, they are instructed to submit information including the address, type of living quarters, and any applicable contact information to the relevant area census office. Moreover, the Bureau indicated it had assigned at least one partnership specialist to every area census office to improve coordination between the Partnership Program and local census operations. In addition, the Bureau created a rumor control page on its website to quickly disseminate factual content in response to misinformation. Examples of misinformation that the Bureau has detected include the false suggestion of a citizenship question being on the census and the posting of a potentially fraudulent census job website. The Bureau’s rumor control page includes the email address rumors@census.gov for the public to report possible misinformation and disinformation. The web page also has a set of frequently asked questions on topics such as data confidentiality and ways to participate in the census, thus helping to ensure that partnership staff, partners, and the public alike with access to the internet have access to accurate online information. Basis for Continued Monitoring. As the Bureau experiences inevitable turnover in partnership specialists and needs to update its messaging and outreach to reflect changing conditions on the ground, such as the COVID-19 outbreak, ensuring consistent training and guidance across its partnership staff and keeping all staff abreast of changes will be important. As noted above, our December 2010 recommendation for the Bureau to increase coordination between the Partnership Program and its area census offices remains open. While partnership specialists were assigned to area census offices, the Bureau has not put in place formal expectations for how partnership staff should support area census office staff and their activities. To fully implement this recommendation, the Bureau would need to document how partnership specialists and area census office staff are expected to work together. We will also continue to monitor how area census office managers express their perspectives on the effectiveness of the Partnership Program in supporting implementation of census field operations. For example, we surveyed area census office managers in March 2020 and found that nationally a plurality (42 percent) who responded said they were dissatisfied with the level of communication and coordination between the Partnership Program and their offices, while 41 percent said they were satisfied. A plurality of respondents (44 percent) were also dissatisfied with the level of clarity of roles and responsibilities between the Partnership Program and their offices, while 38 percent of respondents were satisfied. Open-ended comments we received from survey respondents contained ideas for improving the level of communication between partnership staff and area census office staff, such as having partnership staff be more integrated within the area census office structure. We are sharing such suggestions with the Bureau in near- real time as we receive them for the Bureau to consider moving forward. We will continue to periodically survey the office managers throughout the summer of 2020. Challenge 4: Measuring Outcomes Nature of Challenge. We have previously reported on challenges the Bureau has faced across operations in measuring outcomes. Namely, during the 2018 Census Test we reported that the Bureau’s primary measure of operational progress during Non-Response Follow-Up overstated the amount of completed workload because it emphasized the number of follow-up attempts made instead of the number of cases in which the Bureau got the data it needed—the preferred outcome of the operation. Similarly, our 2017 review of in-office address canvassing—when the Bureau attempted to use aerial imagery to identify areas of the country called blocks that did not require fieldwork to validate the address list— found that the Bureau’s performance measures looked at how many of the addresses in the address list were reviewed in-office, rather than how many addresses did not require additional fieldwork. Separately measuring the contributions of partnership and outreach activities on the desired outcome of maximizing the number of residents who respond to the census is inherently difficult. In one of its evaluations of the 2010 Census, though, the Bureau noted that the Partnership Program needed to do a better job of measuring and rewarding the intensity of partner effort throughout census operations, rather than simply looking at the number of contacts made or the number of partners. As Bureau officials noted to us, the quality of partners ultimately matters more than the quantity. Actions Taken. In its performance measures of the Partnership Program, the Bureau has taken steps beyond measuring the number of partners nationwide. For example, as noted previously, the Bureau prioritizes and tracks the extent to which it secures partnerships in hard-to-count areas, acknowledging that partnerships are needed everywhere but are particularly critical in areas that may otherwise be less likely to have high response rates. Additionally, the Bureau tracks the number of events partners complete and the number of commitments partners signed up for but did not fulfill by their planned dates (known as overdue commitments). As of early March 2020, community partners had fulfilled more than 270,000 committed events nationwide, while nearly 14,000 commitments were overdue. Basis for Continued Monitoring. Going forward, Bureau evaluations of the 2020 Census will demonstrate what, if any, lessons learned the Bureau is able to draw regarding the quality of its 2020 partnership and outreach efforts. The Bureau has multiple sources of data that it is, and will be, collecting to better understand how success can be defined: While the Bureau monitors and reports the number of overdue partnership commitments (cited above), it is not clear what the current level of nearly 14,000 overdue commitments means in the context of the universe of more than 270,000 total committed events. When we asked about this issue, Bureau officials indicated that they monitor the status of overdue commitments mostly to see if partners are staying active in their communities. Officials also said they use the metric to verify that partnership specialists are recording any follow-up they do with partners that have not fulfilled their commitments. Similarly, the Bureau’s plan for the MQA initiative cites the number of census questionnaire responses received through MQA as an indicator of how successful the Bureau is in connecting partners and other census questionnaire assistance resources to areas that need them. Yet, it is unclear from Bureau documentation what levels of MQA uptake, if any, would constitute success. While low MQA uptake, for instance, could mean that partnership specialists and census response representatives were not successful in identifying the right times and locations for MQA, it could also mean that residents were successfully able to respond to the census via other means, or that they did not attend MQA events due to the COVID-19 outbreak. When we followed up with Bureau officials, they indicated that they have planned a series of required debriefings and exit interviews with partnership specialists, which will include MQA effectiveness as a topic. Such debriefings and exit interviews will likely be particularly important, given the MQA change necessitated by the COVID-19 outbreak. Lastly, the COVID-19 outbreak could further complicate the Bureau’s ability to determine the ultimate effectiveness of its partnership and outreach—how well the Bureau achieves the goal of counting everybody once, only once, and in the right place. The Bureau plans to estimate census quality by relying in part on interviews conducted door-to-door in a nationwide sample of households, scheduled for the summer and fall of 2020. The COVID-19 outbreak could prompt the Bureau to delay the related field operation to collect the data or affect household responsiveness to in-person visits. As the timing of this report coincides with ongoing implementation of the self-response period and field enumeration operations, planned Bureau evaluations and assessments will be best positioned to identify any lessons learned and determine whether, in light of the challenges cited above, the Bureau’s partnership and outreach efforts were successful in maximizing participation in the census. Agency Comments and Our Evaluation We provided a draft of this report to the Department of Commerce. In its written comments, reproduced in appendix I, the U.S. Census Bureau said it agreed with the findings of our report and would continue to work to implement related open recommendations from our prior reports. We are sending copies of this report to the Secretary of Commerce, the Undersecretary of Economic Affairs, the Director of the U.S. Census Bureau, and the appropriate congressional committees. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report please contact me at (202) 512-6806 or mihmj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II. Appendix I: Comments from the Department of Commerce Appendix II: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments J. Christopher Mihm, (202) 512-6806 or mihmj@gao.gov In addition to the contact named above, Ty Mitchell (Assistant Director), Devin Braun (Analyst-in-Charge), Mark Abraham, Carole J. Cimitile, Alexandra Edwards, Amalia Konstas, Kerstin Meyer, Cynthia Saunders, Kate Sharkey, Farrah Stone, Jon Ticehurst, Peter Verchinski, and Alicia White made key contributions to this report.


Background The People's Republic of China (PRC or China) has significantly increased its overseas investments since launching its "Go Global Strategy" in 1999 in an effort to make Chinese firms more globally competitive and advance domestic economic development ( Figure 1 ). Since then, Chinese firms have acquired foreign assets and pledged billions of dollars to develop infrastructure abroad. China's push overseas has been particularly visible in the Indo-Pacific region, a major focus of China's effort to increase global trade connectivity through the "Belt and Road Initiative" (BRI, initially known as "One Belt, One Road"), which launched in 2013. However, China's overseas, global economic activities include the purchase, financing, development, and operation of assets and infrastructure across Africa, Asia, Europe, Latin America and the Caribbean, North America, and Oceania. Links to Select Databases on China's Foreign Direct Investment (FDI) Many in Congress and the Trump Administration are focusing attention on possible critical implications of China's growing global economic reach for U.S. economic and geopolitical strategic interests. Some analysts view China's activities as largely commercial in nature, following the path that some Western multinational firms forged in the 1980s and 1990s in expanding and integrating into global markets. Others contend that China's activities are ultimately in support of alleged efforts by Beijing to challenge and undermine U.S. global influence. This report does not provide figures or estimates of China's global economic activities. Nor is it an in-depth analysis of recent trends and developments. Rather, it provides an overview of select issues and challenges encountered when compiling, interpreting, and analyzing statistics on Chinese investment, construction, financing, and development assistance around the world. Framing the Debate on China's Global Reach Economic- and resource-related imperatives play an important role in China's expanding global economic footprint. Analysts see strong domestic economic development as a primary objective for China's leaders for a number of reasons, including those leaders' desire to raise the living standards of the population, dampen social disaffection about economic and other inequities, and sustain regime legitimacy. In addition, China's rapid economic growth has created a domestic appetite for greater resources and technology, as well as for creating markets for Chinese goodsâall of which have served as powerful drivers of China's integration into the global economy and enthusiasm for international trade and investment agreements. For example, as China's energy demands have continued to rise, the Chinese government has sought bilateral agreements, oil and gas contracts, scientific and technological cooperation, and de-facto multilateral security arrangements with energy-rich countries, both in its periphery and around the world. Moreover, China's recent relative economic slowdown (in the aftermath of the government-financed boom of the post-global recession years) has created excess capacity and the need to find overseas markets and employment opportunities for its infrastructure and construction sectors. In pursuing commercial opportunities abroad, Chinese firmsâmany of them state ownedâhave become global leaders in these sectors (e.g., transport infrastructure, such as ports and high-speed rail). Some observers contend that these investment and construction trends may reflect an attempt by China to bolster its position as a global power, gain control of vital sea-lanes and energy-supply routes, secure key supply chains, aggregate control over communications infrastructure and standards, and build up geo-economic leverage to ensure support for its foreign policy objectives. In particular, some U.S. officials have expressed concerns that China's growing international economic engagement goes hand-in-hand with expanding political influence. The seeminglyâthough debatableâ"no strings attached" nature and looser terms of Beijing's overseas loans and investments may be attractive to foreign governments wanting swifter, more "efficient," and relatively less intrusive solutions to their development problems than those offered by bilateral and international financial institutions, such as the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB). Unlike these institutions, many of the Chinese financial institutions and enterprises involved in China's overseas investment, lending and construction are owned or subsidized by the government. As such, they are not accountable to shareholders, do not generally impose safeguards or international standards related to transparency, human rights, and environmental protection, and can afford short-term losses in pursuit of longer-term, strategic goals. Although some analysts and policymakers suggest that Chinese officials and state-owned enterprises (SOEs) appear more comfortable working with undemocratic or authoritarian governments, China's outreach also has extended to the United States, key U.S. allies and partners, and regions where U.S. economic linkages and diplomatic sway have been, until recently, predominant. These developments have led some observers to conclude that Beijing intends to challengeâor is already challengingâU.S. global leadership directly. As a result, some Members of Congress and Administration officials are focusing attention on the critical implications that China's increasing international economic engagements could have for U.S. economic and strategic interests. Some observers have sought to compare China's activities to those of the United States. In contrast to China's, however, U.S. global economic engagements have tended to be more diverse and not government-directed or -funded. They have been driven primarily by the U.S. private sector, whose global presence is long-standing and comprehensive. Data Limitations A major challenge when researching global investment and construction projects and related loans is the accuracy of the data. While this challenge is not unique to projects involving Chinese players, it is exacerbated by the nature of many Chinese projects and loans, whose terms are not always publicly available or transparent. No comprehensive, standardized, or authoritative data are available on all Chinese overseas economic activitiesâfrom either the Chinese government or international organizations. A number of think tanks and private research firms have developed datasets to track investment, loans, and grants by Chinese-owned firms and institutions using commercial databases, news reports, and official government sources, when available ( Appendix A ). These datasets often record the value of projects, loans, and grants when they are publicly announced (e.g., at press conferences). However, many publicly announced projects are never formalized, and if they are, project and loan details may change, and projects may not always come to fruition for various reasons (e.g., changing economic and political conditions, or concerns about sovereignty, debt structure, or environmental impact). Despite these limitations, figures derived from such "data trackers" often drive the policy debate. Because U.S. policymakers may rely on them to assess the overall scope and magnitude of Chinese activities, it is important to recognize the problems with the data and the limitations of existing databases. While they might be valuable and informative, they may also provide vastly different figures that are not necessarily comparable. For example, for 2015âthe most recent year for which complete annual data are available from all major sourcesâfigures on China's investment flows into the United States vary from $2.6 billion (which only includes nonfinancial gross foreign direct investment (FDI) flows and is reported by MOFCOM ) to $16.4 billion (which includes gross announced transaction flows of $100 million or more and is tracked by AEI/Heritage ) ( Figure 2 ). Similarly, China's total outward investment flows for the same year range from $117.9 billion (AEI/Heritage) to $174.4 billion (OECD ) ( Figure 3 and Table 1 ). Comparability issues also arise when trying to differentiate loan, investment, and construction projects that overlap, since datasets only capture a certain type of activity. Various datasets' categorizations may not cover the full range of activity that is taking place. China's official foreign direct investment (FDI) statistics are compiled by two government agencies according to different criteria. The Ministry of Commerce of the People's Republic of China (MOFCOM)'s data are based on officially approved investments by nonfinancial institutionsâthat is, information recorded during the approval process rather than through surveys or questionnaires as in the United States (see textbox below). They are generally separated out by country and industry. The State Administration of Foreign Exchange of the People's Republic of China (SAFE), on the other hand, reports Balance of Payments (BoP) data at the aggregate level. SAFE, in theory, follows IMF guidelines. While both agencies are supposed to reconcile their figures in their annual revisions, discrepancies in the total amounts reported are common and significant. Much of China's official outbound FDI also has traditionally been registered in Hong Kong, the former British colony that has been a Special Administrative Region of the PRC since 1997, or in tax havens such as the Cayman Islands or British Virgin Islands. Chinese firms, in particular, are known to use holding companies and offshore vehicles to structure their investments. "Round-tripping" (the practice of firms routing themselves funds through localities that offer beneficial tax policies or special incentives), "trans-shipping" (the practice of firms routing funds through countries that offer favorable tax policies to later reinvest these funds in third countries), and indirect holdings all make it difficult to track and disaggregate investments accurately. Chinese domestic investors have also been known to rely on these schemes to take advantage of favorable conditions granted only to foreign investors. As the Economist Intelligence Unit notes, "Chinese statistics record approved projects rather than actual money transfers," and "[c]ompanies often list the initial port of call of their capital, rather than its final destination, thus falsely inflating the importance of stop-over locations." In addition to data reliability and comparability issues, it is not always possible to determine if an asset or project is wholly or partially owned, financed, built, or operated by a Chinese entity. Thus, the lack of consistent, disaggregated, and detailed information limits the proper assessment of the size, scope, and implications of these activities. Moreover, because major projects generally involve several phases and a sometimes-evolving cast of stakeholders, it is not always possible to distinguish between the phases of acquisition or construction and those of operationsâas they are often blended in terms of time and firms involved. Many of the overseas infrastructure projects in which Chinese entities are involvedâparticularly portsâalso present distinct challenges not always encountered in the analysis of traditional foreign direct investments (e.g., multinational corporations building a new factory or acquiring an existing domestic firm). In the case of infrastructure, to attract foreign investment and transfer risks to the private sector, it is common for host countries to offer long-term concessions or leasesâfor both construction and operation. These typically allow the grantee firm the right to use land and facilities (e.g., ports and highways) for a defined period in exchange for providing services. Because these lands and facilities tend to be owned by the host government, the investments can come in the form of use-rights through leases or joint ventures. These challenges, together with the opacity of China's terms and conditions, can limit the ability to assess accurately the extent of Chinese involvement. Data availability limitations also may arise since China often finances infrastructure development through its export credit agencies and development banks. China is not a member of the Organization for Economic Cooperation and Development (OECD) or part of its Arrangement on Officially Supported Export Credits, which includes rules on transparency procedures for government-backed export credit financing. The United States, China, and other countries have been working to develop a new set of international rules, but progress reportedly has been limited. Finally, some of China's global economic activities are portrayed inaccurately as "foreign aid" or "development assistance." While certain aspects may resemble assistance in the conventional sense, they generally do not meet the OECD standards of "official development assistance" (ODA). The terms of China's "ODA-like" loans are less concessional than those of other major actors such as the United States and Japan, have large commercial elements with economic benefits accruing to Chinese actors, and are rarely government-to-government. Details on specific Chinese deals and overall flows are opaque because the PRC government rarely releases data on any of its lending activities abroad or those of its state firms and entities. China also is not part of the OECD's Development Assistance Committee, which "monitors development finance flows, reviews and provides guidance on development co-operation policies, promotes sharing of good practices," and helps set ODA standards. Issues and Options for Congress Data limitations and lack of transparency, combined with the number of unknown variables that drive China's foreign economic policy decision-making processes, can affect how Members of Congress perceive and address the challenges that China's overseas economic activities pose to U.S. and global interests. These limitations also complicate efforts to compare accurately the extent to which China's global economic reach differs from that of the United States. Little consensus exists within the United States and the international community on China's ultimate foreign economic policy goals or what motivates and informs its economic activities abroadâeither in general or with regard to specific regions or countries. Debate is ongoing over whether China's global economic engagements have a pragmatic, overarching strategy, or are a series of marginally-related tactical moves to achieve specific economic and political goals. Similarly, some analysts argue that Beijing, through its global economic activities, is trying to supplant the United States as a global power, while others maintain that it is focused mainly on fostering its own national economic development. In the absence of sufficient transparency in China's international economic activities, Members of Congress may seek to support current and new U.S. efforts to better track, analyze, and publicize actual Chinese investment, construction, assistance, and lending activities. Better data and information on China's activities may help U.S. policymakers assess the scope and address key questions over China's international engagements and growing economic role, including: How could the United States more accurately assess and respond to increasing competition by China for leverage and influence, both in countries where the United States is seeking to expand its economic and political ties, as well as in those with strong existing U.S. relationships? To what extent are the terms of China's global investments and economic assistance less restrictive than U.S. activities and how does this affect U.S. efforts to promote good governance around the world? What commercial advantages does China's arguably unique approach to global economic engagement provide its companies, how does this affect the ability of U.S. companies to compete for international business, and what policies and agreements should the United States put in place to mitigate these effects? How can the United States expose where China is in violation of the rules and norms of global institutionsâparticularly where it has or is seeking leadership positionsâand use this knowledge to require China to adhere to international norms and condition its investments and assistance on widely accepted best practices? What are the implications for the United States and international financial institutions (IFIs) that often promote good governance when China competes directly as an international lender and may offer less encumbered "assistance" in ways that directly undermine U.S. and IFI values and principles? How should the IFIs and the United States respond to this challenge, particularly when China is seeking influence and leadership in both current IFIs and these alternative paths? Should China's leadership role be challenged if it is found to be undermining the goals and principles of the organizations it leads or seeks to lead, including with respect to transparency commitments? How do differences in approach and scale of U.S. and Chinese global economic activities affect global perceptions of U.S. engagement around the world? U.S. policymakers could seek to improve their own knowledge base in ways that may enable them to advance U.S. foreign economic interests more effectively, while at the same time encouraging more transparency by China. This could include: Collecting, maintaining, and publicizingâto the extent that is possibleâa more accurate calculus of actual Chinese economic activities, particularly by tracking investment and assistance that is delivered, as opposed to that which is merely announced (e.g., either unilaterally or by encouraging or requiring greater disclosure through the international financial institutions and WTO). Directing agencies within the executive branch to develop a whole-of-government approach and guidance to better assess the global investment, construction, and lending activities of U.S., Chinese, and other major actors. As part of this effort, the U.S. government could harmonize U.S. programs for gathering information and streamline data centralization. In addition, it could study the adequacy of data and information recording, collection, disclosure, reporting, and analysis at the U.S. and international levels and recommend necessary improvements. Establishing a U.S. statistical office or program tasked with collecting current information on international capital flows and other information related to international investment, public procurement, and export and investment promotion, financing, and insurance by U.S., Chinese, and other major economic actors. Conducting oversight and examining more closely data collection and transparency commitments in various institutions, including the Organization for Economic Co-operation and Development (OECD), International Monetary Fund (IMF), the World Bank, and United Nations Conference on Trade and Development (UNCTAD) on investment, loans, and government procurement to determine if these mechanisms are sufficient and/or are being adhered to. Determining whether the World Trade Organization (WTO) should play a greater role to enhance transparency and set standards for dissemination of investment data through future reforms to key agreements or new agreements on investment. Examining the activities of international and regional organizations to determine if they are sufficient to address emerging data requirements or whether a major U.S. and/or internationally-coordinated effort is required. Supporting U.S. and international efforts to provide training courses, workshops, and technical assistance programs for countries to implement international statistical guidelines and improve comparable data compilation and dissemination practices. Holding hearings on Chinese overseas lending and investment practices. The United States could consider a combination of pressure and collaboration to strengthen its economic engagement efforts and encourage China to adopt international best practices. While the success of past efforts has arguably been limited, the United States could continue to: Work with other countries and international economic institutions to improve the collection and accuracy of data, address data deficiencies, and harmonize data reporting requirements by China and other major economies. Encourage China to participate more vigorously in adopting or developing rules on export credit financing and related areas, while urging China to sign on to public-private sector good governance initiatives and agreements. Coordinate efforts with other countries to set terms for data transparency and best practices for China to participate in multilateral and country-level donor foreign assistance dialogues and related efforts to prioritize key development goals and coordinate aid efforts in order to create synergies, avoid duplication and tied aid, and maximize each donor's strengths. Offer to work collaboratively with Chinaâeither bilaterally or through multilateral foraâto more clearly differentiate its official grant-based aid from its subsidization of trade and commerce credit; monitor the effectiveness of its aid strategies; harmonize aid reporting with other donor governments; and develop best practices in support of transparency and accountability. Appendix A. Databases and Resources Appendix B. China's FDI in the United States