SinoDefence Forum

Norfolk · 06-28-2008

Quote:

Originally Posted by tphuang

that's it, you guys would have no idea how long it took me to copy and paste all of that at work. It was a pain!

Sorry, boss.

But we do appreciate your work. Perhaps this thread should be pinned as a sticky for permanent future reference?

Done!..bd popeye super moderator

tphuang · 06-30-2008

this is the congress's discussion on China and dealings with Western hemisphere.

Quote:

REP. ENGEL: A quorum being present, the Subcommittee on the
Western Hemisphere will come to order.

I want to apologize to our guests and to our attendees. It seems
that whenever we have a hearing, the leadership calls a vote just at
that point. So we can always predict when the votes are -- it's when

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we're supposed to start our hearing. So I do apologize, and hopefully
we won't be interrupted by any more votes.

I'm pleased to welcome you to today's hearing, entitled "The New
Challenge: China in the Western Hemisphere." This is a topic of
growing interest, and I look forward to exploring the issue.

Here, on the Western Hemisphere Subcommittee, we're charged with
keeping a close watch on development throughout Latin America and the
Caribbean. Several countries have for years required a great deal of
attention. Colombia, Cuba and Haiti have often led the list.
Likewise, regional issues like poverty, inequality, energy production,
remittances and migration also top the list of issues we must monitor.

In recent years, another challenge has also caught the attention
of the subcommittee, and it emanates from the other side of the globe.
The growth and increasing power of the People's Republic of China is
today forcing policymakers to take a new look at our priorities not
only in Asia but in Latin America as well.

The expansion of a Chinese economic juggernaut has not only had a
great impact on businesses and workers in the United States, it is
also powerfully affecting the entire hemisphere. In 1999, total trade
between China and Latin America and the Caribbean region stood at
($)8.2 billion. By 2007, it had risen to almost ($)102 billion -- a
more than tenfold increase in less than 10 years. Likewise, Chinese
exports to the region have soared by a similar amount.

In November 2004, Chinese President Hu Jintao's visit to several
Latin America countries underscored China's increased presence in the
hemisphere. Cynthia Watson recently wrote that, quote, "The November
2004 rock star visit of Chinese president Hu Jintao to Latin America
was a wake-up call for many in the United States that China had
discovered Latin America."

During the speech to the Brazilian Congress, Hu stated that China
would invest $100 billion over the next decade and ($)20 billion in
Argentina alone. While China has a tendency of over-promising
investment in Latin America, there's obviously no doubt that Beijing's
presence in the region is growing.

I was particularly struck by China's visibility in the Western
Hemisphere when I led a congressional delegation to the southern
Caribbean last year. Our visit just happened to coincide with the
international cricket championships held in several Caribbean
countries.
Grenadian Prime Minister Keith Mitchell scheduled our meeting
with him at their brand new, Chinese-built cricket stadium during a
cricket match. I learned that everyone in Grenada knew that the
Chinese built the multimillion-dollar stadium, and built it, as I
remember, within a year.

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Unfortunately, people were not nearly aware of what the United
States had done for the island of Grenada. In September of 2004,
Hurricane Ivan slammed into Grenada and did terrible damage. Although
people know about the Chinese building of a sports arena, they don't
know that the United States provided $42 million to Grenada for
recovery and reconstruction in the aftermath of the hurricane or that
we repaired over 100,000 -- I'm sorry, 100 -- over 1,000 private
homes, helped 269 small businesses to reopen and assisted 1,300
farmers to plant new crops.

But we should keep the Chinese challenge in perspective. The
U.S. still remains the biggest player in the hemisphere by far. While
China's reported foreign direct investment in the region was ($)11.5
billion in 2005, U.S. investment was ($)366 billion.

U.S. geographic proximity to Latin America, close cultural ties
and long-standing trade patterns give the United States overwhelming
advantages. Nevertheless, the challenge is clear, and if we don't pay
attention, in my opinion, and conduct effective public diplomacy, as
we didn't in Grenada, even after we invaded that country in 1980s,
even the best intentions and the most worthy humanitarian efforts
often go unrecognized. Likewise, if we're not careful, American
businesses could find their investments undercut and their trade
diminished.

The battle for diplomatic recognition between China and Taiwan is
also alive and well in the Western Hemisphere and is thought to be by
many to be China's number one priority in the region. I was just
reading today where there are now going to be direct air flights
between China and Taiwan. Of the 33 independent countries in the
Latin American-Caribbean region, China currently has official
diplomatic relations with 21 states, while the remaining 12 nations
currently maintain relations with Taiwan. That's actually a very
large percentage, given the rest of the world, where the rest of the
world has diplomatic relations during the China-Taiwan split.

For decades, Taiwan was a consistent provider of financial
assistance and investment in Latin America and the Caribbean in order
to nurture its remaining official relationships. Today it is hard-
pressed to compete against the growing economic and diplomatic clout
of China, which in recent years has stepped up its own version of what
is sometimes called checkbook diplomacy.

The growth of Beijing's power and wealth is now visible in the
number of countries recognizing China. Since 2004, Dominica, Costa
Rica and Grenada have switched their recognition to the People's
Republic of China from Taiwan, and reports indicate that other
countries in the region might soon follow.

But not everything always goes well for Beijing in its efforts to
expand official relations in the hemisphere. When national anthems
were played at the inauguration of that Chinese-built cricket stadium
in Grenada that I mentioned before, the Grenadian police band made a

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serious mistake. It performed the national anthem of the Republic of
China, not the People's Republic of China, and the Republic of China
is also known as Taiwan, instead of the People's Republic of China,
which is Beijing. So I guess China can't win them all.

We have a distinguished group of experts with us today to discuss
today's hearing topic, "A New Challenge: China in the Western
Hemisphere.
First I'd like to introduce Daniel P. Erikson, senior associate
for U.S. policy at the Inter-American Dialogue.

Welcome.

Second, we have Evan Ellis, adjunct professor at the University
of Miami.

Welcome, Dr. Ellis.
Finally, I'm pleased to welcome Francisco E. Gonzalez, assistant
professor of Latin American studies at the Paul H. Nitze School of
Advanced International Studies of John Hopkins University.

I would like to -- Mr. Burton is just in the anteroom and he'll
be coming back momentarily, but I would like to ask if any of my
colleagues, Mr. Delahunt, has an opening statement, or Mr. Smith.

Mr. Smith.

REP. CHRISTOPHER H. SMITH (R-NJ): Thank you very much, Mr.
Engel, and Mr. Chairman, thank you for convening this very, very
important hearing.

For some time now we've been aware of the challenge that China's
growing influence around the world poses to U.S. interests on a number
of fronts. China's influence in the Western Hemisphere hasn't been
much of a focus as it maneuvers in some parts of the world, but it is
surely time to take a close look at China's strategy in Latin America.
If China's plan for Africa is a blueprint for what it wants to do
in Latin America, I, for one, am very concerned. I would note to my
colleagues that I convened a hearing on the Subcommittee on Africa,
Global Human Rights, and International Operations in July of 2005 that
described disturbing trends regarding China's activities in Africa --
activities that revealed just how insidious the Chinese government's
influence is on that continent. The damaging influence of China on
the situation in Darfur and in Zimbabwe is well known, and these
dangerous policies are part of a wider trend.

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At our 2005 hearing, Carolyn Bartholomew, commissioner of the
U.S.-China Economic and Security Review Commission, explained the
darker side of China's economic expansion. She described China's
willingness to provide, quote, "economic, military, and diplomatic
assistance to undemocratic African regimes in direct opposition to
political forces that have spent years encouraging positive change
there." She also noted that China is quick to block attempts by the
United States to use multilateral institutions to censure the
appalling human rights practices of some of Chinese government's
allies.

As the Chinese pour money into Africa, their partners are free to
pursue any policies they wish, even if they violate international
treaties and thwart basic human rights. And how can we expect the
Chinese government to hold its business partners to any standard on
human rights?

This is a government that thwarts the aspirations of its own
people in any number of ways, denying basic rights such as freedom of
speech and religion or of any labor rights. It pursues a draconian
one-child-per-couple policy that promotes the killing of innocent
human life. We now have also seen how China has adapted to new
technologies in its attempts to subjugate its own people, restricting
the Internet and locking up those who use it to speak freely.
With China routinely violating the human rights of its own
citizens, why would they care at all about the rights of Latin
Americans? I know that China has built its investments in Africa on
economic, cultural and geographic factors that are very different from
those in Latin America, but when we see China ramping up its financial
stake in the Western Hemisphere from $8.2 billion of total trade in
1999 to almost ($)102 billion in 2007, we can be sure that the Chinese
government's influence won't stop there.

I am convinced that in the end, the people of this hemisphere
will pay the price for becoming part of China's expanding economic
and, unfortunately, its political empire.

I yield back the balance.

REP. ENGEL: I thank the gentleman.

And I guess what we'll do, waiting for Mr. Burton to come back,
is when he comes we'll let him give his opening statement at that
point, or to submit in the record anything that he may desire.
So why don't we start with our panel?

Mr. Erikson, why don't you begin?

MR. ERIKSON: Great, thank you very much, Mr. Chairman, and thank
you for the other members of the committee who are here today.

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This is an extremely important topic and it's an honor for me to
testify. I'm going to make a summary of my views and ask for my full
statement to be placed in the record.

REP. ENGEL: Without objection.

MR. ERIKSON: The Inter-American Dialogue has been closely
following China's engagement with the Western Hemisphere over the past
several years, with an emphasis on the political, economic and
security dimensions of the relationship.

Today there's little doubt that the People's Republic of China
has moved from the periphery to become a central actor in the Western
Hemisphere. While many Latin American and Caribbean countries enjoy
long-established political and economic ties with Beijing, the scope
of change since 2001 has been striking.

By almost every conceivable metric, including high-level visits,
presidential diplomacy, the pace of trade and investment, the level of
cultural exchange and military contacts, China's relations with Latin
America have never been so robust.

Moreover, this deepening relationship has occurred against the
backdrop of three interrelated trends. First, China's stunning rate
of economic growth has driven its search for new markets as well as
endowed it with greater resources to cultivate political and economic
allies throughout the world, including Latin America.
Second, Latin American and Caribbean economies are seen to
diversify away from their traditional trading partners, such as the
United States and Europe, and take advantage of the economic
opportunities presented by China.

And third, Latin America remains an important battleground for
diplomatic recognition between China and Taiwan, as Beijing attempts
to pry loose Taiwan's remaining allies in the region.

I will tackle these points one by one.

To begin with, it's clear that China is a rising economic power
and its global search for the commodities necessary to sustain its
economic expansion forms the bedrock of its relationship with Latin
America.

Let's consider a few numbers. The pace of trade between China
and the region has skyrocketed from about ($)10 billion in the year
2000 to over ($)100 billion in 2007. This is an impressive figure,
although still well below the estimated ($)560 billion in U.S.-Latin
American trade and less than half of the trade that exists between
Europe and Latin America.

Much of this trade has been in the form of commodities, including
Chilean copper, Argentine and Brazilian soya, Venezuelan oil and Cuban

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nickel. China sells a wide range of manufactured consumer products to
Latin American countries.

Brazil was China's largest trading partner last year with two-way
trade totaling $30 billion, followed by Mexico at roughly half that,
then Chile, Argentina and Peru. Venezuela, Panama and Colombia round
out China's top eight trading partners in the region. China has
signed a free trade agreement with Chile in 2005 and is entering into
trade negotiations with Costa Rica and Peru.
Chinese foreign direct investment in Latin America lags far
behind that of the European Union and the United States.
In fact, the EU is estimated to be the region's largest investor,
with about ($)600 billion in investments, followed by U.S. investment
of around ($)350 billion.

By contrast, a top Chinese trade official recently estimated that
about one-quarter of China's total overseas investment goes to Latin
America, which equals about ($)22 billion. However, official
estimates of Chinese investment in Latin America often vary, and in
any case, the vast majority of this investment goes to the Virgin
Islands and the Cayman Islands and other offshore financial centers.
In fact, nonfinancial direct investment in Latin America is probably
around $1.9 billion.

The chairman mentioned the speech made by President Hu Jintao
before the Brazilian Congress, where he promised $100 billion in
investment over the next 10 years. The Chinese announced that they
were actually misquoted -- they were talking about $100 billion in
trade and not investment, but they allowed that assertion to hang out
in the Latin American press for over a year to generate a great level
of excitement about what China may bring to the region.

In fact, the Chinese now say that it was trade they were aiming
for in terms of $100 billion, not investment, and they claim to
already have reached that goal while investment to the region has
traveled much slower.

This initial confusion over what, precisely, China was promising
to Latin America indicates the degree to which cultural differences
and China's relative lack of experience in the region has at times
undercut its diplomacy.

Let's discuss a few political and security concerns. Does
China's renewed economic presence in Latin America pose either a
short-term or long-term risk to U.S. political security interests?
It's difficult to answer this with either a strict yes or no answer.
It's clear that China places its highest priority on its relations
with Washington and is highly sensitive to U.S. perceptions of its
involvement in Latin America.

Nevertheless, there are three cases where security concerns are
traditionally raised. They involve Venezuela, Cuba and the Panama
Canal. The relationship between China and Venezuela's Hugo Chavez has

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been the subject of substantial debate and analysis. Much of this has
been driven by Chavez's obvious interest in diversifying its oil
exports away from the United States and China's search for energy.

However, in the short term it seems it will be very difficult for
Venezuela to somehow cut off or dramatically reduce its oil exports to
the United States and sell to China instead. This is something that
should be watched very carefully, but at the same time, it's not
necessarily concern for immediate alarm.

China is now the second-largest trading partner of Cuba, and it's
helping to sustain the Cuban economy at a time when the U.S. is
attempting to isolate Cubans through sanctions. However, there's also
evidence that the Cubans are disappointed that China -- that Cuba is
not -- the Chinese are disappointed that Cuba's not following the
China model of development and instead is resisting economic reforms.

In terms of Panama, well, there have been concerns about China's
role around the Panama Canal, particularly the operating of several
ports. At the same time, the reality is that trade through the Panama
Canal has flowed relatively smoothly over the past eight years since
the U.S. passed over the canal zone to Panama. In the short term, it
has not seemed that China's involvement in the Panama Canal is likely
to disrupt trade there.
Let me conclude with a few remarks on how the United States
should respond. China's poised to be a major player in the Western
Hemisphere for the foreseeable future, irrespective of what actions
the U.S. does or does not take in reaction to Beijing's growing
influence.

However, there is a response that could help the United States
consolidate its influence in the hemisphere. First, it should
strengthen its ties with Latin America and the Caribbean through
trade, economic integration and cooperation in multilateral fora. The
next Summit of the Americas in 2009 will present an ideal moment for
the U.S. to renew ties to the Western Hemisphere.

Second, the United States should maintain an open dialogue with
China on issues of U.S. concern in the hemisphere, especially as it
relates to democracy, human rights and environmental concerns.

Third, the United States should carefully monitor the evolution
of China's ties with Latin America and the Caribbean, in consultation
with other countries. The primary goal of U.S. policy as it relates
to China and the Western Hemisphere should focus on ensuring that
China acts as a responsible stakeholder that contributes to the
region's economic prosperity while respecting the democratic
principles that serve as the guiding values for the inter-American
system.

Thank you.

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REP. ENGEL: Thank you very much.

Dr. Ellis.

MR. ELLIS: Thank you.

I am also honored by the opportunity to testify today before this
committee. As with Mr. Erikson, I would like to summarize my remarks
and ask that they be entered in full in the Congressional Record.

REP. ENGEL: Without objection, so moved.

MR. ELLIS: The PRC's growing relationships with Latin America
may be understood in terms of economic and strategic imperatives
arising from its emergence as a global power, including, of course, a
worldwide search for new markets and reliable sources of supply, as
well as the PRC using its increasing international weight in its long-
standing efforts to isolate Taiwan.

The principal challenge, I believe, for the United States is to
continue to be a constructive partner as the Latin American region's
needs and interests continue to evolve, including to help the region
deal with what will be undesirable side effects of the new
interactions between it and the People's Republic of China, including
economic displacement and potential sources of misunderstanding.

With respect to some of the questions that the committee has
indicated are of interest, what is the PRC buying from the region?
First of all, very great quantities of goods; however, not always what
the businessmen of Latin America hope to sell it. First of all, the
Chinese growing middle class is using its affluence to sample Western
brand-name goods. Latin American beneficiaries specifically include
Chilean wines, Mexican beers by well-known brands such as FEMSA and
Modelo, although even media outlets such as Televisa reportedly have
plans to translate Mexican telenovelas into Mandarin for broadcast
into China.

At the same time, as is well known, PRC's interest extends to
Latin America's primary products as one global source among many to
fuel its manufacturing base. Examples, as Mr. Erikson indicated,
include copper and potassium nitrate from Chile, include iron and
other mining products from Brazil, Peru and Bolivia, and of course
petroleum from Venezuela, Ecuador and Brazil, and we must not forget
from Canada, the Alberta tar sands as well.

In addition, PRC agricultural needs, increasingly acute, cause it
to buy bulk foodstuffs from the region, such as soy from Brazil and
Argentina. Indeed, one of the little-known impacts of the Argentine
crisis right now in the agricultural sector is that its principal
purchaser of soy products, the Chinese, have been scrambling for
alternative sources.

tphuang · 06-30-2008

more on this

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It's important, I believe, to emphasize that the region, despite
its hopes, has been much less successful in placing its traditional
crops but more labor-intensive crops, such as banana and coffee, in
the PRC, despite great efforts to do so.

As Mr. Erikson indicated, while few of the hopes for PRC
investment in social and infrastructure projects in the region have
materialized, Chinese companies have invested significantly in primary
product sectors through acquisitions and joint ventures in order to
achieve secure sources of supply of interest to them. Notable
examples include the $500 million copper agreement between China
Minmetals and Codelco as well as current and potential $3 billion to
purchase mines in Peru, as well as the recent $1.42 billion
acquisition of petroleum assets in the country of Ecuador, as well as
$4 billion in loans just recently achieved in Venezuela.
Latin America is also of increasing interest to the PRC as a
market for its goods, especially given that slow economic growth in
its traditional markets, the United States, the European Union and
Japan, have increased that importance.

I should point out that in addition to the well-known Chinese
inexpensive textiles, toys and other products, the Chinese products,
as they move up the value-added chain, have a very real social impact.
The possibility of buying a new lease on a motorcycle for $500 or a
new Chery automobile for $6,000 puts motorized transportation in the
reach of an entirely new class in Latin America, and that has a social
impact.

With respect to the Taiwan issue, of course it's widely known
that the PRC offers significant aid in competition with the aid
offered by Taiwan as a quid pro quo for recognition. However, the
growing hopes of doing business with the PRC as a market also drives
much of those hopes, as indeed it was one of the driving forces behind
Costa Rica's decision in June 2007 to change its recognition.

That has implications for Nicaragua and Honduras because those
countries have less short-term hopes to export to the PRC and thus
increased higher interest to continue with their strong, established
relationship with the Taiwanese.

I believe that Paraguay will be one of the upcoming, perhaps the
next test case in that President-elect Lugo in Paraguay expressed
interest during his campaign in recognizing the PRC, and I would also
note that the Taiwanese president has plans to visit Paraguay in
August to presumably help to shore up Taiwan's relationship with that
country.

Turning to energy security, I fundamentally believe that one of
the reasons of the Chinese increasing presence with respect to loans
and oil companies in Venezuela as well as Ecuador as well as fields in
Brazil is of particular concern to the United States is the impact of
declining Mexican production and Mexican deliveries to the United
States from places like the Gulf of Campeche and fields such as
Cantarell.

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Given that behind Canada that Mexico is the major supplier in
this hemisphere of oil, the question of where Venezuelan oil goes as
Mexican oil continues to decline begins to become relevant to U.S.
energy security questions from this hemisphere.
Beyond that, I believe it's important to point out that with
respect to Chinese relationships with what are often termed the
populous countries of the Andes, it's important to point out that
China also has very real concerns over those nations. For example,
after China invested $1.42 billion in the nation of Ecuador to acquire
oil assets there, it is probably not at all pleased by the recent
initiatives by President Correa in that country to force it to
renegotiate those into service contracts.

At the same time, it was not pleased, ostensibly, in August 2006,
when after having built a $350 million facility to use the fuel oil
Orimulsion that PDVSA, in its joint venture called Silavensa (ph)
reneged on its supply agreement to provide that fuel oil to China.

Also, in places such as Ecuador, it's useful to point out that
the Chinese companies equal as Western companies have had some very
real problems with mobilized social forces. In November 2006, for
example, the assets of Andes Petroleum were impaired and production
was impaired when local interests took over an oil field in Tarapoa as
well as in November 2007, when the Ecuadorian government was forced to
declare a state of emergency in the (border ?) province of Orellana,
due to violence directed at PetroOriental, another Chinese interest.

Finally, to turn to security interests, I would like to point out
that perhaps although the military relationships are much talked
about, I believe that a key point is to look at the emerging
relationship between Chinese and Latin American criminal organizations
as the ties between those countries increase -- for example, the
Chinese group Red Dragon, which was implicated in a major scandal
involving Bolivian congressmen and former congressmen and other
indications that these activities are increasing.

To echo what Mr. Erikson said, I believe that given the
possibilities for misunderstanding in the region that the process
initiated during the August 2006 trip by Secretary Shannon to Beijing,
a process of coordination to help resolve the sources of
misunderstanding takes us in the right direction and certainly should
be encouraged and deepened where possible.

Thank you, Mr. Chairman.

REP. ENGEL: Thank you very much.

Dr. Gonzalez.

MR. GONZALEZ: Thank you, Mr. Chairman, members of the
subcommittee; I'm honored to appear before you to discuss the
challenge of China's growing presence in the Western Hemisphere, and

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like my colleagues, I'm happy to have my testimony included in the
Congressional Record.

In my view, the short and medium-term challenge that the U.S.
government faces vis-a-vis the expansion of China's influence in the
Western Hemisphere is and will remain economic rather than diplomatic
or geopolitical. Even if China had the capacity to project hard power
to the Americas, which it does not have, its top priority in the
hemisphere is and will remain having a good relationship with the U.S.

China has much more to lose from alienating the U.S. than it has
to win from strengthening its standing in the Americas. Instead,
China has chosen to exercise soft power in the region. They've used
two channels for this purpose. The most important by far is economic,
in terms of trade and investment promises. The other one is
diplomatic and cultural, and it has mainly been propelled by expanding
Chinese embassies, consulates and Confucius cultural centers in the
region.

In the diplomatic cultural arena, however much educated Latin
Americans admire China's millennial culture and achievements, the
region will remain firmly a member of the Atlantic family, sharing its
alphabet, its political traditions and many of its social and cultural
mores with Europe and with the U.S.

Additionally, and this addresses the point Representative Smith
was talking about, Latin Americans remain distrustful and in fear of
overcentralized rule, like China's. We have to remember Latin
Americans' own distant and recent historical experience with
unaccountable politics and its corollaries -- human rights abuses,
corruption, economic irrationality and official impunity.

Latin Americans don't want to revisit their political past, and
therefore China is not a political model that Latin America would like
to embrace, no matter how strong and high their economic growth is.
On the contrary, what Latin Americans want -- desperately want -- is
to strengthen their young and still-fragile democracies.

In my view, the U.S. should promote decidedly the strengthening
of liberal democracy in Latin America as a matter of tactics as well
as principle, and this objective should be promoted not only through
the traditional channels of the inter-American system or bilateral
relations, but also through an explicit program that gives visibility
to the U.S. government's commitment in helping to advance this goal.

For all their unattained aims and serious shortcomings, Latin
Americans, for example, still remember FDR's Good Neighbor policy and
JFK's Alliance for Progress as high tides of constructive engagement.
Regarding the growing economic presence of China in Latin
America, I think an argument can also be made that this is, in fact,
in the interests of the U.S., because what this country, the U.S.,
faces south of its border is the most unequal region in the world.

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And whereas this fact should not necessarily represent a problem,
inequality has become strongly politicized throughout Latin America
since the early 2000s in a way that has produced a backlash.

This backlash has been characterized by the rise of
democratically elected governments that promise short-term redress and
redistribution by undoing the free market policies of the U.S. and the
international multilateral institutions recommended in the '80s and
'90s -- the so-called Washington Consensus. The fact remains that
majorities or big minorities of voters throughout Latin America think
the outward-oriented model did not deliver on its promises and
therefore must be changed.
Chinese economic engagement in Latin America proves that a
commitment to open economies can actually yield benefits to the
region, which, for example, has enjoyed its fastest five-year growth
period between 2003 and 2007 since the late '60s; thanks to commodity
exports, growing proportions of wheat have been going to the booming
economies of Asia, first and foremost China.

The so-called "super cycle" commodity boom that these raw
materials exporters have enjoyed since '03 have translated into
several benefits, which again in my view are in the interests of the
U.S. First, high-windfall gains from commodities exports have allowed
countries to strengthen their fiscal positions by redeeming
outstanding external debts, bringing down borrowing costs and creating
bond markets in domestic-denominated currencies.

These trends are behind the recent investment grade attained by
Peru and Brazil, and these developments are in the interest of U.S.
banks and businesses, which will find it easier to engage in
productive activity in Latin America thanks to stronger, more liquid
financial markets in the region.

Also, a sound fiscal position and deepening financial markets in
Latin America are in the interest of the U.S. government, because the
development of domestic bond markets reduces the likelihood of
speculative attacks against currencies, macrodevaluations and the
concomitant costs of bail-outs, some of which, as we know, the U.S.
has been forced to participate in.

Second, the higher outward-oriented output in Latin America has
produced spillovers into the domestic economies which have translated
into higher consumption and savings for the growing middle classes.
This trend has been facilitated by another China-related factor,
namely, the cheap availability of consumer products, many of which
used to be the preserve of upper middle and upper classes in Latin
America.

The availability of consumer goods plus the rise of credit
markets for poorer sectors in the region are not silver bullets that
will remedy the complex challenge of underdevelopment in the region.
However, they are an important trend that can act as a cushion against

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the wholesale attack against free markets that have come to dominate
politics in many of the region's countries.

Lastly, on the issue of energy, the conventional wisdom has it
that a China-Venezuela partnership would be to the detriment of
American energy security. From my perspective, this proposition is
false on two counts: economically and politically.

Economically, it makes no sense, nor will it make any time, as
long as oil remains a fungible commodity for Venezuela to ship high
amounts of heavy crude to China. The bulk of heavy refining capacity
remains in the Gulf of Mexico coast of the U.S. Even if China started
investing in heavy refining infrastructure, the likelihood that this
line of investment could become dominant is very low because most of
China's oil import bill is made up of light crude shipped from the
Middle East and Africa. Why invest in a venture that requires massive
installation costs plus higher transport costs when the current
alternative is the most cost-effective?

Politically, China will continue to tread very carefully in Latin
America for fear of alienating the U.S., and in my perspective, the
Chinese will not forgo investment and commercial opportunities --
Venezuelan and Ecuadorian oil, the Panama Canal, the Manta base in
Ecuador. But if they do this, if they continue engaging, they will do
so in the same fashion as Japanese, South Korean, Spanish or Canadian
firms do -- that is, as strict commercial ventures only.

Given China's awareness about the potential to alienate the U.S.
if it pushes into Latin America as aggressively as it has in, say,
Africa, and given that this is exactly what they don't want, my
perspective is that Chinese bids in real commercial commitments in
Latin America will actually remain smaller and more low-profile than
those of other Asian and European countries.

Thank you.

REP. ENGEL: Thank you very much.

I now would like to give our ranking member, Mr. Burton, an
opportunity to make a statement, or even ask some questions, if he'd
like.

REP. DAN BURTON (R-IN): Thank you, Mr. Chairman. I apologize
for being late. I was with the ambassador from Argentina, and I had
to show a little courtesy to him because he's a fine fellow and
they're a good friend of the United States.
My big concern, along with my colleague Mr. Smith, is the human
rights violations that we see in China and the slave labor camps that
they have. Last I heard, there was 10 million people producing
products in slave labor camps that are sold all over the -- producing
products that are sold all over the world, and that's been a big
concern of mine.

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But we're not here today to talk about that, we're here to talk
about China's influence in Latin America and how that will affect the
United States of America. I'm concerned about that. Some of the
things you said right now, like Dr. Gonzalez, kind of allays some of
those fears because you don't think it's going to be a major problem
for us long term. At least that's the way I took your comments, and I
guess that's a positive.

But I'm still concerned about things like Venezuela. You don't
seem to think that Venezuela's going to export a lot of their heavy
oil to China because of production problems. I'm not so sure about
that. We get about 16 or 17 percent, according to my staff, from
Venezuela, and their close ties, their growing ties with countries
like Iran and China I think is a very troubling thing. And China has
the resources to build the kind of refining plants necessary to take
that heavier oil and make it into oil.

One of the things that concerns me about China and possibly
buying more and more oil from Latin America is that that makes it more
difficult for the United States to keep the energy resources that we
need. We have a lot of resources in this country and one of the big
debates that's taking place on the floor of the U.S. House now and has
been taking place over the last few weeks is our ability to produce
our own energy.

We have energy supplies that would help us reduce our dependency
on foreign oil, like Venezuela and the Middle East, but unfortunately,
because of environmental concerns by some environmental groups, we
haven't been able to get the Congress of the United States to allow us
to drill in the ANWR or off the continental shelf, and we aren't able
to go into some of our national forests to get maybe a 3(00-) or 400-
year supply of natural gas which is clean-burning. I'm going off on a
tangent here, but this is important. And we're not able to become
energy independent by using such things as coal shale, which can be
converted into oil and gasoline.

And as a result, Americans are madder than the dickens at us
right now because gasoline is at $4-plus a gallon, and here we are
worrying about China coming into the Western Hemisphere and taking
away a lot of the resources that we have depended upon in the past,
and I don't know what we're going to do if we aren't able to go after
our own resources.

And we do see some of these things being siphoned off by
countries like China, who have the money to do it. We're going to be
in a big -- a lot of hurt, and I hope that I can convince my
colleagues, along with others, that it's time for us to re-evaluate
our situation and realize that while we're concerned about the
environment, we also have to be concerned about our economy. And that
means we have to have the energy necessary to make this economy work.

So I've gone off on a tangent, Mr. Chairman; I apologize for
that.
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Let me just say I'm still concerned about China's influence in
Latin America. They have been able to, with their China-owned
companies, actually take control of both ends of the Panama Canal. I
know that doesn't seem like a great threat, but in time of conflict it
could be a real problem even though most of our battleships couldn't
get through the Panama Canal anyhow. But as far as commerce is
concerned, the Panama Canal is still very important and with China
having both ends of it, we could have a problem down the road.
And also, I'm concerned also about the influence that they have
through their money and their ability to invest in Central and South
America that maybe some of the democracies that we were able to see
come to fruition during the Reagan years may be heading in the
opposite direction.
Venezuela's a perfect case in point. Venezuela was a democracy;
we have a lot of countries down there that are democracies --
Nicaragua, Bolivia and others that are moving to the left. I'm
concerned about that, and I think in part it's due to the fact that
countries like China are going in there and investing and that they
have more influence than we've had in the past.

So with that, I'm anxious to hear what questions are asked.
I have some questions of my own, Mr. Chairman, but I'll reserve
those for later on in the hearing. Thank you.

REP. ENGEL: Well, thank you, Mr. Burton.

Congressional Research Service always puts out memorandums on
different subjects, and when they sent us one on China's involvement
in Latin America, they opened up -- it was extensive, but they opened
up, and I would like to just read you half of that paragraph and ask
you to comment on it. You all have commented on it, but I'd like you
to comment on it more.

This is what they said: "China's growing interest in Latin
America and the Caribbean is a fairly new phenomenon that has
developed over the past several years. Beginning in April 2001 with
President Jiang Zemin's 13-day tour of Latin America, a succession of
senior Chinese officials have visited Latin American countries to
court regional governments while Latin American leaders have also been
frequent visitors in Beijing.

"There are two main drivers in China's expansion of its relations
with Latin American and Caribbean countries: one, competition with
Taiwan for diplomatic recognition, particularly in the Caribbean and
Central America, and, two, strengthened relations with resource-rich
countries in the region that can help feed China's resource needs and
expanding economy."

Now, someone touched on before the fact that China has been under
tremendous criticism with its moves in Africa to try to tap -- some
would say steal -- the resource needs of Africa for its expanding
economy. Is that something that we should worry about in terms of

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Latin America, and should we also worry about how that might affect us
if China is expanding resource needs for her expanding economy?

So if anyone would like to comment on that.
MR. ERIKSON: I'll offer a few quick comments.

First, on the -- I think what you see in China's overall strategy
towards Latin America is a two-tiered strategy, where you look at
Central America and the Caribbean, this is principally about Taiwan.
That's the largest group of countries that still recognize Taiwan.
China won a major victory last year when Costa Rica became the first
Central American country to defect from Taiwan and recognize China.
And then, of course, there's Paraguay. That's the only one left in
South America, and it could be likely to switch soon.

When you look towards South America, that's when you're really
seeing this drive for resources in really trying to feed China's
growing economy. You have a different situation in Latin America than
you do in Africa in the sense that Latin America has basically middle-
income democracies.

There are few very poor countries, such as Guyana and others, but
you have countries in general that have a greater level of democratic
development, institutional development, than exists in Africa, and so
for that reason the severity of the problem that you see with China's
engagement in Africa probably isn't going to replicate itself in quite
the same way in the majority of the Latin American countries.

Nevertheless, there's obviously a shortage of commodities
worldwide. I mean, you're seeing prices rise across the board in
almost every energy sector, in terms of food products and also basic
commodities in metals, and a lot of that is driven by the growth of
China and of India, and so what you're seeing is a global impact. And
to some degree, China's growing role in Latin America does imply some
loss for U.S. business interests there.

But this is something that's playing out not just in Latin
America but across the world, and because of the United States' long-
standing ties with Latin America and the very deep economic
relationship that exists, including the number of free trade
agreements that the United States has with Latin American countries,
the U.S. actually may be better positioned in Latin America than it is
in, say, Africa. Thank you.

MR. ELLIS: I'd like to focus my comments on the resource
dimension of that.

First, of course, the governments of the region, at least many of
them are reaping the benefits of the global commodity boom to the
extent that they have the commodities to sell.

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Why, for example, is the President Kirchner government in
Argentina focusing on taxing approximately half of the $24 billion soy
crop? It's largely because the value of that crop comes from the
Chinese demand, the massive demand for those soy products. We find
similar issues with respect to the booms the Peruvians have been
reaping with respect to copper and iron, with respect to the Chileans
and copper and potassium nitrate, et cetera.
However, as we have heard from other sources, oftentimes the
negative side of growth fueled by primary product exports is where do
those benefits go to? To the extent that they benefit governments and
oftentimes can fuel increases in corruption of those who allocate who
gets the concessions or who does not, as well as oftentimes the
benefits go to those who hold the land, whether it's the cropland or
the mining or oil or other concessions, and to that extent may
actually help to contribute to inequality in the region, traditionally
a problem.

In addition, as we look at where China is going with respect to
their industrial policy versus Latin America, as China moves ever
higher up the value-added chain with Lenovo computers, with
introducing new car brands into Latin America, with introducing
washing machines and other high technology items, Latin America seems
to be moving down the value-added chain into ever-more basic
industries with ever-more low value added, and that is not good for
the diversity of Latin America and the diversity that is needed to
sustain democracy.
I would also like to comment quickly with respect to Venezuela.
I respectfully disagree with my very esteemed colleague Dr. Gonzalez.
I believe that fundamentally, although oil is a fungible commodity,
it's fungible if you have enough time to wait for the change and
enough money to pay for the additional. And what is happening right
now is that PDVSA, according to their 2012 strategic plan, says that
they're going to give an additional 800,000 barrels a day to the
Chinese while at the same time maintaining their contractual
commitments to the U.S. and its refineries.

However, generally off the record, oil executives indicate that
that is almost not going to happen. My own time in Caracas has led me
to believe that these things that you have to put into place in terms
of infrastructure and pipelines and mixing stations and additional
refinery capacity, given the capital crunch that PDVSA's experiencing
right now, two things are happening.

First of all, it's becoming ever more dependent on the $4
billion, which may go up to $18 billion, in short-term funds from
China Development Bank called the heavy investment fund, as well as
other players, as we've seen, such as Iran and Russia. At the same
time, it's becoming ever-more dependent on the presence of those state
oil companies, such as CNPC and PetroChina.

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So the question then becomes in 2012, when Venezuela has to make
a choice between where does this ever-smaller quantity of oil go, does
it go to the United States or does it go to Venezuela? Given that the
Chinese have already gotten the PDVSA to agree to pay for the
additional $3-a-barrel transportation costs from the Venezuelan side,
I believe that that will have a lot to do with the politics -- who is
in charge in Venezuela at the time, as well as the very heavy presence
and investment commitments from the Chinese to the Venezuelans.

Thank you.
REP. ENGEL: Thank you.

Dr. Gonzalez, I'd like to give you a chance to respond.

MR. GONZALEZ: Thank you.

On the issue of Africa and Latin America, I would highlight three
points.

First, the fact that Latin America has stronger governance
structures than Africa. I mean, after all, this is a region which has
had to fight its fair bit with human rights abuses. The Latin America
pre-1980s, post-1980s is a very different region. Most of the
countries in Latin America have ombudsmen; most of the countries in
the region -- you know, for the last three decades, Latin America has
enjoyed uninterrupted democratic rule, as my colleague Dan Erikson was
mentioning.

And this is not just any token "oh, you've got elections." The
mechanism of democratic representation does work in Latin America
today better than it has at any point in time. Politicians are more
responsive to publics than they used to be, and so the idea that the
Chinese could, you know, be able to come to Latin America as they've
gone to Botswana or to Angola, bring their 5(,000), 10,000 workers to
do their own thing, that is just not going to happen in Latin America.
Stronger governance structures, the mechanism of a presentation, works
in Latin America much more than in sub-Saharan Africa.

Second, Latin America has strong trade unions and strong mass-
based political parties, which also put pressure on who can come to
invest, what kinds of resources can come into a country, and this ties
directly with the issue of resource nationalism, which, as you know,
has been the backbone of nationalist politics in Latin America since
the 1930s.
It's not that Latin American countries are wary or suspicious
only about North America or Europe. In general, the idea of resource
nationalism and that raw materials are first and foremost part of the
nation and should be either part of a state monopoly or, you know,
maybe you can end up engaging in partnerships, but nonetheless
partnerships that are meticulously monitored, I think that is, by and
large, politics as usual in Latin America.

I doubt that there's going to be any change in that, and that
kind of jealousy that Latin American governments have showed in terms
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of the management of their resources will apply no matter who it is
that comes knocking on the door -- China, the U.S., Spain.

And just very quickly two comments on Representative Burton's
speech. The idea of Venezuela -- again, let me just point out, at the
moment, Venezuela is exporting around 200,000 barrels of oil to the
Chinese, and the great pledge was that in five years' time, they might
be able to increase this to 2 million.

As my esteemed colleague Dr. Ellis said, Venezuela has real
terrible problems in terms of its infrastructure, its oil
infrastructure. The last six months, Venezuela has been having to buy
Russian crude to meet its own commitments.

The International Energy Agency says that you would require a
barrel of oil to be at $200 -- and today anything can happen, I'm sure
-- but in a sustained fashion, $200 in order that there remained a
minimum profit margin for the Venezuelans to make a buck out of
exporting oil to China.

Venezuela's business is exporting oil to the U.S., and that's
that. Venezuela is dependent on the U.S. much more than the U.S. is
on Venezuela. I think that will continue to be the case in the
future.

REP. BURTON: Thank you, Mr. Chairman.

You know, there was a movie called "Cabaret," gentlemen. There's
a movie called "Cabaret"; did you ever see that movie?

In the movie, the proprietor or the master of ceremonies sang
this song -- "Money makes the world go around, the world go around."
And I'm going to tell you, money does make the world go around,
unfortunately.

China has an awful lot of it, which is our money buying their
products which are produced by very cheap labor, and they use that
money to get the things they want in other parts of the world --
whether it's influence, commodities or whatever.

You talked about a number of commodities in Central America -- or
South America -- copper and oil as well. China in the last couple of
years -- I was just looking at these figures here -- their consumption
of oil products composed of gasoline, diesel and kerosene has risen
from 16.5 percent to 52.73 -- or by 16.5 percent to 52.73 million tons
in the first three months of the year, and crude oil rose by 8 percent
to 91.8 million tons -- tremendous growth.

They have a huge appetite for energy because they're expanding
their economy on the backs of the rest of the world by using their
labor, as my colleague down here probably has talked about before I
got here, and they use that labor to produce products that we're
buying in huge amounts. I think we're their biggest trading partner

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by far. We have a huge trade deficit with them. And they use that
money then to go into other parts of the world to extract commodities
and to extend their influence.

They continue to further their ties with Iran, the brutal
military rulers in Burma, the horrible government of Sudan, selling
them weapons, all because they want energy. And at the rate they're
expanding their economy, I believe that they're going to try to get
energy from any source they can, and Mr. Chavez down there, who is --
I was kind of interested in what you said about him having to import
oil from Russia -- that's because he's such a terrible leader.

He has the resources down there to make that country flourish.
Instead he's been exporting his money and his influence into Nicaragua
and to Bolivia and elsewhere so he can make those countries move to
the left, as well as his relationship with Raul Castro and Fidel
Castro in Cuba.

And so I'm still concerned about their influence. They have
expanded their influence in South America, they have expanded their
influence indirectly in Central America, and I think that there is a
concern there.

But, and let me just say this finally, you have to look at the
way the world is, not the way you want it. China is a superpower --
not a superpower in the same context as the United States, but they're
a growing power -- and because of their system and because they have
the ability to use the money they're getting from us and other
countries because of their cheap labor and production of products,
they have been able to expand their economy, in my view, on the backs
of the rest of the world, and we need to be concerned about that.

Now, the Central and South America are our front yard. And I'm
very concerned about the influence of Iran. I'm very concerned about
the influence of China and other what I would consider radical
countries around the world. And I'd like to see us -- and I wish our
State Department was here today -- I'd like to see our State
Department pay more attention to Central and South America and the
influence that's being exerted by other countries down there so that
we don't have to look back 10 or 15 years from now and say what
happened?

We already are too dependent on foreign energy, and we have the
resources here and we're not doing anything about it. And that's
going to become a more difficult situation in the years to come if we
don't do something pretty quickly about Central and South America and
our own resources.

Thank you, Mr. Chairman.
REP. ENGEL: Thank you.

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If anyone would like to, you know, do a quick answer to Mr.
Burton or a comment, we've just been notified that there are a series
of votes, so I'm going to try to wrap this up in the next 15 minutes.

I'm going to call on Mr. Smith, but if you would like to --
anyone would like to comment -- Mr. Erikson.

MR. ERIKSON: Sure. Just quickly on this point about China and
Venezuela, I think it's clear that Venezuela and Mr. Chavez is a major
variable in U.S.-Latin American relations and a major one in terms of
China's economic outreach in the region; there's no doubt.
When you look at who China's largest trading partners are in
Latin America, though, Venezuela doesn't make the top five, in fact.
You have Brazil, Chile, Mexico, and others that are bigger. Trade
with Venezuela is around the same -- around $6 billion, which is about
the same that China has with Panama and with Peru.

And so the question is, given the fact that Venezuela is such a
major energy exporter and China needs so much energy, why are the
should be much, much larger. And I think that what some of my fellow
panelists have alluded to, that you still have a lot of costs that are
associated with trying to sell a heavy Venezuelan crude to China, both
in terms of transportation and its refining, although China and
Venezuela are announcing a new refinery in China to process Venezuela
crude, so they may be addressing that.

Then there's the political dimension. The Chinese know that the
United States is paying very, very careful attention to what's
happening in Venezuela, and China values its relationship with the
U.S. more than it values its relationship with Venezuela. And so I
think there's been a certain level of caution there. I think last
year, Chinese-Venezuelan trade grew about 30 percent. That's a nice
growth figure, but it's less than what the growth was with China's
trade in other Latin American countries.

But the question is, when you look at the current trends and you
have these oil prices that are going sky-high and may remain there for
some period of time, clearly a relationship between China and
Venezuela that is deepening, even if it's not deepening at the pace
that Mr. Chavez would like it to, I think this is something that it
does require, you know, some very specific attention over the long
term.

I don't think myself or other members of the panel would say
don't worry about it. We're saying let's not panic prematurely
either.

REP. ENGEL: Dr. Gonzalez, you had your hand up, so if you want
to perhaps in a minute --

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MR. GONZALEZ: Thank you, yes.

My main point to Mr. Burton is that a high-growing Latin America
is in the interests of the U.S., and before this current commodity
boom, which has largely been driven by the economies of Asia, first
and foremost China but also India, Latin America was -- had a pretty
mediocre record in terms of growth. The '80s and '90s were not a good
period.

This is what fueled all this disaffection, which has brought
forward, you know, the winning of victorious populist politicians in
Latin America. My sense is that a Latin America which is growing
faster in a sustained way, actually, what you end up doing is at least
partly taking away the banner of those who are crying, you know,
radical redistribution here and now. And if the U.S. or Europe are
not at the moment consuming enormous amounts of commodities as China
and India are, and Latin America can sell those to them, then that's
good for social cohesion, that's good for the future of Latin America.

I don't want to sound, you know, overtly optimistic -- for
example, I share Dr. Ellis's concern in terms of organized crime. I
think that one of the key challenges of China's presence in Latin
America, particularly Mexico and Central America, is human
trafficking. That is something that I would really look into more
seriously than the current economic engagement of China in the region.
REP. ENGEL: Thank you.

Mr. Smith.

REP. SMITH: Four brief questions, and maybe you want to get back
on the record with some answers, because we'll run out of time.

But you mentioned human trafficking, and that's an issue I've
worked on for more than a dozen years. And we know that China has a
female dearth directly attributable to their one-child-per-couple
policy. They're missing as many as 100 million girls because they've
been forcibly aborted as part of the one-child-per-couple policy.

You might want to comment on the concerns that bride -- or
brokers, traffickers will increasingly focus on Latin women to bring
them to China. We're already seeing it in Vietnam, we're seeing it in
a number of other countries, and the problem only gets worse. Forty
million men will not be able to find wives by 2020, according to
Chinese demographers, because they've been aborted. So there's this
lack of women -- they're gone, they're missing -- and now they'll be
looking elsewhere to find those women.

Secondly, on the Human Rights Council, eight members of the Latin
countries make up membership of the Human Rights Council. Do you have
concerns about, as we've seen in the past, the buying of influence by
the Chinese government through foreign aid and trade deals so that
China goes unscathed and there's no scrutiny brought to bear on their
deplorable human rights record on a myriad of fronts?
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Thirdly, the issue of cyberterrorism -- and we know that Carlos
Gutierrez in December, on a trade mission, had his PC and other
electronic -- I think his BlackBerry as well -- compromised. We know
that the Chinese use the cyber -- and there's a front-page National
Journal article about the China cyber invasion -- grave concerns all
of us have about their control, their dominance of the Internet and
its misuse to not only incarcerate people in China but to wreak havoc
elsewhere.

In 2006 and 2007, my subcommittee, Human Rights Subcommittee, was
hit, we believe -- and it's not absolute; we can't prove it beyond any
reasonable doubt -- but we believe it was hit by the Chinese. It was
an IP -- Chinese address, and what they went after seems to have been,
you know, the work we were doing on China's human rights.

I'm very concerned that all of Latin America, since commerce
increasingly is being done on the Internet, could be compromised
severely because they have honed that capability so well.

So I have another one, but I'm out of time, so if you could touch
on those.

REP. ENGEL: Why don't we start with Dr. Ellis?

MR. ELLIS: Thank you, Mr. Chairman.

Let me just respond specifically to cyberterrorism.
One of the interesting dynamics, although it's less recognized,
given the focus on Chinese commodity purchases, is that China
telecommunications firms, specifically Huawei, ZTE, but also to a
lesser extent Shanghai Bell, are making tremendous inroads in Latin
America, largely on cost, to the point where traditional suppliers
such as Telecom and Telefonica are actually getting concerned.

One of the things that we see, for example, in Brazil in December
of last year, there was an issue which 70 workers at one of those two
Chinese companies were actually detained by Brazilian authorities for
operating out of their parent facility without proper visa
authorization, which raises the issue of what are the larger
possibilities raised from a security perspective by this tremendous
growth of Chinese infrastructure, telecom infrastructure in the
region?

And indeed, when we look at Venezuela, we see that in this moment
when there is an interesting triple combination of essentially the
redoing of the Venezuelan telecom infrastructure by ZTE in combination
with supplying the new telecom satellite, which will be launched in, I
believe, August by the Chinese in combination with other issues. So I
believe that it certainly is an issue that is of concern and merits
monitoring.

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REP. ENGEL: Anyone else have -- I have another question, but
anyone want to comment on Mr. Smith -- Dr. Gonzalez.

MR. GONZALEZ: Thank you very much.

On Mr. Smith's points, I'm definitely very aware about the issue
of human trafficking, more in the direction from Asia to the Western
Hemisphere than in the other direction.
From Asia to the Western Hemisphere, Mexican officials have at
least monitored the possibility -- have caught several Chinese
operators already in partnerships with Guatemalan and Mexican gangs,
and what they basically engage in is the trafficking of economic
laborers trying to bring people to the U.S.

Second, a very worrisome issue is child abductions for the
adoption market. In this both Mexicans, Central Americans and Chinese
gang members have been caught abducting children. And third, of
course, and very sadly, is the whole issue of women being smuggled
through Central America and/or Mexico into the United States for
forced prostitution.

So hear hear on that one, Mr. Smith.

On the issue of the eight countries that have representation on
the Commission for Human Rights in the U.N., I wouldn't be surprised
at all if China was able to buy its influence. I follow the issue
closely, and judging by the voting record of that commission, I'm
saddened by it and I share your concern.

REP. ENGEL: Thank you.

I would like to ask a question about Taiwan. We've said that
there are a number of countries, particularly in Central America, who
have switched recognition from Taiwan to the PRC.

Can you just talk a little bit about -- I guess it'll have to be
quick -- how the decision to recognize PRC or China relates to issues
of trade investment and diplomacy in the region. And I've been very
supportive of the Taiwan-U.S. relationship, because I think it's an
important relationship and I think the United States has a special
obligation to the people of Taiwan.

We in the United States obviously don't have formal diplomatic
relations with Taiwan, but we do have lots of other relations with
them and agreements with them. Would you foresee that kind of
arrangement in some of the countries in Latin America who perhaps
don't have diplomatic relations with Taiwan but could have other types
of relations, maybe with some encouragement by the United States?

.ETX

HFAC-WESTERN-CHINA PAGE 34
06/11/2003
.STX

MR. ERIKSON: Thank you for the question.

It's a very important issue. As you mentioned in the beginning,
about 12 of the countries in the Western Hemisphere recognize Taiwan,
and there's only 23 worldwide that do so, so more than half of
Taiwan's allies are in fact in Latin America, principally Central
America and the Caribbean. And this issue is really an extremely
important and highly charged foreign policy decision for a group of
countries that are in general the poorest, the weakest set of
countries in the hemisphere.

If you look at the countries that currently recognize Taiwan,
they include Guatemala, Belize, El Salvador, Honduras, Nicaragua,
Panama, plus several Caribbean countries, including the Dominican
Republic and Haiti, as well as Paraguay.

I really see the trend, now that Costa Rica has switched over to
China, that probably within the next decade you're going to see a
string of countries defect from Taiwan and recognize China, and it's
important to note that every single major economy in the Western
Hemisphere has already done so, including, of course, the United
States.

The U.S. to date has preserved what I would describe as a
strategic ambiguity in terms of advising what precisely Central
America and Caribbean countries should do. On the one hand, the
formal position of the U.S. is that this is a decision for these
countries to make. The U.S. can't decide whether a country's going to
go with Taiwan or with China.

But at the same time, there are mixed signals that are sent out
from different branches of the U.S. government, and I think that many
times there are officials in Beijing, Taipei and the capitals of Latin
America wondering what precisely the U.S. position is.

It may make sense in the long term to encourage Taiwan's
investment and certainly knowledge-sharing in Latin America and the
Caribbean, but at the same time, obviously, China is far and away the
most recognized country in the world out of the two, and I think the
expectation will be that Taiwan will continue to see its numbers drop
over the coming years.

REP. ENGEL: Well, thank you.

I know that the others might want to comment, but I have to run
for a vote. Unless you want 30 seconds to say something, I'm going to
end the hearing.

Let me just say that I would hope that the United States would
encourage our friends in Latin America to have important relations
with Taiwan -- if not diplomatic, than economic and other relations as
well.

.ETX

HFAC-WESTERN-CHINA PAGE 35
06/11/2003
.STX

Dr. Gonzalez, Dr. Ellis, I guess we'll leave it at that, and I
want to thank the three of you for testifying. It was very
enlightening for me and I'm sure for my colleagues, and we will be
pursuing these matters in the future.

The hearing is now adjourned. (Sounds gavel.)

Londo Molari · 07-02-2008

Gotta love the irony. They spend the whole session talking about how transparency on China's part is important so that China's intentions are clear and so that there are no miscalculations or mistakes. And then they can't even say in words what America's policy is towards Taiwan!! Just read this:

Quote:

Mr. Shinn, are you a political appointee? I'm over here, sir.
MR. SHINN: Yes, sir.

REP. TAYLOR: I'm curious, what is the Bush administration's
interpretation of our commitments to the nation of Taiwan to defend it
against a cross-strait invasion, should there be one? Has that policy
ever been articulated by the Bush administration?

MR. SHINN: I believe it's been articulated on a couple of cases
by our secretary and most recently, I think, publicly by Deputy
Secretary of State Negroponte.

REP. TAYLOR: Okay. And what did he say?

MR. SHINN: Which is that we will fulfill our obligations to
Taiwan under the terms of the Taiwan Relations Act.

REP. TAYLOR: Okay, how about a clarification for the American
public? What is that obligation?

MR. SHINN: Our obligation, as I understand the Taiwan Relations
Act, sir, is to provide the Taiwanese with such weapons systems as may
be required to provide them with defensive capabilities in the face of
a threat from the mainland.

REP. TAYLOR: Is that a commitment of American troops, American
ships, American aircraft, or is that a commitment of equipment? And
this all -- really, I'm going into the what-if category. What if
April Glaspie had told Saddam Hussein, "The Bush administration will
defend the Kuwaitis"? So very clear reason for this question, so
let's be real precise in your answer, sir.
MR. SHINN: To be very precise and to be very clear, Congressman,
there has been no change on the part of this administration.

REP. TAYLOR: Okay, so for the, no, but for the benefit of the
American people then, what is this administration's interpretation of
a long-standing commitment or lack of commitment? What exactly does
it mean?

MR. SHINN: Our policy, to be very precise, sir, is based upon
the, as you know, the One-China policy, the Three Communiques with
China and the Taiwan Relations Act. And we continue with that policy,
sir.
REP. TAYLOR: No, for the sake of the American people, because
there's a lot of confusion out there, so why don't you articulate it
as you understand it?

MR. SHINN: The policy, as articulated by figures much more
senior in the chain of command than me, sir, including the Secretary
of State and the Secretary of Defense, has been that our policy
towards the defense of Taiwan has not changed; that we continue to
fulfill our obligations under the Taiwan Relations Act; that we oppose
efforts, by parties on either side, to change the status quo, as we
define it.

REP. TAYLOR: Is it a commitment of materiel? Is it a commitment
of American warships? Is it a commitment of American troops? What is
it, sir?

MR. SHINN: We have committed to, as obliged by the Taiwan
Relations Act, to provide the Taiwanese with such weapons systems as
may be required to oppose military coercion by the Chinese and by the
PLA.

REP. TAYLOR: So you're talking equipment, not people.

MR. SHINN: The Taiwan Relations Act is principally focused on
equipment. Yes, sir.

REP. TAYLOR: No, I thank you very much for that answer.

Thank you, Mr. Chairman.

.ETX

HASC-CHINA PAGE 24
06/25/2002
.STX

REP. SKELTON: Mr. Secretary, you made that perfectly unclear.
I'm trying to go back in history. And you're going to have to refresh
my recollection. Did we not, at one time, have our Seventh Fleet
stationed or at least partially stationed in the Taiwan Straits?

MR. SHINN: As the chairman knows, yes, sir, historically.

REP. SKELTON: When did that end?

MR. SHINN: I don't actually remember when it ended, sir.

REP. SKELTON: Can you ask somebody behind you when that ended?

(Cross talk.)

Anybody.

MR. SHINN: I think we're huddling, sir, to compensate for our
lack of historical memory.

REP. SKELTON: This is not medieval history. This is just
yesterday.

When did that end? When did the Seventh Fleet stop patrolling
the Taiwan Straits?

MR. SHINN: I think, Mr. Chairman, and I would be glad to come
back with a more --

REP. SKELTON: Let's get that before the hearing ends, please.
MR. SHINN: Yes, sir. I believe, Mr. Chairman, that when we --
this all happened around 1979, when we abrogated the treaty with
Taiwan and entered into these relations with the PRC, with reasonable
confidence, but --

REP. SKELTON: Well, let's get that for us.

Ahhh yes... thats REAL transparent. I'm sure that makes America's intentions very clear to China

Hippo - Crissy

RedMercury · 07-02-2008

Now now, while imagemacros are funny, this isn't that kind of forum

Londo Molari · 07-02-2008

my apologies, I'll take them down.

tphuang · 03-29-2009

more on this, this is DodD's briefing actually about the 2009 China military report

Quote:

SR. DEFENSE OFFICIAL: Thank you all for being here. I
appreciate the opportunity to brief you, this afternoon, on the 2009
edition of the Department of Defense's annual report Congress on

Military Power of the People's Republic of China.

This is an important document. And I encourage you all to read
it. It's available on Defense Link now. So it's something that you
can download and read, the entire report.

The completion, coordination and submission of this document

reflect not only the timeliness of the information it contains but
also the strong commitment, on the part of the leadership of the

department, to maintain a robust dialogue with our Congress on this
issue. They're the ones that ask for the report, which is of utmost
importance to our current and future national strategy.

.ETX

DEFENSE-CHINA PAGE 2
03/25/2003

.STX

China's rapid rise as a regional political and economic power --

(audio break) -- implications for the Asia Pacific region and the
world. U.S. policy seeks to establish a positive and cooperative
relationship, with China, one where we deepen and strengthen our
times, on a number of issues of common interest, while candidly
addressing differences where they persist.

Much of what we do, however, depends on the choices that China

makes about its future, both at home and abroad.

The United States welcomes the rise of a stable, peaceful and
prosperous China and encourages China -- participate responsibly in
world affairs by taking on a greater share of the burden for the

stability, resilience and growth of the international system.

We seek continued improvement in the overall U.S.-China
relationship, including the defense relationship. We welcome, for

example, China's hosting of the fourth annual U.S.-China Defense
Policy Coordination Talks in late February in Beijing. And we'll

continue to seize opportunities to build a more cooperative military
relationship with China for the present and for the long term.

However, much uncertainty surrounds China's future course, in
particular in the area that's expanding military power and how that
power might be used. At the Department of Defense, it's our job to
watch the growth of China's military power and maintain deterrence of
conflict. Those two jobs are complicated by the fact that while China

has embarked on a significant military modernization program, the
transparency and openness with which China's conducting this effort is

lacking.

The fiscal year 2000 National Defense Authorization Act mandated
that we publish both a classified and unclassified report annually on
China's military power. And this is the unclassified report,

obviously, is what we're going to be talking about this afternoon.

The report is a Department of Defense product transmitted to
Congress by the secretary of Defense. However, it's been coordinated

with other agencies of the U.S. government, including the National
Security Council and the State Department, the Department of Homeland

Security, Energy, Commerce, Treasury. And it's had extensive vetting
and coordination through the intelligence community. And as such,
although it is a Department of Defense document, it does reflect the

views held broadly across the U.S. government when it comes to China's
military power.
China's People's Liberation Army is pursuing a comprehensive
transformation from a mass army designed for protracted wars of

attrition on its territory to one that's capable of fighting and
winning short-duration, high-intensity conflicts along its periphery

against high-tech adversaries, an approach that China itself refers to
as fighting and winning local wars under conditions of

informalization.

.ETX

DEFENSE-CHINA PAGE 3

03/25/2003
.STX

The pace and scope of China's military transformation have
increased in recent years, fueled by acquisition of advanced foreign
weapons, continued high rates of investment in its domestic defense

and science and technology industries, and far-reaching organizational
and doctrinal reforms of the armed forces.
Now, with that context, I'd like to briefly summarize some of the
specific developments that we see and report on in this year's

document. (Coughs.) Excuse me. China appears to be pursuing a set
of enduring strategic priorities which we identify in this report as,

first, perpetuating the role of the Chinese Communist Party,
continuing economic development, ensuring domestic stability,

protecting national sovereignty and territorial integrity and
obtaining great-power status.

Economic development affects all of these priorities and is a key
driver in China's overall grand strategy. This explains China's focus

on securing access to foreign resources and markets. China's
comprehensive military modernization is supported by continued

increases in government funding. China's announced 2008 defense
budget was approximately $60 billion U.S., which was about a 17.6

percent -- almost 18 percent increase from the previous year.

However, estimating China's actual defense spending is difficult,

due to a lack of accounting transparency and China's still-incomplete
transition from a command economy. Moreover, China's public defense
budget does not include large categories of expenditure.

DOD estimates that China's total defense expenditures for 2000

(sic) could be somewhere between $105 and 150 billion U.S.

Q What year was that you said?

SR. DEFENSE OFFICIAL: Pardon me -- 2008.

Q Okay.

SR. DEFENSE OFFICIAL: And we include charts in the report that

show a comparison both of China's publicly announced defense budget --
our low estimate and our high estimate -- and we also show a

comparison between China's -- the different estimates for China's
defense expenditure and how it compares to other regional powers in

terms of the comparison between China and others.

China's defense industry is also modernizing, with support from

increased government investment, foreign technology acquisition and
integration with the civilian economy.
China's domestic defense industry base is improving. Overall
trends to date favor the space and missile industry, but China still

relies on Russia for advanced engines, propulsion and advanced
electronics.
As China's military modernization progresses, it's adopting

certain skills and capabilities consistent with the characteristics of
modern militaries, while at the same time it's seeking ways to exploit

perceived limitations and vulnerabilities of those militaries through
asymmetric means. And we also spend a good deal of time in the report
talking about asymmetric warfare and China's approach to that.

The PLA's modernization vis-a-vis Taiwan has continued over the
past year, including its build-up of short-range missiles opposite the
island. In the near term, China's armed forces are rapidly developing
coercive capabilities for the purposes of deterring Taiwan's pursuit

of de jure independence. These same capabilities could, in the
future, be used to pressure Taiwan toward a settlement of the cross-

strait dispute on PRC terms while simultaneously attempting to deter,
delay or deny possible U.S. support for the island in case of

conflict.

This modernization and the threat to Taiwan continues despite the

reduction in cross-strait tensions over the last year, since Taiwan
elected a new president.

The PLA is also developing longer-range capabilities that have

implications beyond Taiwan. Some of these capabilities have allowed
it to contribute cooperatively to the international community's

responsibilities in areas such as peacekeeping, humanitarian
assistance and disaster relief and counterpiracy. And we have a
special topic at the end of the report this year that goes into some

detail about China's roles and activities in that area.

However, some of these capabilities, as well as other, more
disruptive ones, could allow China to project power to ensure access
to resources or to enforce claims to disputed territories. In this

regard, we see a continued emphasis on building capacity for sea- and
land-based anti-access and aerial denial operations. And as an

example, in the maritime domain, China's maritime anti-access and
aerial denial capabilities increasingly appear geared toward

coordinated operations to interdict at long ranges aircraft carriers
or expeditionary strike groups out into the Western Pacific.

China's military is also enhancing its strategic capabilities in
the nuclear, space and cyberspace domains. And in this context it's

.ETX

DEFENSE-CHINA PAGE 6
03/25/2003

.STX

developing new generations of land- and sea-based nuclear missiles

capable of targeting the United States as well as other regional
powers. And this includes the mobile solid-fueled intercontinental-
range ballistic missiles like the DF-31 and the DF-31A, as well as the
JL-2 submarine-launched ballistic missile for deployment aboard the
new Jin-class ballistic missile submarine -- the Chinese call it the

Type 094 -- which we expect to IOC this year or perhaps next year.

This is one of the primary reasons why we've prioritized the
dialogue on nuclear policy and doctrine with the Chinese PLA, to gain

a better understanding of these developments and to reduce the risk of
miscalculation.

Despite the welcome improvement in China's routine publication of
defense white papers -- the most recent one being the 2008, or China's

National Defense in 2008, which was published in January 2009 -- much
more could be said by China about its military buildup. We're working

to improve communication with the PLA -- and there are some promising
developments in this regard.

China has resumed reporting its defense expenditure to the United
Nations. However, its decision to employ the simplified reporting

form suggests that China's leaders have not yet committed fully to the
idea of military transparency as a confidence-building measure. And
I'd point to page 33 of the report, where we provide an example -- or
actually, the report that China submitted to the U.N. -- to show that
it's still fairly highly-aggregated data about its defense spending.

The PRC last year also agreed to establish a defense telephone

link between the Department of Defense and their ministry of defense.
That installation was completed in March, and Secretary Gates used it

to talk to his counterpart for the first time in April of last year.

China also decided to deploy naval vessels to the Gulf of Aden,

to conduct counter-piracy operations. These are welcome developments
and an example of the kinds of areas where we can cooperate.

Beijing publicly asserts that China's military modernization is

purely defensive in nature and aimed solely at protecting China's
security and interests. But over the past several years, China has

begun a new phase in military development and is beginning to
articulate roles and missions for the PLA that go beyond China's
immediate territorial interests, but China has left unclear to the

international community the purposes and objectives of China's
evolving doctrine and capabilities.
Moreover, China continues to promulgate incomplete defense
expenditure figures and engage in actions that appear inconsistent

with its declaratory policies. The limited transparency in China's
military and security affairs poses risks to stability by creating

uncertainty and increasing the potential for misunderstanding and
miscalculation. The United States continues to work with our allies

and friends in the region to monitor these developments and adjust our
policies accordingly.
.ETX

DEFENSE-CHINA PAGE 7

03/25/2003
.STX

The report makes clear that China's military power is not just a
U.S.-China issue, but it's an issue of interest to the entire region,
and perhaps even an issue of global concern. And again, I would

direct your attention to the special topic at the end of the report,
which speaks directly to that issue on China's global engagement.
In this chapter we talk about PLA participation in traditional
military diplomacy, joint exercises, arms sales and security

assistance activities, peace support operations and humanitarian
disaster relief operations.

And just a couple of data points that are of note:

Between 2002 and 2007 the PLA participated in at least 14
maritime search and rescue exercises with foreign militaries, and

since 2003 China has invited foreign observers to at least five of
their own exercises.

From 2003 to 2007 China sold nearly $7 billion worth of

conventional weapons systems worldwide, and China's primary customer
in this regard has been Pakistan.

Since 2002 China has deployed over 10,000 personnel to 18 U.N.
peace operations, with 1,800 PRC personnel serving in the U.N.

missions in 2008. And since 2002 the PLA has been involved in 10
emergency relief operations in 14 countries in China's immediate
region. So that again just underscores that China's becoming more
active and becoming more engaged in the world.

In conclusion, we think the report has a lot of interesting
information in it, and we hope it'll contribute in a responsible

fashion to the many debates that are ongoing with respect to the
military dimensions of China's military modernization.

And so with that I'd like to end the prepared part and answer any
questions you might have. And how do you want to do this?

MODERATOR: You can call on them.

SR. DEFENSE OFFICIAL: Okay.

Demetri?

Q Do you think the incident -- I know the Impeccable is not
in your report, but do you think the incident with the Impeccable is

part of an anti-access strategy, or do you see it more as a tactical
thing that happened at the practical level and wasn't signed off by
Beijing?

SR. DEFENSE OFFICIAL: I think there's a lot that we still don't

know yet about, you know, the motivations of that incident.

.ETX

DEFENSE-CHINA PAGE 8
03/25/2003

.STX

I think one thing -- you know, China's very sensitive about what
it perceives to be as its territorial claims. And so I think a lot of

that is consistent with the PLA's overall mission that it's been given
to protect and defend its sovereignty and territorial integrity.

You know, with respect to the specific activities, I mean, I
think that's been talked about previously.

Obviously it's dangerous, and these are things that we've got

mechanisms with the PLA that we want to be able to work with, as well
as our diplomatic engagements, to try to, you know, hope that we won't

see that type of incident repeat itself.

Please.

Q Couldn't -- the report talks about how China is modernizing

at a rate that it is shifting the military balance in the region. Can
you talk a little bit more about that, what exactly that means, what
countries are affected?

SR. DEFENSE OFFICIAL: Well, I think, you know, there's a number

of countries that can be affected. Certainly if you start looking at,
you know, just the aggregated defense expenditures and the

comparisons, with the other countries in the region, you know, it
shows that, you know, China is now spending a lot more for its

military than just about everybody else in the region. I think it is
everybody else in the region.

Some of the capabilities that China is developing, whether it's
on the conventional, you know, precision-strike ballistic missiles,

cruise missiles, these types of things, these are capabilities that
most of the other countries, all of the other countries, don't really

have. And so when you look at it in that context, these are
capabilities that affect the overall balances.

When we start -- you know, when we start looking at projecting
that type of military capability out, whether it's in an anti-access,

area-of-denial context or just a more traditional power-projection
capability, it does affect how the military balance plays out and then
affects how other countries think, about their own security interests.

Q (Off mike) -- go look at, for example, how many years or

decades China may be out from being able to challenge the U.S.
militarily?

SR. DEFENSE OFFICIAL: We didn't actually conduct that assessment

in this report. So we don't make that judgment.

Q Standing back from China's missile development, is there

anything that happened, in 2008, that gives you a greater sense of

.ETX

DEFENSE-CHINA PAGE 10
03/25/2003

.STX

urgency, to build an anti-Chinese missile defense? Or do we have

plenty of time, and things are pretty much where you left last -- the
year before?
SR. DEFENSE OFFICIAL: I don't think there's anything that
happened, within China, you know, last year that would have us change

our policy, you know, with respect to missile defense. But we don't
use this report to talk about our missile defense policy.

Q But there's no sense of urgency because of Chinese missile

developments.

SR. DEFENSE OFFICIAL: I can't speak to our missile defense

policy on that.

Q The report seems to confirm that the Chinese have
established a navy base on Hainan Island. Is that correct?

SR. DEFENSE OFFICIAL: The Chinese operate off of Hainan Island.

Q It looks like there's a new base there. This base appears
very much a part of the mix. So you're confirming what -- I think

think tanks have talked about it. But this is the first I've heard
DOD confirm it.
SR. DEFENSE OFFICIAL: Yes, I mean, it's -- I mean, they've got a
naval base there. But I mean, I can't speak to whether it's ever been

mentioned in any other type of DOD product. But I know that this is
the first time that we talked about that, that base, in this report.

Q And what does it mean for the U.S. posture in the Pacific?

SR. DEFENSE OFFICIAL: I think I'd have to refer you to USPACOM
on that. I don't know if it necessarily affects our posture. I mean,

the way that we conduct our posture in the Pacific is, it's not
targeted at any one particular country.

I mean, we've got capabilities and force allocation based on, you

know, not only our own operations but our cooperation with friends and
allies. And you know, the way our posture works is, it allows us the

type of flexibility to respond to a variety of different contingencies
in the region.

Q You have a great line in the report. It goes something
like, China is negotiating transparency rather than accepting
transparency as a responsibility of a world power. What would you
like to see China do in the next year to be more transparent?

SR. DEFENSE OFFICIAL: Well, I think the actual line in this is
--

Q I was paraphrasing.

.ETX

DEFENSE-CHINA PAGE 11

03/25/2003
.STX

SR. DEFENSE OFFICIAL: -- you know, until China stops viewing

transparency as a transaction to be negotiated and more as a -- as a
responsibility that accompanies accumulation of influence, then the
findings in this report will be limited.

In terms of what we're actually -- I couldn't provide a catalogue
of things -- you know, this is what, you know, China needs to do. I
mean, transparency is in part -- you know, it's an openness and a
willingness to be able to talk about things and recognize that, you

know, your military behavior and activities has consequences for the
region and to be able to provide the type of assurance through -- that

only comes through transparency so that people understand what your
intentions are and what your capabilities are.

And that could be manifest in discussions that we can have at a
military-to-military level, but it also can be manifest in, you know,

improvements to the publication of defense white paper, that it could
provide more information in more detail on that. Unfortunately, I

don't think that's going to happen this year, because they're on a(n)
every-other-year publication cycle, but it's something that we'll

continue working with them on.

Q Do you feel, though, there's progress in transparency
overall last year?

SR. DEFENSE OFFICIAL: I think -- yeah, there's been a -- there's
been an overall trend of incremental and modest improvements in
transparency. And that's something that we welcome and we want to --
we want to encourage -- we want to encourage them to continue.

Q Does China have the ability to deter, delay or deny any
U.S. military action in defense of Taiwan?

SR. DEFENSE OFFICIAL: We don't actually do that kind of

assessment in this report, and I'm probably not the best person to
talk about that. That's -- that gets into an operational question. I
mean, that's something that the U.S. PACOM would probably be better

suited to answer.

Q But it's just a quote, and it says that's what they're
attempting to do.

SR. DEFENSE OFFICIAL: Right.

Q But you don't go into whether they can do it now.

SR. DEFENSE OFFICIAL: No, we don't. I mean, they're attempting
to do it.
Q And have they done anything in the past year that would be
in this report that would enhance your concerns or cause PACOM to

reconsider some of its operations or change any of its operations?

.ETX

DEFENSE-CHINA PAGE 12
03/25/2003

.STX

SR. DEFENSE OFFICIAL: No.

Q So no major change.

SR. DEFENSE OFFICIAL: On the --

Q They didn't cross any major threshold.

SR. DEFENSE OFFICIAL: No. No. I mean -- I mean, we continue to
watch China's military developments and we -- you know, we adjust
accordingly.

Last year -- I don't think there was any -- too many significant

developments in terms of new capabilities being revealed -- you know,
significant new capabilities being revealed. So the answer to your

question, no.

Q Can you maybe explain in layman's terms what some of these

longer-range capabilities and more disruptive capabilities are that
you mention in the report?
SR. DEFENSE OFFICIAL: Longer-range capabilities could include
conventional ballistic missiles, both the short-range ballistic

missiles like the ones that are deployed opposite Taiwan, but also
longer-range, like conventional medium-range ballistic missiles, which

is something that they're working on, as well as the DF-21D, which is
an anti-ship ballistic missile that they're working on. That's based

on a CSS-5 medium-range ballistic missile air frame. Those are the
types of things that we would consider, you know, disruptive in terms
of longer-range capabilities.

But you also have disruptive capabilities more on the

nontraditional side, where, you know, it's the counter-space systems,
not only the anti-satellite weapon that they tested in 2007, but also

other types of counter-space or space control systems, like satellite
communication jammers, directed energy weapons, these types of things.

And when we talk about what a disruptive capability is, I mean, a
lot of those things kind of fall into the category that would be anti-

access and area denial, or things that would significantly alter the
extant military balance. You know, you could look at, you know, some
of their advanced air-defense systems. Those are capabilities that
allow them to project a(n) air defense envelope farther and farther
from China and into the Western Pacific. So your capabilities

certainly affect the security assessments of other countries.

Q Chinese military buildup has been going on for some time.
And don't you think U.S. should be concerned, because Chinese are

helping many other countries as far as in this (neighborhood even ?).
And as far as this report is concerned, sir, what kind of message are
you sending to India, how much India should be concerned?

.ETX

DEFENSE-CHINA PAGE 14
03/25/2003

.STX

SR. DEFENSE OFFICIAL: Well, I think, you know, I mean, actually

if you look at the special topic of the report, it talks about some of
the security assistance and activities that China's doing with other
countries in the region. I think, you know, it's something that we
obviously continue monitoring, and there are some areas where this
type of security assistance can contribute -- can be disruptive or

destabilizing.

You know, so I would say that, yes, we are watching it and we pay
very careful attention to it.

With respect to India, I mean, the report speaks for itself.
And, you know, there's no particular message to India in this report,

but certainly I think that, you know, what the report identifies is
that China's pursuing a long-term comprehensive military

modernization. It's continuing to expand its operations both, you
know, within its immediate region but also potentially moving farther

and farther away. And that's something that has been a long-standing
trend and it's one that we're going to continue watching.

Q Any further U.S. and India military-to-military relations
because of this report?

SR. DEFENSE OFFICIAL: This report doesn't talk about U.S.-India
-- India relations. So, I mean, certainly we have -- we have a

bilateral defense relationship with India and we talk about a whole
range of -- a whole range of issues.

Q The report talks a lot about cyberwarfare. I'm wondering

if you can characterize for us the organization of Chinese cyber-
resources, and also if you can sort of tell us what your assessment is

of the frequency and level and seriousness of attacks emanating from
China.

SR. DEFENSE OFFICIAL: There's a lot of unknowns about
cyberwarfare. And a lot of that has to do with the specific, you

know, challenges associated with attribution. I mean, we do talk
about some instances where we've seen what appears to be intrusions

that originate from China, but, you know, the fidelity of that is
still, you know, very difficult to ascertain.

But this is -- this is an occurrence that continues. And we've
got a -- you know, we continue to watch this and monitor it and, you

know, do our own things domestically to help improve our defenses.

Q Can you characterize whether the threat is growing or
shrinking, or -- what trends have you seen in the past year regarding
threats that at least are appearing to come from inside China?

SR. DEFENSE OFFICIAL: It's of growing concern to us. I think

that's -- I can put it that way. How's that? Because we don't have
quantitative measures included in the report, so I can't point to it

and say that these numbers here show that it's increasing or
decreasing.
.ETX

DEFENSE-CHINA PAGE 15

03/25/2003
.STX

But, you know, given the behavior and given the activities, it's
something that we remain concerned about, particularly as it relates
to, you know, the ability to access sensitive information.

Q Could you also talk to -- on the MMCA after -- (off mike)
-- years, and (debate to choose anything ?)? And (do they want to ?)
touch on the rules of engagement? And also, on the nuclear talks and
-- well, you're having with the Chinese -- (off mike) -- suspend that

kind of talks? And do we try -- (off mike) -- mil-to-mil dialogue
like on -- (off mike) -- and things like that?

SR. DEFENSE OFFICIAL: We don't actually talk about those venues

for interaction with the PLA in this report. But the Military
Maritime Consultative Agreement, the MMCA, is an agreement that we
signed with the PLA in 1998, and that's a venue that we have used to

try to improve operational-level, you know, safety types of
discussions for, you know, when our militaries interact on the high

seas. And the -- and, you know, eventually we want to move it to the
air space above it.

And we look forward to using those types of venues to be able to

talk about issues like the -- like the recent incident with USNS
Impeccable, because this is -- this is an important part, one, of our
dialogue, but it's also an important part of encouraging China to

adopt -- to adopt the kinds of safe operating patterns and behaviors
and types of rules of the road.
You know, we're looking forward to, you know, scheduling the next
meeting. But I think right now the ball's in China's court on that

one.

With respect to the nuclear dialogue, this was an important --
this is an important event. We had our inaugural session last April,

and this is something that Secretary Gates has talked about as being a
very important part of our military dialogue with China. It's one of
these areas where we can, you know, reduce the risk of miscalculation

and misunderstanding. And we look to continue that dialogue as well.

And with respect to military-to-military engagements and
interactions, you know, when Chinese Foreign Minister Yang Jiechi was

here a week and a half ago, he had meetings both at the State
Department and the White House. And President Obama said we need to

increase the level and frequency of the dialogue, and so we look
forward to doing that.

Q Do you know if any military-to-military contacts might have
been postponed or delayed because of the Impeccable incident? Did
that play into it?
SR. DEFENSE OFFICIAL: None that I'm aware of. In fact, I mean,

we've had and we continue to have interactions with the PLA both here
in Washington and in Beijing. It's -- I mean, not that I'm aware of.

.ETX

DEFENSE-CHINA PAGE 16
03/25/2003

.STX

Yes?

Q Can you speak a little bit to China's ambitions for a blue

water navy, and in particular for power production? And do they have
intentions to basically build a navy that is reflective of the U.S.'s
composition of their navy?

SR. DEFENSE OFFICIAL: Well, that's a good question.

I think right now within China -- and we talk about this a little

bit in the chapter on military strategy and doctrine -- I think there
are some debates within China, within its security establishment and

its military-academic establishment and the PLA navy, over what type
of future naval force it wants to build.

You know, we talk a little bit about these new historic missions
that President Hu Jintao gave to the PLA I think back in 2004. The

defense white paper talks about this as well. You know, I think that
we're starting to see some thinking emerging from the PLA navy that
they might want to adopt a slightly different approach to its naval
strategy, maybe one more of a maritime strategic concept. And they
might be looking around at different types of platforms and

capabilities that they'd want to have that would allow them to operate
for longer durations at farther distance from China's shores. And

things like nuclear attack submarines, for example, would give them
the ability to operate farther away from China.

But one of the things I think would be the real -- one of the
signals of that would be if China goes forward with an aircraft

carrier program. And we provide a little bit more evidence in this
year's report, just based on things that came out last year, that

China appears intent on doing that. And once they've develop that
type of platform, that would give them the ability to project power

and operate farther and farther away from China.

So they're looking at it, and we're watching that carefully, but
I think there are still some issues that they want to resolve within
China on how they want to do that.

Yes?
Q I have a very simple question. It's about the report
itself. As you mentioned, you know, China's military -- (inaudible).

In my understanding, you cannot get the upper region of them, the --
(inaudible) -- of forces. So how can we trust this report? I mean,

how could you get the results for the paper? I mean, how could you --
(inaudible) -- this report?

SR. DEFENSE OFFICIAL: We rely on lots of inputs and information.
We work very closely with other parts of the Department of Defense and

our intelligence community. And so -- I mean, the report is what it
is, and it reflects the information, as best as we know it.

.ETX

DEFENSE-CHINA PAGE 18
03/25/2003

.STX

Yeah, in the back, please.

Q (Inaudible) -- follow up on -- (inaudible) -- including
Korea. While the U.S. has reduced -- is starting to reduce its --
(inaudible) -- class program, and a couple others, how do you plan to

make the -- (inaudible)? What are your thoughts on the possibility of
Asian allies threatening U.S. -- (inaudible) -- power?

SR. DEFENSE OFFICIAL: I think, you know -- I mean, our alliances

and our partnerships in the region are a critical component of our
overall strategy. Secretary Clinton recently visited China -- not
China -- well, China and Japan, and then Korea -- I mean, she talked

the role of Japan and Korean and our alliances with those two
countries as really being cornerstones of our overall strategy in the

region. And you know, those relationships then form a part of our
overall ability to maintain the type of deterrence of conflict and to

help maintain peace and stability. So I think a key part of our
overall strategy is to continue working with our allies and partners

to be able to maintain the type of, you know, regional security
environment that has persisted for a long time in Asia. And I don't
anticipate that that's going to change.

Q One more? Are you worried as far as Chinese and Pakistani
military too? Its relationship with China is starting to -- if the
U.S. troops are there or NATO troops in Afghanistan, any kind of worry
for the U.S.?

SR. DEFENSE OFFICIAL: We do note, in this report -- you know, we

provide some information about China's long-standing defense and
security cooperation with Pakistan. I think Pakistan's been the

largest recipient of Chinese arms. And so that's something that we --
that's something that we continue to -- that's something that we
continue to watch. And we'll continue to keep an eye on that.

Q As you know, the Chinese every year will come out the

following day and criticize this report. Was there any discussion
within the administration of toning down the report under the -- under

President Obama, or have you maintained, do you think, the same tone?

SR. DEFENSE OFFICIAL: There's been no discussion within the --
no, I mean, absolutely not. You know, the report is intended to be,
you know, factual, descriptive and analytical. So I think that's --

no.

Q What's your take on why the Chinese are continuing to
increase the number of short-range ballistic missiles aimed across the
Taiwan Strait every year by a hundred or so, as you say in this

report? How does that reconcile with the recent, you know, thaw in
cross-strait relations?

SR. DEFENSE OFFICIAL: You know, that's actually a question I'd

like to hear the answer from the Chinese on, I mean, honestly.

.ETX

DEFENSE-CHINA PAGE 19

03/25/2003
.STX

Q How do the Chinese navy view the U.S. sending a nuclear-
powered carrier to Japan? Do they view that as an oppressive move?

SR. DEFENSE OFFICIAL: I don't know. I haven't -- I haven't seen
anything or heard if they -- if they -- if they respond to that or how
they respond to that. Sorry.

Q One last thing on CSS -- the long-range missiles. Do you

think they're embarked on a mutual deterrence strategy? Is that why
they're developing long-range ballistic missiles?

SR. DEFENSE OFFICIAL: Now, in terms of their strategic nuclear

forces, I think -- you know, some of the terms of art that have been
passed around is China is seeking to have, you know, sufficiency and
effectiveness. I mean, they want to make sure that they can -- they

can maintain a secure second strike option. And so, you know, moving
from their historical liquid fuel to solid-based systems, which were

their primary deterrent, to more mobile, solid-propellant systems,
those are more survivable. And so what that does is that gives them a

little bit more confidence and assurance that they would have an
effective -- an effective deterrent.

Sufficiency is another question, how many -- how many do they
need to have. And that's part of the reason why, you know, we'd like

to get a better sense from them, which is why we want to have this
dialogue. We started the dialogue last year, but we want to continue
the dialogue on nuclear policy and strategy, so we can have a better
understanding of the -- of the intentions and motivations behind their
nuclear forces modernization. They continue to say that their no-

first-use policy is in effect and will remain in effect. And you
know, we take China at its word on that point. But you know, we have

questions, because these capabilities give them options, new options.
So we want to have a better understanding from them.

Q Do they have intercontinental missiles that could hit the
United States at this moment?

SR. DEFENSE OFFICIAL: Yes, they do.

Q So that could be a mutual deterrence eventually.

SR. DEFENSE OFFICIAL: They have the capability. And you know,

again, you know, that's part of the intention is to have a deterrent.
And so some of their systems have the ability to target the United
States.

Q Do you have some goals you'd like to reach, for military-
to-military exchange, relations with China this year, something
concrete rather than mid-level exchange?

SR. DEFENSE OFFICIAL: Well, the mid-level exchanges are actually
important. I mean, those are -- it's an important set of exchanges

.ETX

DEFENSE-CHINA PAGE 20
03/25/2003

.STX

that we initiated, a couple years ago. It gives us and the Chinese
PLA an opportunity to get a better understanding of our institutions.

It's, you know, building, you know, mutual institutional
understanding.

So that's a key aspect, because if you have mid-grade and junior
officers, as they progress, they take those experiences and, you know,

in some cases take them on to higher level positions. So I mean,
those -- that is a concrete event. And that's something that we want
to see continue.
We also have, you know, high-level visits that we'd like to be

able to continue, exchanges between the senior leaders of our
department and our services. And you know, U.S. Pacific Command has,

you know, had, you know, senior-level visits with China in the past.
And these are the types of exchanges we want to see continue.

And we also have been looking at, you know, educational types of
exchanges, between our professional military education institutions
and military academies. These are concrete events. They're important
types of interactions that form a key part of our defense
relationship.

Q What about more visible secretary-level or chairman of the

Joint Chiefs or more visible events, things that you would like to
achieve but may not be able to?

SR. DEFENSE OFFICIAL: Well, we've had some discussions. When
Deputy Assistant Secretary of Defense for East Asia David Sedney went

to China, for the defense policy coordination talks, we talked about
some high-level visits that we're proposing.

And we've also invited a number of high-level visitors to come to

the United States. And we're still working through that with the PLA
on identifying timing for that. And those are things that we look

forward to doing. But we still need to continue working with the PLA
to set those up.

Q (Off mike.)

SR. DEFENSE OFFICIAL: (Inaudible.) The Impeccable just
happened. (Laughs, laughter.)

Q You had those meetings, like, two days before the
Impeccable.

SR. DEFENSE OFFICIAL: Right.

Q But if you're closely communicating with them to try to
arrange visits, did the Impeccable incident have any impact on that?

.ETX

DEFENSE-CHINA PAGE 22
03/25/2003

.STX

SR. DEFENSE OFFICIAL: Not that I can tell. I mean, we actually,

I think -- we've got some high-level visits there that are lined up
pretty soon, and we (want to be able ?) to execute those.
Q When?

SR. DEFENSE OFFICIAL: April.

Q (Off mike.)

SR. DEFENSE OFFICIAL: Right. (Laughter.) I mean, you know, I'm
here to talk about the military power report. I'm not here to talk
about mil to mil, because, you know I don't have the data points right

now on all of the events that are scheduled and what we're looking to
do. I'm sorry. I mean, this is what the purpose of this briefing was

for.

Q Thank you.

SR. DEFENSE OFFICIAL: Yes?

Q Could you talk a little bit about the role of submarines in

the Chinese navy and how that progresses over a period of time?

SR. DEFENSE OFFICIAL: China's investing heavily in developing
undersea warfare capabilities. They've got a mixture of indigenous
submarines, both conventional powered and nuclear powered, as well as

the submarines that they've acquired from Russia. I think they have
about 12 Kilo-class submarine, and those are advanced diesel electric.

When you look at in the broad context of anti-access and area

denial, we're really talking about now a single weapon system or a
single capability, but a layered set of capabilities. And if you look
at it in that context, then and having a submarine -- a submarine

force would give you certain capabilities not only for anti-surface
warfare but eventually, you know, anti-submarine warfare. It's an

area where I think China feels like it's developing in its capability
and, we expect, to continue to provide these types of investments. I

mean, they're working on it and that's manifest in their growing
submarine force.

Q In terms of transparency, has there been less transparency
-- (off mike) -- on that particular subject?

SR. DEFENSE OFFICIAL: We've seen modest improvements in
transparency, but as far as I know, the Chinese haven't provided a
detailed description of their undersea warfare capabilities in their
defense white paper.

Q And on the naval base, is -- the new naval base. Is that

-- how does that figure in that -- (off mike)?

.ETX

DEFENSE-CHINA PAGE 23

03/25/2003
.STX

SR. DEFENSE OFFICIAL: I think, as we talk about in the report,

it would appear to be set up they can actually base submarines from
there and they'd be able to operate from the base at Hainan.

Q Are the Jin-class submarines -- are any of those actually
operational?
SR. DEFENSE OFFICIAL: I don't think so, because I think for it
to be considered operational it'd have to be mated with its primary

purpose, which is the SLBM, and that's not operational yet. So
combined, you know, it's not an operational weapons system until it

can perform its mission.

Q (But how many ?) do they have out at sea at the moment,
even if the missiles aren't on board?

SR. DEFENSE OFFICIAL: I don't know how many they have out at sea
at the moment. I don't know.

Q Are you getting any new letters of intent from Taiwan or

pricing and availability requests from Taiwan for new arms purchases
that are in response to some of the modernization trends you laid out

in this report?

SR. DEFENSE OFFICIAL: Well, we considered our discussions with

Taiwan on defense and security interactions -- you know, our long-
standing policy is that we don't talk about a specific weapons system
or a specific arms sale. We just don't do it until we -- until we

make the decision and we notify Congress.

Q Quick follow-up. Last October there was the notification
of $6.4 billion. Those are held and approved by Congress now and are

in the works in various stages.

SR. DEFENSE OFFICIAL: The ones that we notified the Congress --
have been approved.

Q (Off mike) -- by the U.S. to Taiwanese, that Taiwan will
not be -- that U.S. would come to help Taiwan if Taiwan would --

invasion was prepared of Taiwan.

SR. DEFENSE OFFICIAL: Well, under our Taiwan Relations Act, the
United States will provide defense articles and services in sufficient

quantity to Taiwan to enable it to maintain a sufficient self-defense
capability. And that is something that we are obligated to -- that's
a critical part of our policy, and that policy remains in effect.

At the same time, the Taiwan Relations Act also says that we'll
maintain the capacity to resist any forms of coercion or aggression to

change the status of Taiwan. And that's also our policy, and that
remains in effect.

Q It's not a NATO-type agreement.

.ETX

DEFENSE-CHINA PAGE 24
03/25/2003

.STX

SR. DEFENSE OFFICIAL: (No ?).

Q It's not a -- it's -- or it's a Japan-American agreement --

it's not that kind of agreement.

SR. DEFENSE OFFICIAL: No.

Q (Off mike) -- that strong.
SR. DEFENSE OFFICIAL: Well, I mean, when we had to change --
when we changed diplomatic recognition, we had to terminate the mutual
defense treaty that we had with Taiwan.

So we do not have a defense treaty with Taiwan. But what we do have

is the Taiwan Relations Act, and we have a robust set of defense and
security assistance exchanges with Taiwan that's consistent with our

unofficial relationship.

Q Hi. I want to try one more on cyber warfare.

I'm looking at page 52. You write, "Developing capabilities for

cyber warfare is consistent with authoritative PLA military writings
on the subject." So I'm wondering if you can just talk about that
piece. What -- you know, what -- the writing -- what you can see
coming out of the PRC government, what does it tell you? What's your
analysis of what that says about how the Chinese government is

organizing its cyber defense and attack resources?

SR. DEFENSE OFFICIAL: We see China continuing to focus on
computer network operations, both computer network defense and

computer network attack. In some of the doctrinal, you know, military
writings and stuff that kind of talk about information warfare -- or
integrated network warfare I think is the term that they use -- talk

about the role of, you know -- they of course place a stress on
defending and hardening their own networks, but they also talk about

the role that computer network attacks can play as part of a
preliminary strike, any type of military conflict, because they see,

you know, computer networks as being an essential component of modern
warfare today, not only for, you know, command and control, but also

intelligence, surveillance and reconnaissance, you know, logistics,
all these types of things. And so they see -- they talk about
computer network attack as being -- as being an important part of, you

know, local -- (inaudible) -- conditions and informatization.

In terms of, you know, organization, it's still a little bit, you
know, nebulous, but as we've talked about in the past, we've seen some
cases where they have, you know, dedicated militia units that are --

that are organized to conduct computer network operations. And that's
a way where they can attract, you know, talent from the private

sector, people that are working in the software or information
technology community and when called upon put them into service in

support of the PLA. And I think we've talked in the past, we've seen
training and exercises where they've -- where they've exercised that
type of stuff, including computer network operations.

.ETX

DEFENSE-CHINA PAGE 26
03/25/2003

.STX

Q And what level does an attack become an act of war?

SR. DEFENSE OFFICIAL: I'm not an international lawyer. I can't
-- I can't -- I can't answer that.

Q But is it your analysis that the Chinese government is

doing computer network attack ongoing now?

SR. DEFENSE OFFICIAL: It's my analysis, as we talk in the
report, is we have a number of computer network intrusions that appear

to originate in China. And some of these intrusions for the
acquisition of data would involve the same types of skills,
applications and capabilities that would be consistent with a computer

network attack.

tphuang · 01-14-2010

oh this is going to be a long one, the recent congressional hearing with Admiral Willard

Quote:

+------------------------------------------------------------------------------+

HEARING OF THE HOUSE ARMED SERVICES COMMITTEE SUBJEC..,final
2010-01-13 23:27:26.422 GMT

HEARING OF THE HOUSE ARMED SERVICES COMMITTEE SUBJECT: CHINA: RECENT
SECURITY DEVELOPMENTS. CHAIRED BY: REPRESENTATIVE IKE SKELTON (D-MO)
WITNESSES: WALLACE GREGSON, ASSISTANT SECRETARY OF DEFENSE; ADMIRAL ROBERT
WILLARD, COMMANDER, U.S. PACIFIC COMMAND; DAVID SHEAR, DEPUTY ASSISTANT
SECRETARY OF STATE FOR EAST ASIAN AND PACIFIC AFFAIRS LOCATION: LOCATION:
HVC-210, WASHINGTON, D.C. TIME: 10:00 A.M. EST DATE: WEDNESDAY, JANUARY 11,
2010
--------
REP. SKELTON: (In progress) -- the first hearing before this
committee. We're certainly pleased that you could join us today and
testify on recent security developments involving the country of
China.

I also wish to welcome Admiral Willard's wife Donna, who is
seated behind the good admiral, and we welcome you. If the admiral
missteps a bit, why, you just whisper in his ear and you help him out.
Welcome.

This is a very important and a very timely hearing. It's
interesting to note that just this morning, press reports indicate
that Google is contemplating pulling out of China, which we may
discuss a bit in our hearing.

Now, I've stressed for some time the critical significance of
developments in China to our national security. In recent years,
while we've been heavily focused on events in the Middle East and
South Asia, China's influence has grown in Asia as well as beyond.

I'm pleased that the Obama administration has prioritized the
United States-China security relationship and was encouraged by the
joint statement that resulted from the president's recent visit to
China. I welcome the administration's efforts to increase U.S.-China
relations and cooperation in areas of common interests, ranging from
counterterrorism and nonproliferation to energy security.

We must work together with China for the settlement of conflicts
and reductions of tensions that contribute to global and regional
instability, including denuclearization of the Korean Peninsula, the
Iranian nuclear issue, and the situation in South Asia.

I particularly welcome the administration's support for
increasing military-to-military contacts. I've long viewed such
contacts as essential. It builds trust, it promotes understanding, it
prevents conflicts, and it fosters cooperation. And, given my own
visits to China in recent years, I know how important these
relationships are.

Looking back at U.S.-China security cooperation under the
previous administration, there were some positive steps but there's
still much progress to be achieved. And the new administration will
continue to face plenty of challenges, and I remain concerned by
trends and ambiguities regarding China's military modernization,
including China's missile buildup across from Taiwan and the steady
increase of China's power projection capabilities.

Moreover, China's military budget continues a trend of double-
digit increases at a time when China provides more and more of the
loans that support the American economy. China's transparency on
defense issues is still limited and questions remain regarding China's
strategic intentions. This was highlighted just days ago following
China's concerning missile intercept event.

At the same time, the reduction of tensions across the Taiwan
Strait is a positive development, and I hope to see further progress
in that area, including meaningful action by China to reduce its
military presence directly opposite to Taiwan.

I'm also encouraged by China's recent involvement in
counterpiracy operations in the Gulf of Aden. This demonstrates
responsible use of Chinese military power in line with its
international responsibilities, of which I hope we can see more.

I continue to believe China is not necessarily destined to be a
threat to our country, but there are trends and ambiguities that do
concern us, and I continue to believe that the United States must
demonstrate our own interests in the Asia-Pacific region, including
our ability to project power effectively there.

At the same time, we must also acknowledge China's limitations
and recognize that China's choices may well be shaped by our own
actions. So I look forward to hearing from our witnesses about the
actions that the Department of Defense and the Department of State are
undertaking, and I hope they will help us better understand recent
security developments involving that nation.

I also look forward to receiving a 2010 Department of Defense
annual report on this subject, which is due to this committee in the
month of March. However, before we begin I turn to my friend from
California, the ranking member, Buck McKeon.

REP. BUCK MCKEON (R-CA): Thank you, Mr. Chairman, and thank you
for holding today's hearing on recent security developments involving
the People's Republic of China. Today is our first opportunity to
examine the administration's policy toward China and how such a policy
is aligned with our overall approach to the region.

This hearing also gives us a forum to better understand China's
military buildup and activities where they're expanding their areas of
influence around the globe, all of which have serious implications for
the strategic posture of the United States. I would also like to
welcome our witnesses that the chairman recognized, and thank you all
for being here today. I'll look forward to your testimony and our
discussion.

As I review our policy toward China, it's my understanding that
President Obama's team may follow an approach of strategic assurance,
as put forward by Deputy Secretary of State James Steinberg. This
strategy is based on the belief that China cannot be contained, and
therefore we, America and the international community, must accept its
rise to power.

In return, we seek China's reassurance that its stature will not
come at the expense or security of other nations. For example,
strategic assurance may be demonstrated in part by China's cooperation
with the United States and other nations on matters of shared
interest.

In particular, within the last year we've worked together in our
handling of the global financial crisis, countering piracy off the
east coast of Africa, and isolating North Korea for its persistent and
aggressive nuclear and missile tests.

While these are positive steps in our relationship, we cannot
ignore the reality that China still falls short in the column of

reassurance. Actions speak louder than words. Here are but a few of
the examples.

First, on Monday, China demonstrated its resolve to expand its
strategic capabilities with a missile defense test. As of yesterday
we heard from the Pentagon that this test was conducted without
advance notification to the United States. What are China's
intentions for employing a missile intercept system? Once again we're
left in the dark to question China's commitment to transparency and
cooperation. More concerning, this test comes at a time of tension
over our arms sales to Taiwan. Is this test intended as an aggressive
signal?

Second, according to the latest U.S.-China Economic and Security
Commission Report, I quote, "There has been a marked increase in cyber
intrusions originating in China and targeting U.S. government and
defense-related computer systems," an activity that could potentially
disrupt U.S. commercial and banking systems -- (clears throat) --
excuse me -- as well as compromise sensitive defense and military
data. And the chairman remarked about Google and the problem that
they're having and where we're moving in that direction.

Third, in March 2009, a Chinese naval vessel behaved in an
aggressive manner towards the USNS Impeccable. Despite China's
assertions of its rights within its Maritime Exclusive Economic Zone,
this incident illustrates its willingness to violate international law
and reflects increasing risks of China's expanding military operations
in areas where U.S. forces routinely operate.

Independently, these examples are a cause of concern, but more so
when seen under an umbrella of marked uncertainty surrounding China's
future course in terms of its military and security ambitions.

I would like to now turn to the neighborhood in which China
resides. This brings me to the president's recent trip to Asia.
While some see the U.S-China Joint Statement as a significant
accomplishment, from my view we're merely left with a laundry list of
issues that need to be worked out.

Furthermore, I'm deeply concerned with the message we sent to our
partners in the region. From Australia to India, the trip raised
questions about who has the upper hand in the U.S.-China relationship.

At a time when we should be focused on reaffirming our commitment
to the region, we left many doubting the depth and breadth of American
power and influence. For example, in its 2009 Defence White Paper,
the government of Australia states, "We also need to consider the
circumstances of a more dramatic and, in defense planning terms,
sudden deterioration in our strategic outlook.

"While currently unlikely, a transformation of major power
relations in the U.S.-Pacific region would have a profound effect on
our strategic circumstances. Of particular concern would be any

diminution of the willingness or capacity of the United States to act
as a stabilizing force." I hope each of you will give concrete
examples of what we're doing to alleviate these doubts.

Finally, in just a few weeks, the Department of Defense will
submit its 2010 Quadrennial Defense Review to Congress. Shortly
afterwards, we'll receive the Nuclear Posture Review. In the 2006
QDR, the Pentagon noted that China was at a strategic crossroads and
that it had the greatest potential to compete militarily with the
United States.

In its 2009 annual report to Congress on China's military power,
the department maintained that the pace and scope of China's military
transformation continued to increase, fueled by the acquisition of
advanced foreign weapons. Also similar to years past, it noted that
China continues to develop and field disruptive technologies,
including those for anti-access and area denial, as well as for
nuclear, cyber and space warfare.

When we receive the QDR, I will be looking closely at any changes
to the department's assessment of China. My fear is that we will
downgrade the China threat in an attempt to justify last year's and
future cuts to key defense programs.

If the conclusion is the same as it was in 2006, then I expect
the president's budget to invest in the necessary capabilities to
execute our contingency plans in Asia. This is the type of strategic
reassurance our allies need and is the key to stability in Asia. With
respect to the NPR, we must be cognizant that any additional
reductions in our strategic capabilities will only invite China to
seek strategic parity with the United States.

In closing, today we'll hear about the need for candid dialogue
and improved engagement with China. As you know, we made changes to
the Pentagon's annual report on China's military power in this year's
defense bill to focus on those areas. While I believe that coming to
the table is vital to avoiding misunderstanding and miscalculation, we
must be mindful that it takes two to make a relationship work and that
our priority focus must always be on protecting America's national
security interests.

This is truly a timely hearing and we appreciate your appearance
here this morning. Thank you, Mr. Chairman.

REP. SKELTON: I thank the gentleman.

A word to the members. We will be back in our old haunts, the
committee room, around the first of next month, so it will be much

more convenient for us and it's going to look very, very good. I'm
very pleased with what I saw yesterday.

Each of the witnesses today, as I understand it, have statements
to make, and we will call on Admiral Willard first. Admiral?

ADM. WILLARD: Thank you, Chairman Skelton, Representative
McKeon, and members of this committee. Chairman, thank you very much
for introducing my wife Donna, who joins me today. She has been a
military spouse for 36 years in addition to being a mom and a
grandmother, and she is now very much a joint spouse at Pacific
Command, with oversight of the needs of Army, Navy, Air Force, Marine
Corps and Coast Guard families, as well as families of our civilian
workers within PACOM. I'm pleased to have her here as well. Thank
you, sir.

I've now been in command of the United States Pacific Command for
about three months, and although I may be new to PACOM, I'm commanded
extensively in the Asia-Pacific region. Consequently, during my 36
years of service, I've developed a great respect for this part of the
world. In that time, I have come to believe that now more than ever,
it's vital to our nation's security interests and economic prosperity.

In previous tours, as now, the emergence of China and its
military has been a routine topic of discussion in my interactions
with regional leaders. Of concern to most: reconciling China's
declared desire for a peaceful and stable environment for economic
development with a new military capability and capacity that appear
designed to challenge international freedoms of action and potentially
enforce influence over regional nations.

Reconciliation of these two divergent positions can only occur
through continuous frank conversations and mutual actions within a
strong and mature military-to-military relationship, a relationship
that does not yet exist between the United States military and the
PLA.

And until it does and it's determined that China's intent is
indeed benign, it's critical that we maintain the readiness of our
forward-deployed forces, continually reinforce our commitment to our
allies and partners in the region, and meet each challenge by the
People's Republic of China in a professional manner that is consistent
with international law.

It's clearly in both nations' interest and the Asia-Pacific
region's interest to manage these complexities and to develop a
relationship with China that is constructive in every way. At U.S.
Pacific Command, our goal is to support this relationship by
identifying opportunities that allow us to work more closely with
China while also encouraging her to reconcile strategic intent with
increasingly sophisticated combat capabilities.

Congress can assist by maintaining a focus not only on China but
on the growing importance of the Asia-Pacific region to our nation and
to our global partners. Our messages during engagements with Chinese
leadership both in Beijing and during their visits to Washington,
D.C., must be consistent, resolute, and invoke the nation's principles
and values.

I offer my staff support -- direct support to you during your
travels to the region and invite you to stop in Honolulu and visit
U.S. Pacific Command on your way to or from this area of
responsibility.

Finally, I would like to thank this committee for the strong
support you provide to the men and women of our United States
military. Despite being involved in two wars, our retention and
recruiting rates remain very strong, which is a direct reflection of
the quality of life initiative supported by you and by the American
people.

On behalf of more than 300,000 men and women of U.S. Pacific
Command, please accept my sincere appreciation for the work that you
do for us and for this great nation. Thank you and I look forward to
answering your questions.

REP. SKELTON: Thank you, Admiral. Secretary Gregson.

MR. GREGSON: Mr. Chairman, members of the committee, thank you
very much for this opportunity to appear today to discuss recent
military and security developments in the People's Republic of China.
I'm pleased to be joined by old friends and colleagues, Admiral
Willard and Mr. David Shear.

China's rapid rise as a regional political and economic power
with growing global influence has significant implications for the
Asia-Pacific region, the United States and the world. These
developments occur in a dynamic environment with little historical
precedent.

As Secretary Gates said, "During the past three decades, an
enormous swath of Asia has changed almost beyond recognition."
Hundreds of millions have emerged from poverty to higher living
standards as a result of cooperation, openness and mutual security.
New and reemerging centers of power alike are realizing extraordinary
growth and development.

From India to Indonesia, China to Russia, and Australia to Japan,
millions have moved from poverty to prosperity. China's rapid
development helps drive this extraordinary and dynamic growth. In
turn, China gains greatly from Asia's growth.

The United States welcomes a strong, prosperous and successful
China. As President Obama stated, "The relationship between the
United States and China will shape the 21st century, which makes it as
important as any bilateral relationship in the world."

But this development occurs as new challenges emerge. Our new
security issues cover a very wide range. These include economics,
regional areas of tension, terrorism, proliferation, energy supplies,
piracy, the effects of climate change and disasters, both manmade and
natural.

Our increasingly interconnected world and common demands for
resources require cooperation and integrated solutions. Since the
committee's last hearing on this topic, we have seen several
significant developments -- some positive, others troubling.

Many are documented in the Secretary of Defense's annual report
on military power of the People's Republic of China. On one hand, we
have several positive examples of China's contribution to
international peace and stability. We are encouraged by China's
support for U.S. Security Council Resolution 1874 and its efforts to
support the denuclearization of the Korean Peninsula.

China is also developing emergency military capabilities that are
allowing it to contribute cooperatively in the delivery of public
goods, from peacekeeping and counterpiracy to humanitarian assistance
and disaster relief.

We appreciate the positive experience of our two navies working
in concert with the international community to combat piracy in the
Gulf of Aden, and we are looking forward to building on these
experiences.

But, we have concerns about the pace, scope and lack of
transparency in China's military modernization. The People's
Liberation Army is changing from a mass Army designed for protracted
wars of attrition on its own territory to one developed for winning
short-duration, high-intensity conflicts on its periphery against
high-tech adversaries.

Weapons and material to support this are being procured from both
foreign sources and an increasingly capable industrial and technical
base. Organizational and doctrinal changes are also evident as are
disruptive technologies designed for anti-access and ariel denial,
nuclear space and cyberspace arenas. Modernization and expansion of
military capabilities across the Taiwan Strait continues with the
addition of more missiles, enhanced air, surface, and undersea
capabilities.

Over the past several years, China developed and articulated
roles and missions for the PLA that go beyond immediate territorial
interests. We will continue to use military engagement with the PRC
to demonstrate U.S. commitment to the Asia Pacific region and act as a
partner in addressing common security challenges.

We will maintain and enhance our presence and alliances in Asia
and clearly demonstrate U.S. resolve. Our interest lie as they have
for the decades of Asia's rise in constructive engagement with China
combined with a strong network of alliances and partnerships
throughout the region.

Thank you and I appreciate the opportunity to be here and I look
forward to your questions.

REP. SKELTON: Thank you Mr. Secretary. Secretary Shear.

MR. SHEAR: Thank you Mr. Chairman, Mr. McKeon, I appreciate the
opportunity to appear before you today. My colleagues from the
Department of Defense have already addressed our military to military
relations with China, so my remarks will focus on the president's
November trip to Asia, as well as our broader security goals regarding
China and the region.

Since coming to office, President Obama has repeatedly stated
that the United States welcomes the emergence of China and that in an
interconnected world our does not need to be a zero sum game. We
welcome an international world for China in which its growing economy
is joined by growing responsibility. And I would reiterate our desire
that as the Chinese economy grows, they become a responsible member of
the international community.

President Obama's trip to Asia in November 2009 with stops in
Japan, Singapore, China and South Korea was intended to demonstrate
the U.S. commitment to the region, build trust, articulate our values

on issues such as human rights and strengthen and expand our
cooperation with China. The trip was productive in this regard.
During his first ever visit to China, the president deepened his
acquaintance with his Chinese counterparts and demonstrated to them
the importance we place on cooperating on such issues as Iran, North
Korea and Afghanistan.

The president set the stage for further cooperation with China in
preparation for the Copenhagen conference on climate change. He
discussed exchange rates and trade, clean energy, military to military
exchanges, human rights, and stopping the spread of nuclear weapons.
We outlined the key accomplishments of the visit in a joint statement
issued by President Obama and President Hu Jintao on November 17.

It has been said before that in order to get China right, you
have to get the region right. The United States is a vital
contributor to Asian security and economic prosperity. Our active
presence in Asia helps promote regional security and stability. We
intend to deepen our engagement and strengthen our leadership in the
region by strengthening our commitments to allies and partners and
enhancing our involvement in regional institutions. And the secretary
addressed these issues as well as our presence in the region in an
important speech in Honolulu yesterday.

The president's trip to China and the region demonstrated the
importance we place on East Asia which remains vital to U.S. security
and prosperity. In the November joint statement, the Chinese
recognized the positive role the United States plays in East Asia by
stating that China welcomes the United States as an Asia Pacific
nation that contributes to peace, stability, and prosperity in the
region.

The trip was also a continuation of our efforts to build a
positive, cooperative and comprehensive relationship between the
United States and China. As President Obama has said, the ability of
the United States and China to partner with each other is a
prerequisite for progress on some of the most important issues of our
times. Those issues include several important security challenges,
issues such as North Korea and Iran cannot be successfully addressed
without intensive and sustained involvement by China. To date, we've
been encouraged by China's willingness to cooperate with these areas,
although there is a lot of work to be done.

We obviously do not see eye to eye with the Chinese on every
issue. For example, on Taiwan, the United States remains committed to
our one China policy based on the three joint commuicaes and the
Taiwan Relations Act. We believe that this policy has contributed
greatly to the peace and stability of the past several decades and we
remain committed to that framework. We welcome the improvement in
cross strait relations over the past year, at the same time we have
voiced our concerns about China's rapid military modernization program
as it relates to Taiwan. China's continued military build up across
the Taiwan Strait despite improvements in cross strait relations

raises many questions about Beijing's commitment to a peaceful
solution to the cross straits issue.

Similarly, the United States and China have differences on the
issue of human rights. The promotion of human rights remains an
essential element of American foreign policy as the president has
said, it is a part of who we are as a people. President Obama has
stated that the rise of a strong and prosperous China can be a source
of strength for the community of nations. This summer we'll hold
another meeting of the U.S./China strategic and economic dialogue that
we initiated last July. We will use this and other forums to continue
building our relationship with China and to seek pragmatic cooperation
on issues of mutual concern. At the same time, we'll remain engaged
and active throughout the region, supporting our allies and expanding
our leadership in this vitally important part of the world.

Thank you for the opportunity to make these remarks, sir, and Mr.
Chairman, if you don't mind, I'd like to say a little something on the
subject of Google.

As you all may know, Google made a statement yesterday about a
cyber attack on its facilities allegedly originating from China. And
Secretary Clinton made a strong statement on this yesterday, which I'd
like to repeat for you all. She said we have been briefed by Google
on these allegations, which raise very serious concerns and questions.
We look to the Chinese government for an explanation. The ability to
operate with confidence in cyberspace is critical in a modern society
and economy. The secretary also said that she will be giving an
address next week on the centrality of internet freedom in the 21st
century, and we will have further comment on this matter as the facts
become clear.

The secretary will deliver a speech on internet freedom next
Thursday that was scheduled before Google's announcement. She has
been very engaged on the issue of internet freedom and anticipated the
need to stake out clear policy ground on this subject. The secretary
had dinner with 10 executives of leading high tech companies last week
and discussed internet freedom during that dinner. She has been
actively listening and learning from those assembled executives,
including Google CEO Schmidt. She takes this issue very, very
seriously and we have been in touch with Google subsequent to their
contact with Secretary Clinton and we have been in contact with all of
the agencies dealing with cyber security on this issue and we will be
happy to remain in touch with you on this subject.

REP. SKELTON: Thank you very much Secretary Shear. A question
to Admiral Willard and Secretary Gregson. What is the major security
challenge our country has with China? And to Secretary Shear, what is
the major non-security challenge we have with China?

Admiral?

ADM. WILLARD: Chairman Skelton, I think the major security
challenge is the level of uncertainty that exists in attempting to
reconcile the public statements that China makes regarding its long
term intent, which is generally that it characterizes its military
capabilities and capacities as defensive only and seeks peaceful and
harmonious environment in which to grow its economy and prosper. With
a military capability that is not necessarily consistent with that
characterization of the future in that the power projection
capabilities, the capabilities, capacities, both in asymmetric areas
and conventional areas tend to exceed that description. That
ambiguity that currently exists and our attempts to reconcile that are
the security issue that we hope to tackle in a military to military
dialogue with our PRC counterparts.

REP. SKELTON: Secretary Gregson?

MR. GREGSON: I would only add to the Admiral's remarks that we
remain particularly concerned about their ongoing developments in a
nuclear arena, cyberspace as Secretary Shear eloquently discussed and
space capabilities, their development in the air and maritime realms
also fit in there but particularly nuclear, cyberspace and space
capabilities constitute a potential asymmetrical threat to our ways of
doing business. We watch all this very carefully.

REP. SKELTON: Thank you Secretary Shear.

MR. SHEAR: Let me discuss the major non-security challenges by
sharing with you our priorities for our non-security relationship with
China. Number one priority is coordinating with China on the global
financial crisis. Economic recovery is President Obama's number one
priority and economic recovery and how we coordinate with the Chinese
on this subject is the number one issue on our agenda with the
Chinese. We want the Chinese to rebalance their economy as we
rebalance ours. Chinese people will need to save less and consume
more. We would like to see the Chinese economy shift away from its
emphasis on heavy industry export oriented industry. We seek the
Chinese pursuit of a market oriented flexible exchange rate. All of
these issues came up in the president's meetings in Beijing with his
Chinese counterparts.

A second priority is cooperation with China on international
security issues such as Iran and North Korea. And a third priority is
coordination with the Chinese on the subject of climate change. And I
think on climate change, we achieved some progress both with the
Chinese and the international community in the context of the
Copenhagen conference several weeks ago.

REP. SKELTON: Mr. McKeon.

REP. MCKEON: Thank you Mr. Chairman. In my opening statement I
highlighted some of the concerns when it comes to our policy approach
toward China. From what I can gather from last year's annual report
to Congress, you share some of the same concerns regarding China. A
shift in strategic priorities and behavior, especially as it expands
its need for access to more markets and natural resources, expanding
and improving disruptive military technologies in areas such as space
and cyberspace, a lack of transparency when it comes to military
budget intentions and decision making, and its increasing leverage in
the region and around the world.

Gentlemen, what precisely is the president's China policy? How
is it different from his predecessor? And how will it seek to address
these shared concerns?

I want to start with you Admiral.

ADM. WILLARD: Thank you sir. I think from the military
standpoint, our approach to China is very much two fold. It is first
and foremost to seek to grow a relationship with China that encourages
their constructive contributions to the security issues in the Asia
Pacific region. It's the purpose behind military to military
dialogue, it's the reason for our emphasis to the Chinese on the need
for continuity, some constancy in terms of that dialogue. We think
that it's lagging behind the other engagements between our nation and
the People's Republic of China.

Secondarily on the issue of the ambiguity's that currently exist,
the inconsistencies that we deal with in the Asia Pacific region, we
bear the responsibility to ensure our forward presence and the
readiness of our forces in the region to assure our allies and
partners in the region and to continue to grow those relationships as
Secretary Gregson described in his opening comments.

So as to maintain a security in the region that we've frankly
been responsible for for the past 150 years. So we will maintain our
presence in the region as robustly as we have in the past as we
continue to engage the Chinese in dialogue and, hopefully, foster an
improved relationship and get to some of the ambiguities that have
been discussed thus far this morning.

REP. MCKEON: Thank you. Secretary Gregson.

MR. GREGSON: In the President's words, stated to the Chinese at
the Security and Economic Dialogue as well as in Beijing, we seek a
positive, cooperative and comprehensive relationship with China.
Secretary Gates' characterization of our policy is that China is not a
strategic adversary. It is a partner in some respects but a
competitor in others. Our defense strategy, released in 2008, states,
as you mentioned, a Chinese potential for competing with the United
States and that U.S. interaction will have to be long-term, multi-
dimensional, and involve peacetime engagement between our defense
establishments as much as it involves field and military capabilities.

It's impossible to separate our engagement with China from our
engagement with the region. Our consistent and increased engagement
with the region, our enhancements of our alliances and partnerships
there not only in the East Asian region but, increasingly, through the
Indian Ocean area will be essential to us shaping the environment that
will allow us to also shape or develop cooperative, comprehensive
relationships with the Chinese.

REP. MCKEON: Secretary Shear.

MR. SHEAR: In order to build a positive, cooperative and
comprehensive relationship, we are engaging with the Chinese to seek
out common interests and devise ways of pursuing those common
interests together. This is not an easy task. It can be very
challenging. While we share common interests, our interests are not
always identical and our bilateral relationship with China, our
approach to the region as a whole, as well as maintaining our military
strength in the region, are all part of a comprehensive approach to
developing the relationship with China.

REP. MCKEON: Thank you. China is shifting away from labor-
intensive operations and they're moving toward increasing production
of high technology goods. They've matured as a manufacturer and
assembler of advanced technology products. They've created an

attractive environment for foreign companies to make investments with
increased subsidies, tax incentives, and preferential loans. At the
same time we're hearing concerns from industry that defense policy
changes emerging from the QDR, coupled with recent anticipated cuts in
DOD spending will force U.S. industry to divest itself of certain
capabilities, reduce our production lines, and inhibit innovation.

Gentlemen, as the president develops his China policy, to what
extent does U.S. industrial policy enter into his decision making?
I'm concerned about our workforce. Do you share my concern that the
United States industrial base may be unable to sustain the
technological innovation that's been the hallmark of U.S. military,
given the current fiscal environment, and can you provide specific
examples of how the president's China policy seeks to address China's
unfair trade policies and ensure that the U.S. military continues to
have access to the manufacturing capacity, technological capacity, and
strategic materials necessary to equip our war fighters in the future?

MR. SHEAR: If I may start, Congressman, with regard to China's
unfair trade practices. We have a multi-pronged approach toward trade
with China that includes pursuing cases in the WTO on Chinese unfair
trade practices, and we achieved several successes last year in this
regard, particularly with the protection of intellectual property
rights.

We are also enforcing our laws and regulations on trade, and the
president's decision on the 421 case on tires is a case in point.
Again, we are also vigorously pursuing the Chinese on the enforcement
of intellectual property rights. Overall, as we pursue economic
recovery, I think attention to our technological capabilities will be
central to the administration's approach to both the economy as a
whole and to our economic relationship with China.

REP. MCKEON: Admiral.

ADM. WILLARD: Representative, McKeon, while trade is not in my
lane, certainly the industrial base and the production of our military
capacities is, and I would only offer that the work that you do as a
committee to help to strengthen the United States industrial base on
behalf of its military, the attention that you pay that, and I know
that Secretary Gates' emphasis on doing what we can to strengthen the
U.S. industrial base in support of our armed forces is of critical
importance.

And I would offer, one, my thanks to you for your efforts in this
particular area and again offer my emphasis on the criticality of an
industrial base that can support this military, not in the near term
but in the long term.

REP. MCKEON: Thank you very much.

MR. GREGSON: Mr. McKeon, it's clear that China is developing an
increasingly capable technical and industrial base. It's also clear

that they're able to procure certain items of foreign military goods
and technology and then reverse engineer it to suit their needs. At
the same time its industrial espionage is not unknown. Our
intelligence agencies and our technology control agencies exercise as
vigorous a control as possible to ensure that we not only prohibit
unauthorized American transfers of technologies to China but also that
our other partners around the world obey our tech control
restrictions.

Behind the industrial base, of course, is also the American
educational base, and I think that we need to make sure that that
base, the colleges and universities, the quality of the graduates that
we are producing is maintained. We have the advantage of qualified
students from all over the world that want to come to the United
States to go to our schools and we are enriched by that process, as is
our entire educational (system).

And then on into the industrial and technical base, we need to
make sure that we maintain that as a priority so that we can meet the
goal that you set out, that we maintain our advantages.

REP. MCKEON: Thank you very much. Mr. Chairman.

REP. SKELTON: I thank the gentleman. Dr. Snyder.

REP. SNYDER: Thank you, Mr. Chairman. I appreciate you all
being here. Secretary Gregson, it's hard to believe it's been about 40
years since your Vietnam days, right? We appreciate your service
there as a marine, a young marine in Vietnam.

Mr. Shear, I'm going to direct my questions to you just because
of our limitations on time, but Admiral and Mr. Secretary, feel free
to join in if you want to augment what Mr. Shear has to say. Mr.
Shear, what does the Chinese government perceive as their greatest
existential threat?

MR. SHEAR: The Chinese pursue a variety of security goals. I
think the number one goal is the preservation of the Chinese Communist
party. I think the Chinese Communist party is very concerned about
the prospects for social stability in China. I think they spend a lot
of time and resources trying to ensure that the vast social and
economic changes they're undergoing to not shake their rule of China.

REP. SNYDER: So as the Chinese government is sitting there
looking ahead, they see their greatest existential threat not the
United States, not Taiwan, not the Japanese or any other foreign
entity. They see their greatest existential threat as being something
happening internally. Is that a fair summary of what you said?

MR. SHEAR: Yes, I think the Chinese pay a lot of attention to
internal security and internal social stability, and that is the
number one goal for them.

REP. SNYDER: I forget the length of time it's been since we had
that devastating earthquake in China that I think caught the world's
attention probably longer than some of these tragedies do because of
what happened to the school buildings, and I was surprised by the
level of cracking down the Chinese government exerted on parents
trying to find out what happened. As you look back at that, how do
you analyze what occurred with regard to the internal discussions,
internal investigations that occurred around the destruction of the
schoolhouses?

MR. SHEAR: The destruction of the schoolhouses, the loss of
lives, as well as the overall destruction in Sichuan Province, was
very tragic. We did everything we could to help the Chinese recover
from that.

REP. SNYDER: I'm interested in the stifling of the investigation
internally about what occurred, the building codes at school
buildings.

MR. SHEAR: My belief is that the Chinese government has
conducted an investigation and that they have concluded that they need

to improve building codes. They have not been particularly
transparent in the extent to which they've conducted this
investigation. They have, as you say, repressed dissent on this
subject.

It was very interesting watching the Chinese public's reaction to
the earthquake, however. There was a great deal of spontaneous
reaction on the Internet. Voluntary groups arose spontaneously
through communication on the Internet, and a lot of Chinese simply up
and volunteered to go to Sichuan to help things out, so you have a
very complicated situation. But you're right.

REP. SNYDER: Going back to what you said about the number one
threat they perceive is internal stability, if you aggressively
repress and stifle the efforts of parents to find out why their
children died because of bad local government policies in terms of
approval of building codes, isn't that an indication of evidence for
your first statement? I mean, I don't know how to look at it other
than they were apprehensive that somehow a local effort to figure out
what happened with local building codes could turn into some kind of
national movement because if there was bad policies in those school
buildings, I suspect they could have occurred elsewhere. Is that a
fair analysis?

MR. SHEAR: I agree. I agree.

REP. SNYDER: I wanted to ask, too, you're a linguist and have a
lengthy State Department experience, where are we at with regard to
the development of Chinese language skills amongst our folks here that
aspire to be both part of the military, part of Admiral Willard's
group but also State Department? Where are we at with regard to
Chinese language skills?

MR. SHEAR: The State Department itself has an extensive language
program, conducted both in Washington, in Teibei and in Beijing. I
myself was the first foreign service officer to study Chinese in
mainland China after 1949. I went to the Johns Hopkins Center in
Nanjing.

REP. SNYDER: But the fact that we have an aggressive State
Department program is an indication that we don't have language skills
within the American public at large. Where do you see that as we move
ahead?

MR. SHEAR: I agree that we need more Chinese language skills
developed within the American public at large. We've seen great
growth in Chinese language teaching in high schools and at the
university level and in this regard the president announced a very
strong initiative during his trip to increase the number of American
students in China to 100,000 over the next four years, and we'll be
working to implement that in the coming weeks and months.

REP. SNYDER: Thank you all for your service.

tphuang · 01-14-2010

next part

Quote:

REP. SKELTON: I thank the gentleman. Mr. Bartlett.

REP. ROSCOE BARTLETT (R-MD): Relative to Dr. Snyder's question,
I would like to suggest that China has two concerns that largely
illuminate their very aggressive military buildup. The first is
Taiwan, a tiny island the size of Maryland, three fourths of which is
truly uninhabitable, 20-some million people versus the homeland of 1.3
billion people why the big concern?

I think they see that if Taiwan can declare its independence, so
can a lot of other regions like Tibet, for instance, and they see
their empire unraveling if Taiwan can do this, so I hope that we can
resolve this concern diplomatically because I think China will do
anything necessary militarily to keep Taiwan from declaring its
independence.

The second major concern they have and, Admiral, you mentioned
that in the eighth page of your prepared testimony: energy. I led a
CODEL of nine members to China three years ago to talk about energy
and they began their discussion of energy by talking about post-oil.

We in the Congress have a lot of trouble seeing beyond the next
election, and our business community is primarily focused on the next
quarterly report.

The Chinese are looking ahead decades and generations, and there
will, indeed, be a post-oil world.

The Chinese are now aggressively buying up oil all over the world
and buying good will. And, Mr. Secretary, I asked the State
Department why would they buy up oil when, in today's world, it makes
no difference who owns oil and who comes -- that that was, in effect,
a global auction with the dollars buys the oil. So who owns the oil
makes no difference.

They told me the Chinese were buying oil because they didn't
understand the marketplace. I think they understand the marketplace
very well. And I think that the future -- that in the future, the
Chinese will tell us, gee, guys, I'm sorry but we own the oil, and we
cannot share it with the world.

To make that a reality, they have to have a blue-water navy big
enough, spread globally across the world far enough to protect all of
the sea lanes for the passage of this oil.

To the extent that we continue to use a fourth of the world's
oil, that we have done nothing to reduce our demand for foreign oil,
we think -- I think we hasten the day the Chinese will tell us we're
not going to share our oil with the world.

What should be our policy relative to energy because I think it's
an overarching issue. Oil is now $80 a barrel. The world will never
ever again have sustained good times until we do something meaningful
about alternative energy. And so far, we, the world, and the we, the
United States, have done nothing meaningful about aggressive
conservation or alternative energy.

What ought we to be doing to avoid this real potential threat
from the Chinese to deny us access to oil because they own it?

MR. SHEAR: Congressman, we're pursuing intensive dialogue with
the Chinese on the subject of energy security in which we have raised
our concerns about Chinese efforts to lock up oil reserves with long-
term contracts. And we'll continue to engage them on this subject at
very senior levels.

REP. BARTLETT: Engaging them on the subject is quite irrelevant.
You know, as long as we continue to be largely dependent and
increasingly dependent on foreign oil, we have no meaningful program
of conservation or development of alternative energy to wean us from
-- oil is an incredible energy source.

The quantity and quality of energy and oil is unmatched anywhere
in liquid fuels. And to the extent that we -- this one person in 22
uses a fourth of the world's oil. To the extent that this continues,
do we not make inevitable this confrontation with China over energy?

MR. SHEAR: We share your concerns on this subject, Congressman.
And our energy security dialogue with the Chinese is aimed at avoiding
conflict over the search for oil.

REP. BARTLETT: I would like to see shared concerns matched by
some meaningful leadership action. Sir, I just don't see that. Do
you see it?

MR. SHEAR: We have worked with the Chinese to increase their
cooperation with the International Energy Agency. We've seen some
progress there. The Chinese are building an oil reserve -- an
emergency oil reserve -- which we welcome. And we're going to keep
pursuing this issue with the Chinese.

REP. BARTLETT: Thank you. The China envisioning a post-oil
world, I think, we, in no way, believe that there will be a post-oil
world, and I would suggest that we ought to confer more with the
Chinese so that, collectively, we do not precipitate huge
international crises over energy.

Thank you.

REP. SKELTON: Thank the gentleman.

Ms. Davis?

REP. SUSAN DAVIS (D-CA): Thank you, Mr. Chairman.

Thank you to all of you, and thank you for your service as well.

If I could follow up on my colleague's question, I guess just how
do you characterize China's energy dependency as influencing its
defense policy? Would you say that to a great extent? Or if you'd
like to characterize that for us. And how has it used the sale of
military technologies as incentives to secure energy deals? Is that,
again, a large part of their policy or to a greater -- less extent?
And what should we be doing about that?

MR. SHEAR: I'll defer to my Defense Department colleagues on
this subject.

MR. GREGSON: Thank you. We see China increasingly developing
the ability to get -- to move beyond concerns of territorial defense
and moving around the world, in large part, to protect their access to
energy sources and to product the lines of communication.

It would suggest it drives not only defense policy for China to
an extent, but it also drives a lot of their foreign policy. We tend
to focus on the development of the Chinese navy thinking of the lines
of communication from the Persian Gulf and Saudi Arabia is there
biggest supplier of oil. Angola is the second.

But there's also -- the Chinese are also concerned with energy
extraction, mineral extraction in Central Asia and other areas. So it
is a definite driver of their policy.

Sale of military technology is a concern, particularly to states
that are of keen interest to us, such as Sudan and others where arms
deals have been negotiated and executed. One can derive a conclusion
that, if they're importing oil from there, that there's a connection
between the arms deals. Nevertheless, while we suspect a connection,
we're concerned about Sudan. And any arms transfers to Sudan, of
course, are of a concern.

So, yes, we see that, too.

REP. DAVIS: In our discussions -- and I might turn to Admiral
Willard in terms of the transparency and the relationships -- the
military relationships. In that regard in terms of energy, is that an
issue that has some transparency in discussion? Or would you say,
again, that that's of great concern to us but one that we're not able
to impact greatly?

ADM. WILLARD: I think the Chinese have actually been quite vocal
regarding their concerns over their sea lines of communication in
particular. As it results to the movement of all their commerce, to
include their trade, but as well energy and other natural resources,
they refer to, in particular, the Malacca problem, which is their
choke point -- all of our choke point at the Strait Malacca and the
strategic value of that strait and the importance of protecting and
securing those sea lines to include the various choke points that
exist between the sources of those natural resources and commerce and
China itself.

Secretary Gregson, I think, said it well. The expansion in their
naval capacity and their air force certainly has a dimension to it
that has to do with securing their regional commercial interests. How
far that will extend beyond the Asia-Pacific region, the South China
Sea region, and East China Sea into the Indian Ocean region remains to
be seen.

But they're demonstrating the capability to operate at longer
ranges by virtue of their assistance to the international counter-
piracy issue in Gulf of Aden now and their ability to sustain their
operations there.

REP. DAVIS: Secretary Shear, would you say that, in the
development of our relationships, then, that we're working with that
in a more cooperative way or, again, not having quite the ability to
have that at a level of discussion that we're seeking? And what are
we doing about that?

MR. SHEAR: At the same time we are discussing with the Chinese
energy security and regional security issues, at the same time, we're
seeking more transparency from the Chinese in their defense and
security policies, we're also strengthening our relationships
throughout the region, particularly in Southeast Asia.

Secretary Clinton has visited Southeast Asia three times last
year. She is in the region again as we speak. And remaining in
contact with our friends and allies throughout the region,
particularly in Southeast Asia, will be an important -- play an
important role in our addressing this.

MR. GREGSON: If I may touch very briefly on one aspect of your
question about transparency, it's not strictly a defense equity, but
there is active engagement in the scientific and educational
communities on development of renewable energy between China and the
United States.

It usually occurs in conferences and efforts under the cognizance
of the Department of Energy or the Department of Interior. So that's
one encouraging sign that there is some thought to life beyond oil.

REP. DAVIS: Thank you.

REP. SKELTON: Thank the gentlelady.

The gentleman from Virginia, Mr. Forbes?

REP. J. RANDY FORBES (R-VA): Thank you, Mr. Chairman.

Mr. Chairman, I want to begin by thanking you for not just this
hearing but for asking a lot of tough questions about China and the
United States relationships before many members in Congress did that.
And I just appreciate your leadership on that.

And, also, Admiral, thank you so much for your service and for
your wife's service. I know that's a partnership team. And for all
of your staff -- I know the heavy work that they have to do just to
come to a hearing like this.

Mr. Secretary, Mr. Shear, we appreciate so much all of you being
here.

I'm going to try to ask my questions so that they can have short
and succinct answers not because I want to cut you off, but I'd love
for you to extrapolate any way you want in the record. Just because I
only have five minutes, and this microphone goes dead.

But, Admiral, I looked at your testimony, and as I read that
testimony, China currently has 290 ships in their navy. Am I accurate
in that assessment?

ADM. WILLARD: Roughly, yes, sir.

REP. FORBES: Roughly. And that number doesn't exist in a
vacuum. Isn't it significant that we try to extrapolate or actually
get some idea of what their shipbuilding plan actually is so we know
how many ships they're going to be building over the next several
months if we want to try to project our strength against theirs?

ADM. WILLARD: Of course.

REP. FORBES: Is that a significant component to our evaluation?

ADM. WILLARD: It is part of a broad evaluation of China's --

REP. FORBES: And if we look -- according to the 2009 Military
Power of People's Republic of China Report to Congress produced by the
Pentagon just a few months ago, the estimate was that they had 260
ships. Is that correct?

ADM. WILLARD: I would have to go back and --

REP. FORBES: Let me just tell you, for the record, it was. So
we missed it by about 30 ships.

How many ships do we currently have, roughly, in our Navy now?

ADM. WILLARD: In the Pacific Command, I have access to about 180
ships.

REP. FORBES: Overall in the Navy? Any idea?

ADM. WILLARD: About 283.

REP. FORBES: So we've got about 283. According to the report
that was given to us a few months ago, they had 260 ships. Again,
just as one component -- fewer ships than we did. According to your
testimony, they have 290 more ships than we do.

Again, I know that's just one component to look at. But it shows
the importance, I think, and the significance of having some idea of
what kind of shipbuilding plan they are undertaking so we know whether
that 260 ships were accurate or the 290 ships were accurate.

Mr. Secretary, I'd like to ask you if the United States current
has a shipbuilding plan? Not whether it's being modified, not whether
you like it, not to even ask you to tell me what it is. But do we
currently have a shipbuilding plan for the United States of America as
you know it from the Department of Defense?

MR. GREGSON: There is a plan as delineated in the program and in
the president's budget, yes.

REP. FORBES: So it exists?

MR. GREGSON: Yes.

REP. FORBES: Now, are you aware that, by law, the Department of
Defense was supposed to give the United States Congress that
shipbuilding plan when they submitted the budget so that we would know
and could make the same kind of comparisons that the admiral talked
about was significant in knowing about the ships that the Chinese had
that we were supposed to have that, by law, submitted to us at the
time the budget was submitted?

MR. GREGSON: It's not our intention to ever ignore any
requirements from Congress.

REP. FORBES: I'm just asking whether you know that that was the
law or not.

MR. GREGSON: No, I did not.

REP. FORBES: Okay. And the question I would ask you, Mr.
Secretary, if you could you supply for the record at some particular
point in that shipbuilding plan existed. I would just submit to you,
one, the law required that we get a copy so we could make that same
kind of comparison. Secondly, this committee, unanimously had a
congressional inquiry demanding that you comply with the law of the
Department of Defense and give it to us.

To date, we still haven't had it. And I would just ask that you
submit for the record to us the legal justification of why you refuse
-- or the Department of Defense refused to give the United States
Congress their shipbuilding plan.

And then I'd also ask you if you'd want to submit for the record
-- because I won't have time to have you -- in my minute and 15 left
-- how we can legitimately talk about a lack of transparency with
China when we won't submit our own shipbuilding plan to the United
States Congress.

Mr. Shear, I would just ask you, again, shortly your testimony,
if you could submit to us for the record -- I was excited to hear
about the victories that we've had in wins with intellectual property
rights and the economy with China. And we want to get those
publicized because I don't hear them, you know, anywhere that I look
or study.

If you would submit a list of those victories that we've had this
year for the record, both with intellectual property rights and the
Chinese economically for the record, we'd love to have them so we can
talk about them and get them out.

And, with that, gentlemen, thank you so much for your service and
for being here.

Mr. Chairman, I yield back.

REP. SKELTON: Thank you very much.

Admiral, I might point out that one of those most memorable
congressional moments was when, along with Mr. Forbes, we planted the
tree at Kunming in memory of the American flyers who flew the hump and
those who were part of the Flying Tigers during the Second World War.
And I certainly hope that you will be able to revisit that place for
us and give us an update on the tree that we planted.

ADM. WILLARD: I'll do that.

REP. SKELTON: Please do.

Mr. Marshall?

REP. JIM MARSHALL (D-GA): Thank you, Mr. Chairman. I'd like to
yield my time to the chairman the Sea Power Subcommittee, the
gentleman from Mississippi, Mr. Taylor.

REP. GENE TAYLOR (D-MS): Thank you, Mr. Chairman, and thank you,
Mr. Marshall.

Admiral, you know, in my life, I never guessed as a kid we'd be
at war in Panama or Afghanistan or Bosnia. You know, we've always
thought it would be the war against the Russians that, thank goodness,
did not happen.

With that in mind, the things that we don't expect to happen
often do happen. Once an area that concerns me is that, you know, our
carriers would go about 15 years from here to there on the fuel that's
built into that vessel. But the vessels that defend those carriers
have to refuel every three to five days.

A logical assumption is that the weak link then in our carrier
task force is the oiler that supplies that destroyer or cruiser that
protects the carrier. If I'm a potential enemy of the United States,
I'm not going to hit us where we're strong. I'm going it hit us where
we're weak.

It is my understanding that we have a limited number of oilers in
the Pacific, somewhere between 8 and 12. And so the logical question
would be, you know, since our enemies have been pretty good at finding
our weaknesses and exploiting them -- and, thus, the IED in Iraq --
what steps is the Navy taking should some scenario develop in the
Pacific where a potential enemy's first step is to take out those 8 or
12 oilers?

Does the fleet then fail to sail? Because one of the things that
really Congressman Bartlett impressed upon me is our need for energy
dependence in the long term. One of the way that we can achieve that,
as we know, is with the nuclear-powered surface combatants. Each one
of those can save about ten million gallons of fuel per ship per year,
plus you don't need that oiler. You lose that weak link.

Now, Congress has passed language that says our next generation
of service combatants is going to be nuclear powered. We've passed
legislation that says the next generation of large deck amphibs is
going to be nuclear powered.

But what I don't see is the Navy taking any steps to implement
that. That's one thing.

The second thing is in the short term, if you've only got 8 or 12
of this thing that's vital, what steps does the Navy have as a backup
should a clever fool decide that ground one is to take out the oilers?
What's your backup plan, and what are we doing to, in the short term,
increase those numbers so that that worst-case scenario doesn't
happen?

ADM. WILLARD: Thank you, Representative Taylor. I think you
bring up some provocative issues, and that is how we handle some of
the tactical-level risks to our force complement when we conduct
major-scale operations. And, certainly, the protection of our tanking
assets at sea is a major factor in our planning and in the way in
which we attempt to mitigate potential vulnerabilities.

I think, you know, to your point regarding nuclear power, we gain
great flexibility with our aircraft carriers and our submarines being
nuclear powered. As you suggest, our surface ships do rely on
refueling. I would offer that we refuel at sea. We also refuel in
port.

And when we're operating in the Western Pacific, the approach is
to complete both of those. We also have the capability, though it's
exercised rather rarely, to refuel our surface ships from our carriers
themselves. So our big-deck ships have the opportunity to conduct
refueling of our smaller escort ships.

So between protection operations around them and the various ways
in which we can take advantage of geography and the force complement
to conduct refueling, we manage this problem and our naval commanders
are tasked with planning around it and managing it very carefully.

I take your point that refueling of our ships is keenly an area
that we have to focus on, and the adequacy of our tanker fleet to be
able to ensure that we have the freedom of actions that we require in
our operations is very important.

REP. TAYLOR: Admiral, if I may.

ADM. WILLARD: Please.

REP. TAYLOR: The chairman is going to gavel this thing in 20
seconds. I have laid out my concerns. Would you have someone from
your office, at your convenience, but hopefully in the very near
future, come visit with me with more detailed and in-depth answer than
you're able to give in public?

ADM. WILLARD: I'd be happy to.

REP. TAYLOR: Thank you, sir.

ADM. WILLARD: Thank you.

REP. SKELTON: Thanks the gentleman.

The gentleman from Minnesota, Mr. Kline.

REP. JOHN KLINE (R-MN): Thank you, Mr. Chairman.

Thank you, gentlemen, for your service and for being here today.

I want to -- it seems like forever that we have been concerned
with and worrying about China's role in a couple of places I'd like
for you to touch on briefly, some of which you already have. One is,
of course, when General Gregson and I were lieutenants, we were
worried about Taiwan, the Straits, and China and what China's actions
may be.

And in that case, we were probably mostly worried about what the
Taiwanese government might do that might precipitate military action
on the part of China. And it seems we're sitting here today, and we
still have some of those concerns. President Ma in Taiwan and some
new folks there may have changed some of that dynamic, and I'd be
interested in your discussing where you think we are and what the
level, if you will, of tension is now in China-Taiwan relations.

And then the other one that never goes away, and we've been
discussing in our lifetime, we've had U.S. forces in Korea since
before Mr. Gregson and I were lieutenants and, certainly, before you
were an ensign, Admiral. And we still have troops there.

And the question here is: China's role in being able to
influence actions in North Korea, particularly, with their nuclear and
missile activities. So we have three minutes and 22 seconds. If any
of you or all of you can address both of those and how you see China
-- where China is now in both of those issues -- the relationship with
Taiwan, the potential for military action there, and how China is
doing in helping us get back to the six-party talks and what's going
on in North Korea.

MR. SHEAR (?) : Thank you for those questions. I'll go very
quickly so my colleagues can jump in.

Since the election of President Ma Ying-jeou, Taiwan and China
have undertaken a series of reciprocal actions that we find very
favorable -- direct flights, visitations to offshore islands, business
ties, all the sinews of normal peacetime engagement that we think
contributes to a decrease in tension and operates in support of our
object active of a peaceful settlement of issues across the Taiwan
Strait.

It's been mentioned more than a few times before, we remain
concerned about the build-up of PRC military capabilities across the
strait, and we watch very carefully not only the amount of that build-
up but the types of systems that they're developing to make sure that
we maintain the ability to fulfill our obligations under the Taiwan
Relations Act.

On North Korea, we are encouraged by China's support of U.N.
Security Council Resolution $1874. Very important to prevent North
Korea from profiting from their nuclear-related technology, their
missile-related technology; very important to keep North Korea from
exporting any type of weapon systems that are prohibited under 1874.

China's support is essential to maintain an international
consensus to keep 1874 a viable resolution, and we're very positively
encouraged, as I said, about their development on that.

In the meantime, we continue to ask China to exert their
influence to work on their neighbor to convince them of the wisdom of
complete, verifiable, and irreversible denuclearization, which remains
our goal with North Korea.

REP. KLINE: And are you getting a good response from the Chinese
in that effort? That's -- I mean, that's what we're getting down to.
We've said for a long time that we can't have success with the
denuclearization and the demilitarization or missilization, I guess if
that's a word, of North Korea without China's active participation
because of the enormous influence that China has with North Korea.

Are we seeing that influence or just is it sort of quiet now?

MR. SHEAR (?) : We are seeing influence. We would like to see
more influence. For our part, we have made it quite clear that we
intend to fulfill all of our obligations to our allies and that we
will -- and that, to the extent that we are not successful in
achieving complete, verifiable, and irreversible denuclearization of
North Korea, we will enhance those alliances and we will enhance our
ability to enforce our alliance obligations and that that is a
condition that contributes as much to instability in Northeast Asia as
any other scenario that China could be worried about.

REP. KLINE: Okay. Thank you. I see my time has expired. So I
will yield back the two seconds.

Thank you, Mr. Chairman.

REP. SKELTON: Thank the gentleman.

The gentleman from Washington, Mr. Larsen.

REP. RICK LARSEN (D-WA): Thank you, Mr. Chairman.

Gentlemen, thanks for coming today.

Secretary Gregson, with regards to Monday's missile test, how
would you characterize the notification China gave to the
international community compared to what the U.S. does when we conduct
a missile test or even when Russia conducts a missile test?

MR. GREGSON: I'm not aware that we received any notification
until after the test.

REP. LARSEN: And how would that differ than -- how would that
differ, largely, with a ballistic missile test process that the U.S.
undertakes or that Russia undertakes? I mean, do we provide
notification?

MR. GREGSON: Traditionally, through notice to mariners, notice
to airmen, close your areas, various things, yes.

REP. LARSEN: Yeah. Yeah.

So was there -- there was no indication at all -- or not
indication. There was no communication to the international community
about the missile test and its reasons and so on, at least as far as
we know from China?

MR. GREGSON: I'm looking at my colleagues. I am personally not
aware of any.

REP. LARSEN: Yeah. Secretary Shear, do you have any thought on
that?

MR. SHEAR: We're not aware of any prior notification of the
test. We have spoken with the Chinese since the test. We've asked
them for more information. We've asked them to be more transparent
with regard to this test and their testing in general.

The Chinese have only responded so far that this particular test
was defensive in nature. It was not aimed at any specific countries
and that no orbital debris was created by this test.

REP. LARSEN: Something we could all read in the paper ourselves
but not actually helpful. That's my comment. You don't have to
comment on that.

Mr. Chairman, before I move further, I have a statement for the
record I'd like unanimous consent to enter that.

REP. SKELTON: Without objection.

REP. LARSEN: Thank you.

For Secretary Shear and Secretary Gregson, China may be our most
important dialogue in Asia right now, but Japan clearly remains our

most important ally in the region. There's reports, obviously, with
the new Japanese government, they're trying to seek or create or
develop, in concept, an East Asia Security Group between Japan, China,
and South Korea.

Recent statements indicate that, maybe, you know, Japan all along
was intending to include the United States. How would you discuss the
steps the U.S. is taking to strengthen the U.S.-Japanese relationship
while we're also pursuing a various set of relationships with China?

Maybe Secretary Shear can start there, and Secretary Gregson can
follow.

MR. SHEAR: We're working very closely with the Japanese to
strengthen the alliance. Secretary Clinton met with Foreign Minister
Okada in Honolulu yesterday. They celebrated the 50th anniversary of
the U.S.-Japan Security Treaty. They recommitted to strengthening the
alliance.

I think it was a very good meeting.

REP. LARSEN: Secretary Gregson?

MR. GREGSON: We've been undergoing for some time a
transformation and realignment of U.S. forces and Japanese forces
within Japan. Pending is the continuation of the realignment with the
build-up of U.S. forces in Guam.

The Guam program also includes near-continuous presence of
Japanese aviation and ground forces in Guam and their training. We
look forward to rapid implementation of that as a way to adapt and
transform the military and security aspect of our alliance for the new
century.

REP. LARSEN: Thanks.

Back to the missile tests. And this may be for Admiral Willard
or for Secretary Gregson.

Given the recent Taiwan (ph) arms sales going through and the
context of this missile test, do we see this as a tit-for-tat? And do
we see -- I mean, do we anticipate something else happening because of
the Taiwan (ph) arms sales, which I think most of us all stand four-
square behind?

For instance, when they were announced in '08, China suspend any
further military-to-military discussions including the consultative
talks.

But those started up again last month, I think. Are we
anticipating another, you know, a tit for tat because of the arms
sales, Admiral Willard?

ADM. WILLARD: Well, if history bears out at such time as arms
sales would be announced or their consultation with our Congress would
take place, the PRC has typically reacted very vocally, and our
military-to-military engagement has historically been suspended.
Whether or not that's the case this time or not will remain to be
seen.

I would offer that in the discussions that General Chu had with
the secretary and with me on his way back to Beijing, we emphasized
the need for constancy in that military-to-military dialogue. And we
were explaining the mutual benefit of maintaining it, whether or not
differences erupt between or governments or not.

So again, I think we'll be testing the maturity of that military-
to-military relationship in the future, not just over our legal
obligation to conduct Taiwan arms sales, but over other issues between
our governments as well.

REP. TAYLOR: Thank you. I see my time is up.

REP. SKELTON: Mr. Coffman.

REP. MIKE COFFMAN (R-CO): Thank you, Mr. Chairman.

I'd like to ask the panel to address what I believe has become a
very serious emerging national security threat as it relates to China.
It has to do with industrial-based supply issues controlled by China
and not any specific military threat. But I am hoping, given your
background and your current positions focusing on Pacific Rim nations,
to garner the benefit of your thoughts and comments.

Worldwide demand for rare earth elements are escalating rapidly.
Rare earths are used in a number of applications, including emerging
green technologies. And many of us on this dais have concerns as to
what that means for American innovation and domestic job growth.

But the fact that so many national security and defense systems
require these materials to function and operate is of greater concern
to us here at this hearing. Ninety-five percent of worldwide rare
earth reserves being accessed today are located in China or controlled
by Chinese-led interests.

Today, there are no rare earth elements or production sites of
significance taking place in North America or anywhere outside of
China. And Chinese domestic demand for rare earth elements could
easily equal Chinese production as early as 2012.

Furthermore, in October 2009, an internal report by China's
Ministry of Industry and Information Technology disclosed proposals to
ban the export of five rare earth elements and restrict supplies of
the remaining metals as early as next year.

I ask the witnesses to comment on these developments and address
their entity's situational awareness of the reliance on these rare
earth elements, what they feel are the strategic implications and how
they plan to develop an appropriate policy to mitigate this impending
supply crisis as it relates to national security and defense.

ADM. WILLARD: Sir, I'd like to take that question for the record
and get back to you as soon as we can.

REP. COFFMAN: Very well, appreciate that. Anyone else care to
respond?

Okay. I was -- second question. About four or five years ago, I
believe that since we don't have formal relations with Taiwan in terms
of an ambassador here, I think it's general counsel might be the term.
I'm not sure what the term is for their diplomatic representative in
Washington. But I was at a dinner, seated next to him, and asked him
what the most significant national security was to Taiwan.

And at that time, he said, a recession in China. And I asked him
why that was the case. And he said, because then he felt that the
leadership of the People's Republic of China, the PRC, will look
outward as to threats to deflect the attention of the people of China
on their own domestic problems. And that's where he felt that Taiwan
would be the most vulnerable.

I wonder if any of you could comment on that.

MR. GREGSON: That has -- the relationship of economic
development, national development to the authority, legitimacy of the
leadership has been often discussed as a matter of speculation. And a
connection has been drawn. And as a matter of fact, it's been often
stated that 8 percent per-year growth, or better, is necessary to
maintain domestic tranquility within China.

While we watch that from the defense side, we also watch the
development of capabilities, and we try and make sure that we have
done everything we can to counter the capabilities we see on the other
side of the strait, relying on the fact that we can't read minds and
read intentions with clarity. We can draw inferences, and we can get
some ideas, but we're not relying on the conditions of prosperity to
be a guarantee that nothing bad will happen. We're taking all

appropriate precautions to make sure we can react if the situation
worsens, regardless of what the prosperity situation is across the
strait.

I understand the points of your dinner companion, and I think
it's a very interesting observation, particularly from their side.
But on the defense side, we remain oriented on the capabilities.

MR. SHEAR: The Chinese government certainly appeals to Chinese
nationalist sentiment frequently, but we don't see an uptick in that
or an effort to blame Chinese domestic problems on foreign sources
result of the economic downturn. And it looks to us like the Chinese
economy is turning around. They had 8 percent growth last year. I
think they may have 8 (percent) to 9 percent growth this year. But
we're not seeing that phenomenon happen right now.

REP. COFFMAN: Thank you, Mr. Chairman.

REP. SKELTON: Thank the gentleman.

Mr. Kissell.

REP. LARRY KISSELL (D-NC): Thank you, Mr. Chairman.

And welcome gentlemen.

And Mrs. Willard, thank you for being here today, and thank you
for the service that you render to your nation.

I'm going to go back a little bit. As we know, China is an
ancient kingdom many thousands of years old. And I'm going to go back
2(,000) to 3,000 years.

Sometimes when we study history, we tend to separate our time
lines and forget that history moves at the same time period. And the
time period while Europe was in the Middle Ages and before, China was
a prospering kingdom and inarguably could have made some of the same
decisions that Europe later made in terms of conquest, expansion,
exploration, and did not.

And if the history book that I talked from was correct, it was a
decision that this was not a pursuit that they wanted nationally to
evolve to. And while Europe later came to dominate the world, China
in many ways chose not to do that.

And if you look at the history since then, of course, the time
period when the European nations tended to dominate China, that China
has never pursued that course of what you maybe call aggression or
expansion or looking overseas and other places for, you know, their
national prospects.

I'm trying to get an idea in my mind, what is the mind-set of the
Chinese now? How much has that changed, or has it changed?

You know, we've talked about all the ambiguities that exist among
what China may be doing. For our two secretaries, if you had to
narrow it down, what is the Chinese mind-set? Is it aggressive? Is
it defensive? Is it, we want to be equal to, we want respect? What
is the mind-set of the Chinese now?

MR. SHEAR: We're familiar with your view of Chinese history.
From our historical experience, we see rising powers as a potential
challenge to the international community. We hope to avoid that in
China's case by engaging intensively in China.

REP. KISSELL: And I don't mean to interrupt, but what is the
Chinese mind-set? I understand how we view it. But what do you think
they, long term, how are they trying to position themselves and why?

MR. SHEAR: I think the Chinese want to express themselves as a
major global power. I think they've done that mostly economically so
far. I think that remains a lower priority on their list after
securiNG communist party stability and power and after domestic
economic development.

MR GREGSON: I would concur with that.

I might add that I think a lot of Chinese attitude consists of the
fact that world trends are in -- are working in their direction now.
And that it's time for them to enjoy some of the largess that they --
and the benefits of being a world power that they were not able to do
for the last couple of centuries.

REP. KISSELL: And one other question, going in a different
direction. I had read recently where water would be a great
limitation toward China and its ability to continue its, you know, its
economic expansion. Just wonder what your thoughts are -- how that
may figure in, how much it figures in; and what that might mean long
term.

MR. GREGSON: That conservative population growth estimations and
conservative economic growth estimations -- there is the potential out
there in the future that resource allocation of precious liquids --
oil, water will become an item that's going to require vigorous,
active and cooperative management. The Mekong River Initiative right
now is one way to try and manage water and related items like fresh
water fisheries and things. The Mekong starts in China, and of
course, goes through Southeast Asia. And any time somebody puts a dam
at one point on the river, it affects everybody downstream. Those
obvious things -- yes, this is going to be an item of major concern.

REP. KISSELL: Thank you, gentlemen.

I yield back my time.

REP. SKELTON: Thank the gentleman.

The gentleman from Louisiana, Mr. Fleming.

REP. JOHN C. FLEMING (R-LA): Thank you Mr. Chairman. My
question is for Admiral Willard. As you know, sir, our aircraft
carriers are a platform that we use to project power around the world.
This is certainly relevant to some of the issues brought up about oil
and energy in general.

It is my understanding that the Chinese have a mid-range
ballistic missile that can travel up to 2,000 kilometers. It can
easily attack an aircraft carrier; and that we don't have any real
antidote for that. Hopefully, it is still under development and not
fully capable. So what is our Navy's plans to protect our aircraft
carriers, given this potential shift in power; and certainly our

ability to project our Navy and the naval air forces closer to the
perimeters of China itself?

ADM. WILLARD: As you suggest, as one element of the anti-access
strategy by China, there has been development of a ballistic missile
capability that we believe is intended to target surface ships to
include our aircraft carriers; and it's an issue of major concern. We
within our programs are developing capabilities to protect, you know,
obviously protect our surface ships to include our aircraft carriers
from that. The details obviously we would need to discuss at some
future opportunity in a closed session.

REP. FLEMING: Would you agree, sir, that this may put even more
emphasis on the need for the next generation bomber, which is an air
platform that again is a standoff type of defense mechanism or attack
mechanism, if you will. That you know we sort of laid that aside here
recently. And I'm wondering if maybe we need to take a stronger look
at that in view of what we're seeing here.

ADM. WILLARD: I think when we approached the anti-access
capabilities that are being developed here, that we have to look
broadly at all of the capabilities that provide us opportunities to
continue to operate with freedom of action inside the envelopes of
that capability. Certainly, our bomber force and any recapitalization
of our bomber force, extended-range weapons; as well as our ability to
penetrate with our surface ships and not give up access where we
require it are all parts of the defense strategy to accomplish that.

REP. FLEMING: Thank you, sir. Thank you to the panel, and thank
you for your service. I yield back.

REP. SKELTON: Thank the gentleman.

Mr. Taylor of Mississippi.

REP. TAYLOR: Mr. Chairman, I'm going to yield to our only member
of the Ranger Hall of Fame that is a member of Congress, Mr. Marshall.

REP. JIM MARSHALL (D-GA): Thank you Mr. Taylor, I appreciate
that. I'm curious about the extent to which we can expect that China
at some point might be more helpful to us where terrorism is
concerned; and specifically, the efforts in Iraq and Afghanistan, and
our worries about Pakistan and India and the possible conflicts there.

A couple of Chinese colonels published the book called
Unrestricted Warfare in the Mid-90s. Probably most of you have
already read that -- at least read an executive summary of it. And
that piece, that book explores ways in which China can engage in
conflicts with the United States in essence asymmetrically. And
publication of the book was authorized and approved by the Chinese
government. And not so many years have passed since the publication
of the book.

Among the things that these two colonels observed -- and this
book's publication proceeds 9/11 -- observe is that the close
relationship between America's political elite and the military
industrial state, combined with America's military expeditionary
capacity means that it's only a matter of time before America gets
itself involved in conflicts that bankrupt it. If there is an ongoing
attitude of China that it's good for China to see the American economy
weakened; then it seems to me that China might be holding back in
assisting us with regard to Iraq, Afghanistan, and terrorism
generally; because this is something that's costing us an awful lot of
money.

And so, I'd just like general comments about Pakistan, India, the
flashpoints there, nuclear power, you know, controlled by both. And
any thought that China is at some point here going to going this
effort against terrorism. Which if you think about it, given the
nature of their evolving economy, they're going to be a target also
eventually.

MR. SHEAR: Congressman, with regard to the Chinese approach to
American economic health, I think the Chinese recognize that we have
-- we are interdependent economically; and that our economic
relationship benefits both sides. On the subject of terrorism, we
engage the Chinese on this subject both at senior levels and at the
working level through a counterterrorism working group, which has met
recently. In general, our cooperation on counterterrorism issues with
the Chinese is at a fairly basic level, but we're working on it.

On the subject of Afghanistan and South Asia generally, I think
the Chinese share our interests in peace and stability in South Asia;
particularly in Afghanistan, it's right on China's border. We have
engaged the Chinese fairly intensively on the subject of Afghanistan.
Special Envoy Holbrooke has been to Beijing twice to discuss this
subject with them. They've expressed an interest in cooperating, but
we're still at the early stages of --

REP. MARSHALL: So we haven't seen anything concrete.

MR. SHEAR: Not yet, no

REP. MARSHALL: And where terrorism is concerned, have we seen
anything concrete there?

MR. SHEAR: We conducted exchanges with the Chinese particularly
in the run up to the Olympics. And we're continuing those exchanges,
but I'd say we're at a very basic level.

REP. MARSHALL: What have we proposed that they do with regard to
terrorism or stability in Afghanistan, Pakistan, India, et cetera?
What are we proposing that they're just not willing to do?

MR. SHEAR: We think, we think -- as I say, the Chinese have
expressed an interest in -- a general interest in cooperation. We

conducted a working level meeting with the Chinese to discuss specific
ways in which we can work together on the ground in Afghanistan before
the president's visit in November. I think they're thinking this
through right now.

We proposed such avenues -- things they can do to help
Afghanistan in agricultural infrastructure, infrastructure generally,
capacity building, and areas like that. But we're still just
beginning; we're pressing the Chinese on this.

REP. MARSHALL: What about assistance from China? I know we're
looking at different ways to get materials into Afghanistan. Is there
any movement where that is concerned?

MR. GREGSON: We're developing alternative lines of communication
to avoid over-dependence on the LOCs through Pakistan. Generally,
they involve the northern distribution network. We don't know of an
opportunity yet for China to contribute.

REP. MARSHALL: Thank you Mr. Chairman.

REP. SKELTON: Thank the gentleman.

Mr. Franks.

REP. TRENT FRANKS (R-AZ): Well thank you Mr. Chairman. And
thank you Admiral Willard. I want to direct my first question to you.
Thank you just for your lifetime commitment to the cause of human
freedom and all the things. You know, people like us up here talk a
lot about the importance of protecting freedom. And people like you
personify it, and we're really grateful to have you here today.

I was encouraged about your discussion related to protecting some
of our battle groups from emerging Chinese missile technology. And as
you are probably very aware in the Perry-Schlesinger report it said
that we had to be careful with long-range defenses because it could
upset the strategic balance between the U.S. and China and the U.S.
and Russia. But in light of some of the recent reports in the media
that China is working to perfect or develop a mid-range and long-range
missile defense capability, they don't seem quite as concerned about
that strategic balance as maybe we are.

And so, I guess my question to you -- can you talk to us a little
bit about the Chinese missile defense technology advances; and
specifically, their medium- to long-range capabilities?

ADM. WILLARD: I would only offer that in terms of their missile
defense capabilities, that they are by and large still in the research
and development stages. That this is a subject actually of inquiry
regarding the most recent missile-to-missile engagement that has been
witnessed; and that the Chinese have -- as we discussed earlier,
reported on over the past several days.

So these developments and other developments are -- we would
continue to watch. But in terms of levels of detail and so forth,
obviously, in a closed session can be discussed.

tphuang · 01-14-2010

next part

Quote:

REP. FRANKS: Well let me, if I could, switch -- thank you
admiral -- to Secretary Gregson. Can you tell us about China's space
program? Have there been any advances in technology, or have they
continued pursuing space as a military venue since their 2007 ASAT
test? The question is predicated on the notion that, you know, China
has with their ASAT capability have pursued in a phrase weaponizing
space. And it seems -- it's pretty clear to me that that's already
happened. But can you tell us have they continued pursuing space as a
military venue since their last ASAT test in 2007?

MR. GREGSON: The Chinese have stated that they oppose the
militarization of space. Their actions seem to indicate the contrary
intention. We continue to press the Chinese for an explanation. And
we'd be happy to provide details in a closed session.

REP. FRANKS: Well, Mr. Chairman, I guess I make the point all
too often here that I think it's important as a country to maintain
our missile defense capability. We seem to be moving into a dynamic
militarily and otherwise in the future that that will be a critical
consideration for us. And I think that we have a moral responsibility
to the citizens to be able to defend the U.S. from any missile
launched from anywhere on the globe; at least, that's the goal.

I know that Mr. Reagan contemplated and hoped for that. And
we've come probably further than even he contemplated at one point.
But I think the ultimate concern should still be to be able to defend
ourselves in that situation. Because in a world where radical, rogue
nations are potentially going to be a part of that equation, I think
it's vital that we continue in the direction of developing that.

And I thank all of you for your efforts in that regard, and I yield
back, Mr. Chairman. Thank you.

REP. SKELTON: I thank the gentleman. Ms. Bordallo, the
gentlelady from Guam.

DEL. MADELEINE BORDALLO (D-GU): Thank you very much, Mr.
Chairman. Secretary Gregson, I appreciate working with you on the
Guam issues and look forward to your answers today. And Mr. Shear,
thank you for appearing before the committee. And finally, Admiral
Willard, thank you, and I look forward to working with you as our new
PACOM commander.

As you all may know, I co-chair the China caucus with my
colleague, Congressman Forbes, and I have several questions regarding
recent security developments in China and how it affects our posture
in the Asia-Pacific region.

Secretary Gregson, it seems that China wants to continue becoming
a global power that has serious force projection capabilities, and on
his most recent Asia trip President Obama stated that the United
States is and will remain a Pacific power. In that vein, how does the
realignment of military forces in Japan and to Guam play in the
balance of power in the Pacific? And if we are to remain a Pacific
power, what other enhancements of our current military and civilian
capabilities are needed to maintain a robust posture in the Asia-
Pacific area?

MR. GREGSON: Thank you for the question. Secretary Gates has
remarked often that there is sovereign U.S. territory in the Pacific
-- Alaska, Hawaii, and Guam -- and with the help of our vital help
from Japan we're increasing, as you know, our air, naval, and Marine
presence in Guam. This will also enable the continuous or near-
continuous presence of Japanese and other allied and friendly forces
for training with the United States and better position us for
continued engagement, not only throughout Southeast Asia and the
Indian Ocean but also into the area involving the Compact states and
our other territories in the mid-Pacific.

I think this will allow us to continue to develop capabilities
and to continue to develop relationships across the region that will
contribute to peace, stability, and prosperity throughout the area.

REP. BORDALLO: Thank you. My final question is for Admiral
Willard. The 2009 report to Congress from the U.S.-China Economic and

Security Review Commission made a very intriguing and a stark finding,
and that is China's development of anti-ship Cruise missiles. The
report states, and I quote, "According to the U.S. Department of
Defense, this missile will have a likely range of 1,500 kilometers, be
armed with maneuverable warheads, and is intended to deny regional
access to surface ships of the opposing side. When combined with
appropriate surveillance and targeting systems, this missile could
have the potential destroy or disable aircraft carriers and their
associated battle groups while in transit." End quote.

Now I am concerned by this finding and would like to explore our
deterrent capabilities in the Pacific to respond to this growing
tactical threat by the Chinese. And what types of deterrents are in
place on our surface fleet to combat this tactical weapon? What
impact would this weapon system have on our ability to project our
naval power in China, such as port visits to Hong Kong?

ADM. WILLARD: Well, thank you, ma'am, for the question. I would
offer that the Chinese have developed a ballistic missile with
extended range capabilities that we believe is intended to counter
surface ships. They have also developed extended-range Cruise
missiles, as you suggest, for launch from their surface ships and from
their submarines as part of a broader anti-access strategy. All of
these developments, capability developments and the capacities that
they are fielding have led to concerns both on the part of the United
States and on the part of the region with regard to what they're there
for and their intended use.
In the case of -- you bring up deterrence. There's a
responsibility that we bear to the region writ large to extend
deterrence throughout the region to prevent wars from happening, to
prevent future contingencies from occurring. We've been very
successful, I would offer, for many decades now in accomplishing that.
That is by and large accomplished through our presence and posture in
the region and that is unchanged. Regardless of these developments --
capabilities developments that you describe, we maintain a presence on
the waters in the region, as we have for a century and a half, and we
intend to stay.

We think that the extended deterrence that the United States
offers to our allies and partners in the region, our presence to
ensure security of the sea lines of communication and airlines of
communication in this part of the world are vital to our nation's
security, as well as to our nation's economy and the economies of our
partners.

REP. BORDALLO: Thank you, Admiral. I yield back. Thank you,
Mr. Chairman.

REP. SKELTON: Thank the gentlelady. Mr. McIntyre.

REP. MIKE MCINTYRE (D-NC): Thank you, Mr. Chairman, and thank
you, gentlemen, for being here today. Because I was tied up in

another matter and got here a little bit later, I want to ask you
about something just for clarification. I know in December of a year
ago China began to provide its naval vessels to protect the commercial
ships navigating in the Gulf of Aden from the Somali pirate attacks.

Do you characterize this as a positive development with regard to
U.S.-Chinese cooperation? And are they willing, and are currently
working with the United States in cooperation vis-a-vis dealing with
these pirates?

ADM. WILLARD: From the PACOM perspective we view it as a very
positive development. It's a demonstration of the PRC's willingness
to utilize their military capability in a way that is contributing to
other nations, to the international betterment of security in that
particular region of the world. They began those operations operating
outside of the international regime that was put in place to
coordinate the efforts by the many nations that are contributing to
the anti-piracy effort over the years.

Now that this has been occurring, I would offer that the PRC has
grown closer to those regimes, and to the extent that there is a line
of communication that has been developed and a level of information-
sharing that is both contributing to their operations and also
contributing to the operations of the combined task force that's
engaged in counter-piracy. So to both your questions, yes, it's
positive, and yes, they have grown closer to cooperating not just with
the United States but with the international effort that is often
foreign-led in the Gulf of Aden.

MR. GREGSON: I concur completely with the admiral. The freedom
of navigation -- freedom of the seas, freedom of navigation, freedom
of innocent commerce, freedom of innocent passage is vitally important
to both the United States and China, as well as the rest of the world,
particularly considering the Gulf of Aden and where it sits across the
lines of communication that are vital to energy supplies moving around
the world.

The Chinese over time, as the admiral stated, are increasingly
coming to understand and to appreciate the norms of cooperation that
have been established in the international task force out there.
While they still cannot, for their own political reasons, join the
international task force, they're operating, quote, "in cooperation
with," unquote, the task force in informal lines of communication and
cooperation are growing. We see this as overall a very positive
development.

REP. MCINTYRE: Thank you. With limited time, let me change to
another subject. Admiral, do you believe that we're building enough
ships to counter the continual build-up of ships by the Chinese and
their naval fleet in the Pacific? And do you feel like we're keeping
the pace as we need to, or that there needs to be a stronger build-up
of the American fleet?

ADM. WILLARD: I would speak for Pacific Command and our ability
to contend with the security issues within my area of responsibility,
and I believe I can do that. I think that the importance of
maintaining our industrial base and continuing to recapitalize our
surface fleet in the Navy is critically important, and that as the
Pacific commander it's critically important to me that my naval
component contribute the level of combat power that I require for the
joint operations that we conduct.

REP. MCINTYRE: So the question is, do we have enough ships to do
that? Or do you feel like we're on course to maintain the level of
the number of ships that we need to do that?

ADM. WILLARD: I am satisfied with the current budget and ship-
building level of effort that we're pursuing in the United States Navy
to produce the ships that I require to accomplish my mission in the
Pacific.

REP. MCINTYRE: Beyond the number of ships, do you feel like --
or if in fact there becomes a problem with the number of ships, do you
feel like we still have the capability otherwise to effectively
counter the Chinese build-up?

ADM. WILLARD: The short answer is yes. Currently the U.S.
Pacific Command is contributing nearly 30,000 troops to the Middle
East, and certainly force structure to the two wars that are currently
ongoing in our nation. And as we determine our abilities to meet our
obligations throughout the Pacific, to include the potential for
future contingencies in the western Pacific, I have to evaluate the
associated risks with that force structure's commitment to our two
wars and what mitigations I'm obligated to put into place to ensure
that I can perform my mission and yes, I believe I can do that.

REP. MCINTYRE: We want to support you in that. Thank you, Mr.
Chairman.

REP. SKELTON: Thank the gentleman from North Carolina.

The last question I would address to Secretary Gregson. In light
of the Google news this morning and other recent attacks against
American government sites, how are we addressing the increasing cyber
attacks from China?

MR. GREGSON: I think it's not only increased cyber attacks from
China that the United States faces, but increased cyber attacks from a
number of places, including non-state actors, everybody with access to
--

REP. SKELTON: I understand that. I'm asking about China.

MR. GREGSON: Among other things, we are standing up a cyber
command as a sub-unified command of Strategic Command. We have a
number of security procedures that have been put in place over the

years throughout the Department of Defense to protect our proprietary
networks, and we continue to research ways where we can enhance our
defenses in the future. This is an ever-evolving threat and we take
it very seriously.

REP. SKELTON: Secretary Shear, do you have any comments?

MR. SHEAR: Cyber security is a national priority for this
administration. Shortly after taking office the president directed
that the National Security Council and the National Homeland Security
Council conduct a top-to-bottom review of our cyber security efforts.
The results of that review were published in May. We're in the
process of implementing those.

We are particularly concerned, particularly after the Google
affair, about Chinese efforts. We will be raising this with the
Chinese and we take it very seriously.

REP. SKELTON: Secretary Gregson, in open session can you tell us
what the jurisdiction of the cyber command is?

MR. GREGSON: I'd like to take that for the record, Mr. Chairman.

REP. SKELTON: Thank you very much.

I certainly thank the witnesses today. I think this is the first
hearing on China per se that we've had in this Congress, and you've
done very, very well. Admiral Willard, Secretary Gregson, Secretary
Shear, it's certainly good of you to be with us and we look forward to
seeing you again. Very best to you.

MR. SHEAR: Thank the chairman.

ravenshield936 · 01-14-2010

Quote:

Originally Posted by tphuang

that's it, you guys would have no idea how long it took me to copy and paste all of that at work. It was a pain!

holy smokes
you made this world a better place

tres · 01-15-2010

It is amazing these politicians have no clue about China but still shaping the policies and history.

Roger604 · 01-15-2010

Yup, another new year means another "Pentagon PLA Report".

My bet is that they have a draft almost ready for release but now they have to go back and revise all their estimates.

maxx · 01-15-2010

Quote:

Originally Posted by tres

It is amazing these politicians have no clue about China but still shaping the policies and history.

I thought they were quite fair, from the US-interest view point. Their POV were predictable though.

Arthur Borges · 06-26-2010

Quote:

QUOTE (from the quote)
And as the chairman mentioned in his comments, this goes right to
the heart of the issue. What's the intent of this buildup? For
example, we don't know, as the Chinese nuclear forces increase, in
their size, in their survivability and in their precision, we're not
sure if this is going to alter their, for example, their no-first-use
policy.
UNQUOTE

This statement shows a profound ignorance of China and Chinese: As another SDF member stated: "Westerners view co-dependency as a weakness" and he ought to have added that Chinese (and most civilized peoples) view co-dependency as a reassuring asset. Another term for that is "friendship". After all, your next-door neighbour's positive attitude to you means you are likelier to resolve any disputes amicably and can count on each for help when things get rough: China has a long history of natural & manmade disasters that have, shall I say, written it into their DNA that when schlitz hits the fan, your personal survival depends largely on family & close friends.

The Chinese ICBM force capable of reaching the Continental USA stands at 16 to 20 DF-5 missiles of 1960s technology. The missiles need half an hour to fuel and the warheads are stored in a separate facility -- this is all according to FAS.

The Chinese strategy is simply to ante up enough to own a seat in the political poker game called the nuclear club because of a credible countervalue option, not a disproportionately expensive counterforce one, which would require an arsenal in the low thousands of ICBMs.

The regional strategy, however, is to defend its territorial integrity, and it defines Taiwan as part of its territory based on restitution to China of Taiwan in 1945 by the WW2 Allies.

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