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THE FUTURE OF U.S.–CHINA RELATIONS 

HEARING 

BEFORE THE

COMMITTEE ON FOREIGN RELATIONS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 25, 2014 

Printed for the use of the Committee on Foreign Relations 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys/ 

FOREI-43947 with DISTILLER

COMMITTEE ON FOREIGN RELATIONS

ROBERT MENENDEZ, New Jersey, Chairman

BARBARA BOXER, California 

BENJAMIN L. CARDIN, Maryland 

JEANNE SHAHEEN, New Hampshire 

CHRISTOPHER A. COONS, Delaware 

RICHARD J. DURBIN, Illinois 

TOM UDALL, New Mexico 

CHRISTOPHER MURPHY, Connecticut 

TIM KAINE, Virginia 

EDWARD J. MARKEY, Massachusetts 

BOB CORKER, Tennessee 

JAMES E. RISCH, Idaho 

MARCO RUBIO, Florida 

RON JOHNSON, Wisconsin 

JEFF FLAKE, Arizona 

JOHN McCAIN, Arizona 

JOHN BARRASSO, Wyoming 

RAND PAUL, Kentucky 

DANIEL E. O’BRIEN, Staff Director

LESTER E. MUNSON III, Republican Staff Director

(II)

FOREI-43947 with DISTILLER

C O N T E N T S 

Page 

Corker, Hon. Bob, U.S. Senator from Tennessee, opening statement ................. 2 

Friedberg, Dr. Aaron L., Professor of Politics and International Affairs, 

Princeton University, Princeton, NJ .................................................................. 19 

Prepared statement .......................................................................................... 22 

Menendez, Hon. Robert, U.S. Senator from New Jersey, opening statement .... 1 

Russel, Hon. Daniel R., Assistant Secretary of State for East Asia and Pacific 

Affairs, U.S. Department of State, Washington, DC ......................................... 3 

Prepared statement .......................................................................................... 5 

Roy, Hon. J. Stapleton, Distinguished Scholar and Founding Director Emeritus of the Kissinger Institute on China and the United States, Woodrow 

Wilson International Center for Scholars, Washington, DC ............................ 17 

(III)

FOREI-43947 with DISTILLER

FOREI-43947 with DISTILLER

(1) 

THE FUTURE OF U.S.–CHINA RELATIONS 

WEDNESDAY, JUNE 25, 2014 

U.S. SENATE, COMMITTEE ON FOREIGN RELATIONS, Washington, DC. 

The committee met, pursuant to notice, at 2:15 p.m., in room 

SD–419, Dirksen Senate Office Building, Hon. Robert Menendez 

(chairman of the committee) presiding. 

Present: Senators Menendez, Cardin, Corker, Risch, and Rubio. 

OPENING STATEMENT OF HON. ROBERT MENENDEZ, 

U.S. SENATOR FROM NEW JERSEY 

The CHAIRMAN. This hearing of the Senate Foreign Relations 

Committee will come to order. 

We appreciate Ambassador Russel being with us, and our other 

panelists. 

There is no question that one of our biggest foreign policy challenges is getting the relationship between the United States and 

China, and the rebalance to the Asia-Pacific, right. Today’s hearing 

explores the U.S.-China relationship and, coming as it does just in 

advance of next month’s U.S.-China Strategic and Economic Dialogue, allows us to reflect on other issues beyond the Middle East 

that will also shape the 21st century. 

China is soon to become the world’s largest economy, whether 

measured in purchasing price parity or raw GDP. Consider that 

more concrete has been poured in China in the past handful of 

years than in all of the United States during the 20th century. 

Eight of the world’s 12-largest container ports are in China. 

China is on the move, but the question is: On the move to what? 

Will China become a trade partner committed to the enforcement 

of international law, or will we see 19th-century mercantilist 

behavior and the flouting of international norms? Will China help 

to support peace and stability in Asia or seek to overturn the 

order? Will China open space for its citizens to express their views 

and ideas, or will it continue, like Cuba, to brutally repress its own 

people? 

In the last year alone, a crackdown has swept away more than 

150 journalists, lawyers, and activists. The bottom line is that 

there are reasons for hope, but there are also reasons for pessimism. 

The fact is, U.S. exports to China have increased by almost $40 

billion in the past 4 years alone, from $67 billion to $106 billion, 

creating and sustaining millions of U.S. jobs in sectors across the 

board: automobiles, power generation, machinery, aircraft, and 

FOREI-43947 with DISTILLER

2 

other vital industrial sectors. That speaks to the potential of our 

partnership. At the same time, U.S. firms complain of cyberenabled theft of intellectual property rights or just plain old-fashioned theft when trying to do business in China. 

Equally or more troubling still, we have seen an increasingly provocative China on the seas, coercing and intimidating neighbors in 

both the East China Sea and South China Sea, and attempting to 

use the threat of military force to address territorial and regional 

disputes. China’s provocative actions in the South China Sea 

threaten not just regional stability, but longstanding U.S. interests 

in the free flow of commerce, freedom of navigation, and in the 

peaceful diplomatic resolution of disputes consistent with international law. Likewise, China’s continued deliberate and provocative 

actions in and around Japanese territory run the risk of sparking 

a broader regional crisis. There should be a clear cost to China’s 

actions and what we must do to offset those actions is deepen our 

alliances with Korea, Japan, and the Philippines, and reconsider 

the arms embargo with Vietnam, and we must make sure we fully 

resource all elements of the rebalance. 

So, I look forward to our panelists’ thoughts on how we should 

evaluate the strategic and economic realities unfolding with the 

rise of China. How do we reconceptualize the problems we face? 

How do we turn them into opportunities? How do we make sure 

allies and partners have the resources they need in the context of 

China’s rise? And how do we work with China through such mechanisms as the SSD at the Strategic and Economic Dialogue to 

assure that disagreements need not lead to conflict? 

And, with that, let me recognize the distinguished ranking member, Senator Corker, for his remarks. 

OPENING STATEMENT OF HON. BOB CORKER, 

U.S. SENATOR FROM TENNESSEE 

Senator CORKER. Thank you, Mr. Chairman, and thank you for 

calling this hearing. 

I also want to thank the witnesses for being here and sharing 

their wisdom with us. 

It has been exactly 1 year since President Obama and President 

Xi Jinping gathered at Sunnylands to chart a new course for U.S.- 

China bilateral relations. Analysts were optimistic that the summit 

would set a tone for greater cooperation between the United States 

and China on a range of issues, including North Korea. 

However, as we convene here, a year later, the prospects for 

enhanced cooperation seem fairly dim. Indeed, we are facing a 

period of increasingly strained relations between Washington and 

Beijing, with issues such as China’s continued aggressiveness in 

the East and South China Seas, as well as serious ongoing issues 

with Chinese cyber theft. 

Moreover, I am troubled that the Obama administration does not 

appear to have a clear China policy or a strategy to address Beijing’s continued disregard for international norms, including economic rules of the road. It is deeply disconcerting to me that the 

negotiations on the Trans-Pacific Partnership, which has the potential to be a game changer in the Asia-Pacific by cementing free 

trade principles in the region and potentially influencing Chinese 

FOREI-43947 with DISTILLER

3 

behavior, continue to drag on absent high-level political engagement from the administration. 

The United States-China bilateral relationship is one of the most 

important and consequential relationships for U.S. political, economic, and strategic interests, yet China appears to be positioning 

itself increasingly as a geopolitical and strategic rival to the United 

States. The pace and lack of transparency with respect to the Chinese military modernization, coupled with China’s actions in the 

East and South China Seas, has cast doubt on the idea of the 

peaceful rise of China. 

Despite these challenges, I still see great opportunities to 

strengthen cooperation, specifically the conclusion of successful 

negotiations on Bilateral Investment Treaty, which has the potential to benefit U.S. businesses. 

I look forward to hearing from Assistant Secretary Russel, and 

from our second panel of experts, on whether the time has come 

to rethink U.S. policy toward China and other issues I am sure 

they will bring up. 

And again, I want to thank you, Mr. Chairman, for calling this 

hearing. 

The CHAIRMAN. Thank you, Senator Corker. 

Our first panelist is Daniel Russel, the Assistant Secretary of 

State for East Asia and Pacific Affairs. 

Ambassador, your full statement is going to be included in the 

record, without objection. We would ask you to try to summarize 

it in about 5 minutes or so, so we can enter into a dialogue. 

And, with that, you are recognized. 

STATEMENT OF HON. DANIEL R. RUSSEL, ASSISTANT SECRETARY OF STATE FOR EAST ASIA AND PACIFIC AFFAIRS, U.S. 

DEPARTMENT OF STATE, WASHINGTON, DC 

Ambassador RUSSEL. Thank you very much, Mr. Chairman, 

Ranking Member Corker. I appreciate the opportunity to testify 

today on United States-China relations. And I thank you also for 

your bipartisan support of our Asia policy. 

I am also honored to participate with one of America’s most 

accomplished diplomats, China experts, and a good friend of mine, 

Ambassador Roy, and with another important contributor, Dr. 

Friedberg. 

This year marks the 35th anniversary of the official diplomatic 

relations between the United States and China. We have made 

remarkable progress during that time. There is enormous potential, 

moreover, for further progress that benefits both our countries, our 

neighbors, and the world. 

To achieve this progress, we seek a relationship defined, not by 

strategic rivalry, but by fair and healthy competition, by practical 

cooperation on priority issues, and by constructive management of 

differences. As President Obama has made clear, we seek and welcome the emergence of a stable, peaceful, and prosperous China 

that respects and supports global rules and universal values. Our 

two economies are intertwined, so China’s growth fuels our own 

and promotes the region’s prosperity, a prosperity underpinned by 

America’s enduring security commitments and engagement. Many 

of our interests coincide. So, China’s expanding regional role can 

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4 

complement the sustained United States strategic engagement in 

the Asia-Pacific. 

Mr. Chairman, we do not seek to contain China. To the contrary, 

we want China to contribute to the stability and development of 

the region by exercising restraint, by upholding the basic rules on 

which the international system is built, rules that China helps formulate and benefits from. So, to advance this goal, we maintain an 

intense pace of high-level bilateral engagement. 

In 2 weeks, our countries will hold the U.S.-China Strategic and 

Economic Dialogue, the S&ED, in Beijing. This important annual 

dialogue is led by Secretaries Kerry and Lew, with their Chinese 

counterparts, and covers virtually every aspect of our relationship. 

The strategic track includes our highest ranking joint civilianmilitary exchange with China, will seek progress on challenges in 

Africa, South Asia, the Middle East, and will discuss concerns like 

maritime disputes and China’s behavior in the South and East 

China Sea, as well as cyber security and terrorism, and will further 

our important efforts with China on the world’s most pressing 

nuclear proliferation challenges: North Korea and Iran. 

In the economic track, we will work to strengthen global economic recovery. China’s leaders have announced plans for economic 

reforms that, if realized, could go a long way in moving China’s 

economy toward fair market principles. Growing Chinese direct 

investment in the United States contributes to jobs here at home, 

and our Bilateral Investment Treaty negotiations hold the potential 

for greater benefit. 

We will work on climate change, energy, and environment issues, 

where the United States and China share common interests and 

responsibilities as the two largest energy consumers and carbon 

emitters. 

And we will raise our concerns about the worsening human 

rights situation, as senior U.S. officials invariably do. Just this 

month, for example, China harshly suppressed any commemoration 

of the 25th anniversary of the violent Tiananmen Square crackdown, with cases of harassment, detention, and arrests of journalists, lawyers, activists. 

We will also expand exchange programs that foster long-term 

mutual understanding through the annual United States-China 

consultation on people-to-people exchanges—235,000 Chinese students studied in the United States last year, and we are increasing 

the number of Americans who study in China. And 1.8 million 

Chinese visitors last year contributed nearly $10 billion to our 

economy. 

Mr. Chairman, the United States-China relationship has made 

great strides over these decades, and we are committed to building 

on that progress. Together, we seek to create a ‘‘new model of relations’’ built on practical cooperation and constructive management 

of differences that strengthens the international system to the benefit of our countries and the world. 

Thank you, and I look forward to your questions. 

[The prepared statement of Ambassador Russel follows:] 

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PREPARED STATEMENT OF DANIEL R. RUSSEL

INTRODUCTION

Chairman Menendez, Ranking Member Corker, members of the committee, thank 

you for the opportunity to testify today on U.S.-China relations. It is also a great 

honor to be participating in today’s hearing with one of our Nation’s most accomplished diplomats, Ambassador Stapleton Roy—a friend, former colleague, and one 

of the foremost experts on U.S.-China relations. Ambassador Roy’s contributions to 

the U.S.-China relationship have been invaluable, and I look forward to hearing his 

insights. 

I would also like to take this opportunity to thank you, Mr. Chairman, for your 

leadership and to acknowledge this committee’s contributions to the rich bipartisan 

tradition of engaging China. I have found it extremely valuable to work closely with 

the committee’s members, and in particular with the Asia Subcommittee, in advancing U.S. interests vis-a-vis China and the Asia-Pacific region as a whole. 

OVERALL BILATERAL RELATIONS

This year marks the 35th anniversary of the establishment of official diplomatic 

relations between the United States and China. We have made remarkable progress 

since the era of back-channel messaging and secret trips. The scope of today’s U.S.- 

China relationship was unimaginable when President Nixon made his historic visit 

in 1972 to China. 

Yet there is still enormous potential for progress in the U.S.-China relationship. 

Progress that will yield benefits to the citizens of both countries, our neighbors, and 

the world. To realize this progress and these benefits, we seek to ensure that the 

relationship is not defined by strategic rivalry, but by fair and healthy competition, 

by practical cooperation on priority issues, and by constructive management of our 

differences and disagreements. Where interests overlap, we will seek to expand 

cooperation with China. These areas include economic prosperity, a denuclearized 

Korean Peninsula, peaceful resolution of the Iranian nuclear issue, and a reduction 

in the emission of greenhouse gases. Where they diverge—and we have significant 

and well-known areas of disagreement—we will work to ensure that our differences 

are constructively managed. 

Mr. Chairman, there are those who argue that cold-war-like rivalry is inevitable 

and that the United States and China are condemned to a zero-sum struggle for 

supremacy, if not conflict. I reject such mechanistic thinking. As anyone who has 

served in government can tell you, this deterministic analysis overlooks the role of 

leaders who have the ability to set policy and to shape relationships. It gives short 

shrift to the fact that our two economies are becoming increasingly intertwined, 

which increases each side’s stake in the success of the other. It undervalues the fact 

that leaders in Washington and Beijing are fully cognizant of the risk of unintended 

strategic rivalry between an emerging power and an established power and have 

agreed to take deliberate actions to prevent such an outcome. And it ignores the 

reality of the past 35 years—that, in spite of our differences, U.S.-China relations 

have steadily grown deeper and stronger—and in doing so, we have built a very 

resilient relationship. 

We view China’s economic growth as complementary to the region’s prosperity, 

and China’s expanded role in the region can be complementary to the sustained U.S. 

strategic engagement in the Asia-Pacific. We and our partners in the region want 

China’s rise to contribute to the stability and continued development of the region. 

As President Obama and Secretary Kerry have made very clear, we do not seek to 

contain China; to the contrary, we welcome the emergence of a stable, peaceful, and 

prosperous China. We believe all countries, and particularly emerging powers like 

China, should recognize the self-benefit of upholding basic rules and norms on 

which the international system is built; these are rules and norms which China has 

participated in formulating and shaping, and they are rules and norms that it continues to benefit from. In this context, we are encouraging China to exercise restraint in dealing with its neighbors and show respect for universal values and 

international law both at home and abroad. 

A key element of our approach to the Asia-Pacific region, often called the rebalance, is strengthening America’s alliances and partnerships in the region. This contributes directly to the stable security environment that has underpinned the region’s—and China’s—dramatic economic growth and development. 

A second element is working to build up regional institutions in order to uphold 

the international rules-based system and create platforms for the countries and 

leaders to work on priority strategic, economic, and other issues. These institutions 

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help develop habits of cooperation and promote respect for the interests of all 

parties. 

A third key element has been expanding and deepening our relationships with 

important emerging countries such as China, including through regular and highlevel dialogue. 

In just 2 weeks, our countries will hold the sixth round of the U.S.-China Strategic and Economic Dialogue—the ‘‘S&ED’’—in Beijing. This annual dialogue is 

unique in its level and scope. It is led on the U.S. side by Secretaries Kerry and 

Lew and brings a number of Cabinet-level and other senior U.S. Government officials together with their Chinese counterparts to work on the major issues facing 

us. The breadth of the agenda in the two tracks—strategic and economic—reflects 

the breadth of modern U.S.-China relations. The S&ED is an important vehicle for 

making progress in the pursuit of a cooperative and constructive relationship; for 

building a ‘‘new model’’ that disproves the thesis that the United States and China 

are somehow destined for strategic rivalry and confrontation. 

The S&ED is an important forum for the United States and China to take stock 

of and set goals for the bilateral relationship, to review regional and international 

developments and explain our respective policies, to coordinate and seek practical 

areas of cooperation on important issues of mutual interest, and to constructively 

manage areas of difference through candid, high-level discussions. 

Let me preview of some of the topics for upcoming discussions at this year’s 

S&ED: 

• We will exchange views and explore prospects for progress on regional challenges, including Sudan, Afghanistan, Iran, North Korea, Ukraine, Iraq, and 

maritime disputes in the South and East China Seas; • The world’s two largest economies will work on strengthening the global economic recovery; • The world’s two biggest energy consumers and carbon emitters will work on 

combating climate change, and expand cooperation on clean energy; • We will discuss global challenges ranging from cyber security to counterterrorism to wildlife trafficking, and the United States will raise our concerns over 

human rights; 

• Secretary Kerry will cochair the annual U.S.-China High-Level Consultation on 

People-to-People Exchange, which supports exchange programs that build the 

foundation for mutual understanding and trust; 

• And Deputy Secretary of State Bill Burns and his Chinese counterpart will hold 

the U.S.-China Strategic Security Dialogue (SSD), our highest-ranking joint 

civilian-military exchange with China, where we will conduct frank discussions 

on some of the most sensitive strategic issues in the relationship. 

The S&ED and our numerous other dialogues and official exchanges with the Chinese each year reflect the importance we attach to managing this relationship. This 

level and pace of engagement show the commitment of both sides to producing tangible benefits for our two peoples, the Asia-Pacific region, and the global community. 

The United States and China have a vital stake in each other’s success. That is 

why we maintain an intensive schedule of engagement; President Obama and President Xi met in Sunnylands, CA, a year ago and have met twice more since then. 

The President plans to visit Beijing in November when China hosts APEC. Secretary Kerry, as well as numerous Cabinet and sub-Cabinet officials, have visited 

China already in 2014 and have met with Chinese counterparts in the United States 

or at international fora. 

We work with China in virtually all important international arenas, including the 

U.N., the G20, the East Asia Summit, and APEC where we are cooperating closely 

on regulatory transparency, supply chain efficiencies, promoting clean and renewable energy, cross-border education, and combating corruption and bribery. Our 

relationship touches on nearly every regional and global issue, and, as such, requires sustained, high-level attention. Moreover, few of these issues can be effectively addressed if China and the United States do not cooperate. 

ECONOMIC RELATIONS

Economic issues play a central role in the U.S.-China relationship. China’s economic success has added to our growth and increased the purchasing power of consumers in the United States. Our two-way trade has almost quadrupled since China 

joined the WTO in late 2001. While the long-standing imbalance in that trade 

remains troubling, China is now one of the fastest growing U.S. export markets. In 

fact, U.S. exports to China grew by more than 90 percent between 2007 and 2013. 

In our bilateral engagements, we are encouraging economic reforms within China 

to ensure not only that its economic behavior is sustainable on its own terms, but 

FOREI-43947 with DISTILLER

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that it contributes to strong, sustainable and balanced growth of the global economy. 

This includes reorienting its economy away from a development model reliant on 

exports and credit-fueled investment in real estate and infrastructure to one that 

increases consumer spending and contributes to global demand. Central to this goal 

has been urging China to move toward a market-determined exchange rate. We are 

also addressing sources of friction in our bilateral relationship by pressing China 

to change a range of discriminatory policies and practices that harm U.S. companies 

and workers and that undermine incentives to innovate. These include subsidies 

that tilt the competitive playing field in favor of Chinese national champions, policies that pressure companies to hand over intellectual property as a condition for 

access to the Chinese market, and export credits that unfairly advantage Chinese 

companies in third markets. U.S. businesses have investments totaling over $50 billion. And from 2012 to 2013, Chinese direct investment flows into the United States 

more than doubled, according to private sector figures, and now contribute to thousands of jobs here. Our ongoing bilateral investment treaty negotiations hold the 

potential for even more mutually beneficial economic ties. 

Even as we increase trade and investment, we will continue insisting on tangible 

progress in other economic areas that matter to the United States. These include: 

• China continuing to move toward a market-determined exchange rate; 

• Negotiating a Bilateral Investment Treaty; 

• Increasing access to Chinese markets for U.S. businesses; 

• Developing a more transparent regulatory regime; 

• Ending industrial policies that favor state-owned enterprises and national 

champions and seek to disadvantage foreign companies and their products; 

• Ending forced technology transfer; and 

• Addressing U.S. concerns over the theft of intellectual property and trade 

secrets, including government-sponsored, cyber-enabled theft for the purpose of 

giving Chinese companies a competitive advantage. 

We will also continue to encourage greater Chinese integration into the rulesbased international economic and trading system, in order to create a level playing 

field for domestic and foreign companies operating in its and other markets. Over 

the last few months, China’s leaders have announced plans for sweeping reforms 

that, if realized, could go a long way in moving China’s economy toward market 

principles. We are encouraged that these announced reforms would potentially give 

the market a greater role in the economy, and we are keenly interested to see such 

reforms put into practice. I believe we can do much to work with China as it transitions to a consumption-driven, market-oriented growth model that would benefit 

both our economies. 

MILITARY-TO-MILITARY RELATIONS

On the military side of the U.S.-China relationship, we are committed to building 

a sustained and substantive military-to-military relationship that focuses on identifying concrete, practical areas of cooperation and reducing risk. This includes not 

only deepening the use of institutionalized dialogue mechanisms, including senior 

defense participation at the SSD and S&ED, but also inviting the Chinese to join 

regional cooperative exercises and expanding talks with the Chinese military about 

operational safety in the region. For the first time this year, China will participate 

in RIMPAC June 26–August 1 in Hawaii. 

We also aim to continue high-level exchanges between our militaries. Recent 

exchanges have included visits to China by Secretary Hagel in April and General 

Odierno in February, and a visit to the United States by Chief of the General Staff, 

General Fang Fenghui, in May. 

At the same time, we will continue to carefully monitor China’s military developments and encourage China to exhibit greater transparency with respect to its military spending and modernization. This will help countries better understand the 

motivations of the People’s Liberation Army. We continue to encourage China to use 

its military capabilities in a manner conducive to the maintenance of peace and stability in the Asia-Pacific region. 

GLOBAL AND REGIONAL ISSUES

As the largest energy consumers, greenhouse gas emitters, and renewable energy 

producers, the United States and China share common interests, challenges, and 

responsibilities. These are issues that relate directly to our economic and national 

security. Cooperation on climate change, energy, and environmental protection is 

more critical than ever and is an important area of focus in the U.S.-China bilateral 

relationship. 

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Through broad dialogues such as the Ten-Year Framework for Energy and Environment Cooperation and the S&ED, over the last year we have been able to 

produce new and expanded commitments to cooperation on climate change, energy, 

and the environment. During Secretary Kerry’s February trip to Beijing, he announced implementation plans for each of the five initiatives under the Climate 

Change Working Group as well as a new enhanced policy dialogue on domestic and 

international policies to address climate change that will be held on the margins of 

the upcoming S&ED. 

China is a vital partner on some of the world’s most pressing proliferation challenges, including the DPRK and Iran. The United States and China agree on the 

importance and urgency of achieving a denuclearized, stable, and prosperous Korean 

Peninsula. While differences remain between us on some of the tactics, we coordinate closely and consult intensively on how to advance these shared goals. The 

result has been a tightened web of sanctions targeting North Korea’s nuclear, ballistic missile, and proliferation efforts. China has also strengthened its own sanctions enforcement, which we welcome, though it could do more to prevent North 

Korea from engaging in proliferation activities. Indeed, North Korea remains in flagrant violation of the U.N. Security Council resolutions that the United States and 

China approved and support. So we are urging China to make greater use of its 

unique leverage with the DPRK to produce concrete signs that the DPRK leader has 

come to the realization that his only viable path forward is denuclearization. 

On Iran, the United States and China share the goal of preventing Iran from 

acquiring a nuclear weapon and are working together within the P5+1 negotiations 

with Iran toward that goal. Through our frequent and high-level engagement, we 

will continue to press China to honor its commitments, in particular those related 

to its imports of Iranian oil and enforcement of U.N. sanctions, in furtherance of 

reaching a comprehensive and long-term solution to the Iran nuclear issue. 

MANAGING DIFFERENCES

In the Asia-Pacific region, Beijing’s neighbors are understandably alarmed by China’s increasingly coercive efforts to assert and enforce its claims in the South China 

and East China Seas. A pattern of unilateral Chinese actions in sensitive and disputed areas is raising tensions and damaging China’s international standing. Moreover, some of China’s actions are directed at U.S. treaty allies. The United States 

has important interests at stake in these seas: freedom of navigation and overflight, 

unimpeded lawful commerce, respect for international law, and the peaceful management of disputes. We apply the same principles to the behavior of all claimants 

involved, not only to China. China—as a strong and rising power—should hold itself 

to a high standard of behavior; to willfully disregard diplomatic and other peaceful 

ways of dealing with disagreements and disputes in favor of economic or physical 

coercion is destabilizing and dangerous. 

The United States does not take sides on the sovereignty questions underlying the 

territorial disputes in the South and East China Seas, but we have an interest in 

the behavior of states in their management or resolution of these disputes. We want 

countries, including China, to manage or settle claims through peaceful, diplomatic 

means. For example, the Philippines and Indonesia have just done so in connection 

with their EEZ boundary. Disputes can also be addressed through third-party dispute resolution processes. Where parties’ rights under treaties may be affected, 

some treaties provide for third-party dispute settlement, as is the case of the Law 

of the Sea Convention, an avenue pursued by the Philippines in an arbitration with 

China currently being considered by an Arbitral Tribunal constituted under that 

treaty. The United States and the international community oppose the use or the 

threat of force to try to advance a claim, and view such actions as having no effect 

in strengthening the legitimacy of China’s claims. These issues should be decided 

on the basis of the merits of China’s and other claimants’ legal claims and adherence to international law and norms, not the strength of their militaries and law 

enforcement ships or the size of their economies. 

Another area where we believe China’s actions run counter to important universal 

principles is the worsening human rights situation in China. Just this month, China 

conducted a harsh crackdown on commemorations of the 25th anniversary of 

Tiananmen Square. China’s actions included the detention, harassment and arrests 

of journalists, lawyers, and activists. Top U.S. officials raise our concerns with Chinese leaders on a regular basis, and, as we have in every previous round, Secretary 

Kerry plans to raise human rights at this year’s S&ED. We express concern about 

the Chinese Government’s censorship of the media and Internet. We push for the 

release of all political prisoners, including but not limited to prominent figures like 

Liu Xiaobo. We urge China to address the policies in Tibetan areas that threaten 

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the distinct religious, cultural, and linguistic identity of the Tibetan people. Instability and violence are on the increase in the Xinjiang Uighur Autonomous Region. 

As we unequivocally condemn the acts of terrorism and violence, we also urge China 

to take steps to reduce tensions and reform counterproductive policies that stoke 

discontent and restrict peaceful expression and religious freedom. 

CONCLUSION

Clearly, a wide-ranging and complex relationship such as ours with China comes 

with challenges. Some degree of friction is inevitable. But an essential tool for managing and resolving differences is open and extensive communications between our 

two countries—at senior and working levels of government, military to military, 

through local governments and organizations, between our business communities, 

and at the grassroots level. 

We are now reflecting on the considerable progress attained in 35 years of bilateral relations. One key lesson is that to ensure that our relationship grows and matures, we need to build up the links among our two peoples. People-to-people exchanges are essential to enhancing mutual understanding and furthering U.S. strategic and economic goals. To that end, the United States in 2013 received 1.8 million 

Chinese visitors who collectively spent $9.8 billion on goods and services in our 

economy. Our State Department personnel work hard to facilitate growing Chinese 

demand for international travel by maintaining average visa wait-times under 5 

days over the past 2 years. 

Education also plays an important role fostering mutual understanding. In 2013, 

we had 235,000 students from China studying in the United States, more than from 

any other country, and the United States aspires to increase the number of American students studying in China and learning Mandarin through the 100,000 Strong 

Initiative. In March, PRC First Lady Peng Liyuan welcomed First Lady Michelle 

Obama to China where together they met with U.S. and Chinese students and faculty and promoted the value of study abroad and educational exchange. 

We are also working with groups like the Sister Cities International and the U.S.- 

China Governors Forum. These programs help by encouraging and supporting cities 

and states to deepen their cultural or commercial ties with Chinese counterparts. 

In the last year alone, we have supported numerous visits of governors and state 

delegations and helped them to find opportunities to deepen their involvement and 

links to China. 

The Department works closely with the United States Chamber of Commerce, 

AmCham China, the U.S.-China Business Council, and other business groups to 

support key priorities for U.S. companies doing business in China and to promote 

greater Chinese investment in the United States. In partnership and consultation 

with those organizations, we have encouraged the Chinese Government to eliminate 

investment restrictions, strengthen IPR protection, increase regulatory transparency, and establish a level playing field for all companies in China. 

In conclusion, let me paraphrase what President Obama said earlier this year 

when he met with Chinese President Xi at the Nuclear Security Summit in The 

Hague. The U.S.-China relationship has made great strides over these past several 

decades, and both sides are committed to building a new model of relations between 

our countries defined by expanded cooperation and constructive management of differences. 

Mr. Chairman, I thank you for the opportunity to appear before you today to discuss U.S.-China relations. I look forward to answering any questions you and others 

from the committee may have. 

The CHAIRMAN. Well, thank you. It sounds like a rather rosy picture. Let me delve into it a little bit. 

So, when China speaks of a new type of great power relationship, 

what is it that the administration interprets in that phrase? Is that 

China just laying down a marker for gaining greater say in its own 

backyard? And what is our response to that? 

Ambassador RUSSEL. The new model concept is something that 

was discussed indepth in the Sunnylands meeting, a year ago, that 

Senator Corker referred to. There are those in China who seek to 

define a new model as if it were the creation of a sphere of influence by China in the Asia-Pacific region, and the ‘‘respect’’ by the 

United States and the international community for certain ‘‘core 

FOREI-43947 with DISTILLER

10 

interests,’’ as if it was not legitimate for the United States and others to hold positions on certain issues. 

We see the prospect of a so-called ‘‘new model’’ very differently. 

To the President and to the administration, to the United States, 

the goal is a model that is defined by practical cooperation on 

issues of genuine significance to the United States, China, and to 

the world—real issues, not boutique issues—along with the ability 

and the wherewithal to address and manage our serious and genuine differences, and to do so in a way that is strengthening, not 

deleterious, to the rules of the international system that have 

allowed China to achieve so much progress in its development. We 

seek a model of a relationship that is marked not by strategic 

rivalry, but by healthy competition. 

The CHAIRMAN. So—and that is what we see. What does China 

see when it says that it seeks a relationship that is based on a new 

great power paradigm? 

Ambassador RUSSEL. When the Chinese officials talk about the 

‘‘new model,’’ typically they talk about win-win outcomes, and they 

talk about respect for core interests. We are all for win-win outcomes, but we are not for slogans. 

What we care about and what we seek to achieve is meaningful 

cooperation. So, at the upcoming S&ED, for example, on the security—on the strategic track, which, as I mentioned, brings together 

high-level civilian as well as military officers in the strategic security dialogue under it, we engage on issues like the conduct of 

China in the South China Sea and the East China Sea. We engage 

directly on issues of human rights, including the repressive practices in Xinjiang and Tibet. We do not consider so-called ‘‘core 

interests’’ to be out of bounds for substantive discussion, and we 

hold China to account for its behavior. 

The CHAIRMAN. Well, when we talk about hoping that China will 

be part of an international order that will observe international 

rules, and you talk about the South China Sea, is our carefully calibrated balance between cooperation and competition still the right 

approach? Should we be putting a little more on the competition 

side and demonstrating, in more robust terms, our enduring 

national interest in freedom of navigation, the free flow of commerce, and the peaceful resolution of disputes, consistent with 

international law? 

Ambassador RUSSEL. Mr. Chairman, we believe that competition 

and cooperation coexist in the United States-China relationship. 

We seek healthy competition on the basis of a set of accepted global 

norms. We welcome the right and the ability of China to participate in shaping and updating rules, but on the condition that 

China accepts that rules are binding on it, as well as on others. 

Rules apply not only to small countries, but to large ones. 

We are strengthening our diplomatic engagement throughout the 

region. We have significantly strengthened our military alliances 

and our security relationships. Our presence in the life and in the 

security of the Asia-Pacific is robust. 

The Prime Minister of Singapore is in Washington today. I think 

he had the opportunity to call on you and other members of the 

committee. Singapore, for example, is not only an important security partner of the United States, not only an important conegoFOREI-43947 with DISTILLER

11 

tiator in the effort to achieve a uniquely high-standard, comprehensive trade agreement, the TPP. Singapore is also a charter member 

in ASEAN, a regional grouping that the Obama administration has 

invested a great deal of diplomatic effort in supporting. 

The CHAIRMAN. I appreciate that. But, you know, this committee 

has expressed itself, as has the Senate, about its concerns about 

the way China is acting in the South China Sea. And, while there 

may be—maybe those are legitimate disputes on territories—but 

the manner in which, so far, it seems to be addressed is more of 

a muscular China versus a China driven by the international order 

which seeks to solve its disputes through the international order. 

And that is a concern. 

Let me turn to another concern. We talk about competition. I 

was in China last August, and throughout the region, and I always 

try to meet with the American Chamber of Commerce in different 

countries to get a perspective of the realities on the ground about 

the challenges of doing business for American companies in a given 

country. And a 2013 American Chamber of Commerce China survey found that 72 percent of respondents, which reflected a lot of 

what I heard when I was there, said that China’s IPR enforcement 

was either ineffective or totally ineffective. The U.S. International 

Trade Commission estimated that United States intellectualproperty-intensive firms that conducted business in China lost $48 

billion in sales, royalties, and license fees in 2009 because of IPR 

violations there. In certain sectors, such as wind power, where 

American Superconductor has been severely harmed by IP theft by 

its Chinese partner, Sinovel, the damage to U.S. businesses have 

been particularly acute. It is estimated that an effective IPR 

enforcement regime in China that would be comparable to United 

States levels could increase employment by IP-intensive firms here 

in the United States by 923,000 jobs. 

So, where does intellectual property rights in our competition 

and discussion with China rank on the list of priorities among the 

wide range of issues that we have with China? 

Ambassador RUSSEL. Mr. Chairman, the protection of intellectual 

property rights is a top priority for the administration, and I can 

personally attest to the fact that President Obama, Vice President 

Biden, Secretary Kerry, and other Cabinet Secretaries have raised 

our concerns very directly with Chinese leaders, including, and particularly, the Premier, Li Keqiang, who has responsibility for the 

economy. This is on the agenda as a priority issue for the upcoming 

S&ED. 

The CHAIRMAN. But, we have had this on the agenda. Now, this 

is not new to the agenda, right? So, what—— 

Ambassador RUSSEL. Right. 

The CHAIRMAN [continuing]. Is the progress we have made? I 

mean, where has the dialogue taken us on making advancements? 

So far, I do not see it. 

Ambassador RUSSEL. Well, there are points of measurable 

progress with respect to motion pictures, with respect to pharmaceuticals. But, I fully agree with your point that China still has a 

long way to go to meet acceptable international standards in protecting IPR. 

FOREI-43947 with DISTILLER

12 

One thing that is different is the fact that the Chinese themselves now realize that they increasingly have more to lose as Chinese companies develop products and as Chinese consumers suffer 

from the poison or the other deleterious effects of fake pharmaceuticals and counterfeit products. 

We use our regular working group on IPR to delve down on very 

specific issues. We have made a strong push to educate Chinese 

consumers and manufacturers to the fact that they lose in the race 

for innovation, they lose in the race for entrepreneurship, when 

they flagrantly violate the rule of law and they rely on the theft 

or the forced transfer of U.S. or other technology and products as 

the driver of their industries. 

A related problem, Mr. Chairman, is the use of cyber-enabled 

theft of United States companies’ intellectual property and proprietary information, theft that we have identified as enabled, in some 

cases, by Chinese Government or Chinese military officials. This is 

an issue that we raise forcefully, and it is an area where we will 

continue to push for Chinese to take action. 

The CHAIRMAN. I have many other questions. 

Let me turn to Senator Corker, recognizing that there is a vote 

that is ongoing. 

Senator Cardin, have you voted in the last vote? 

Senator CARDIN. I have. 

The CHAIRMAN. So, I will let Senator Cardin chair. I will leave, 

come back, and we will try to keep the hearing going, in respect 

to everybody’s time. 

Senator Corker. 

Senator CORKER. Thank you. Thank you. 

Again, thank you for being here. 

I cannot help but notice that Secretary Kerry’s bigger issues, 

timewise, seem to lie in the Middle East. Secretary Sherman is 

spending 100 percent of her time on Iran negotiations—we had a 

good meeting this morning—and Secretary Burns is leaving. Who 

is responsible at the State Department for our China policy? 

Ambassador RUSSEL. Secretary Kerry, personally, is responsible, 

and is engaged directly in overseeing our China policy. I met with 

Secretary Kerry at some length last week to discuss it. I have 

accompanied Secretary Kerry to China. I will again next week, 

when he makes his sixth visit to Asia. He is on the phone with his 

Chinese counterparts, he is in regular receipt of the reports that 

our Ambassador, Ambassador Baucus, submit or that I send up. I 

have found, and I can attest, Senator, to the fact, that Secretary 

Kerry and Deputy Secretary Burns and all of our Under Secretaries are focused and engaged on the Asia-Pacific broadly, but particularly on the United States-China relationship. 

Senator CORKER. And what is their constructive policy to persuade China to not have the antagonistic relations that it has with 

its neighbors? 

Ambassador RUSSEL. Well, we have outlined clearly the principles that we believe should guide China and all the countries in 

the region with respect to maritime security, which includes, obviously, the respect for freedom of navigation and overflight, unimpeded lawful commerce, and insist that only peaceful resolution of 

FOREI-43947 with DISTILLER

13 

disputes is in consistency with international law as the acceptable 

vehicle for responding. 

There is, however, as you have pointed out, Senator, a pattern 

of behavior on the part of the Chinese that is straining China’s 

relations with its neighbors and raising questions about China’s 

intention. We talk candidly, directly, and openly to the Chinese 

leadership through our diplomatic context. We talk extensively 

with not only the other four claimants, which are ASEAN countries, but also the relevant neighbors who have a stake in the 

peaceful and open region in Southeast Asia. 

We have put forward—and you will hear more about this from 

Secretary Kerry—a proposal that the claimants themselves, including China—China is not alone in overreaching—can, on a voluntary 

basis, forgo some of the provocative actions that are destabilizing, 

such as the reclamation of islands and the construction of bases, 

such as the building up of outposts, and so on. 

So, we use public messaging, we use diplomacy. We also engage 

in building the capacity of the countries in Southeast Asia to 

ensure that they are able to adequately police their own territorial 

waters and that they can maintain the domain awareness that 

ensures that they know what is going on in their contiguous waters 

or in the open seas. 

Our strategy, Senator, includes the support for a unified and 

influential ASEAN, and we believe that the call from the ASEAN 

countries to China to work with them, not to bully them, has a 

long-term salutary effect. 

Lastly, the fact of the matter is that the robust military presence, the strong security commitments, and the healthy alliances 

that the United States maintains with many countries in the 

region similarly serves to maintain stability and keep the peace, 

going forward, as it has for the last six decades. 

Senator CORKER. I appreciate that comprehensive answer. We 

just had a gentleman in from the region who is very much a part 

of China, if you will, and I asked him why this was taking place. 

If you want to synthesize his answer down to just a phrase, it was, 

‘‘China’s doing this because they can.’’ 

Ambassador RUSSEL. That is—— 

Senator CORKER. So, for years, they could not. They were not 

strong enough. Now they are a rising nation, and they can do what 

they are doing because they can. 

I listen to you, and, I am not in any way trying to be critical of 

you as an individual, but I hear all those things, and it does not 

appear to me that it is having the desired outcome. Now, maybe 

over the next 20 years, as you build these capacities, maybe that 

is the case. But, I am concerned that, over the next 20 months, 

something happens that ends up creating a conflict or things get 

out of hand. I am just wondering what are some of the other things 

the administration might consider to ensure that something really 

catastrophic does not occur? 

Ambassador RUSSEL. Well, thank you, Senator. 

We believe strongly that diplomacy is the right vehicle for 

addressing this set of problems. We also think that one critically 

important step will be for all of the claimants, not only China, but 

particularly China, to define its claims clearly in ways that are 

FOREI-43947 with DISTILLER

14 

consistent with international law. Because the risk of an incident 

and confrontation that you allude to is driven by ambiguity over 

who is claiming what, and on what basis. And so, we have, therefore, urged China to set aside the legally ambiguous construct of 

a nine-dash line and, instead, make its claim—and we do not take 

a position; its claims may be valid—but, make a claim in terms 

that are consistent with international law. 

Number two, to pursue diplomatic or legal means to address it. 

We are also, as I mentioned, strengthening the capacity of the partners on an ongoing basis. I do not think this is a 20-year proposition, but it is not an overnight proposition, either. 

China’s—by its own assertion, China’s interests lie in a stable 

and peaceful periphery. China has said—China’s leaders have said 

that they want quiet in their environment in order to concentrate 

on development and social and economic growth. They have not 

achieved stability or quiet. To the contrary, they have generated 

real strains in their relationships. And so, the watchword that we 

advocate, in the first instance, is restraint, and big countries have 

a big responsibility to exercise it. Secondly, there are a range of 

very practical crisis-prevention and crisis-management initiatives 

that are in play in the region. And Secretary Kerry, who will be 

in the region for a seventh time to attend the ASEAN Regional 

Forum in August, is a strong advocate for, and has held in-depth 

discussions, as he will again in August, on some of these very practical confidence-building measures and crisis-prevention measures 

that include hotlines and that include agreements on handling 

unplanned incidents at sea. 

Senator CORKER. Well, thank you for being here. 

I am going to turn it over to Chairman Cardin and go vote so 

folks back home will have confidence in me. Okay? [Laughter.] 

Thank you. 

Senator CARDIN [presiding]. Secretary Russel, let me thank you 

for not just your leadership on the bilateral relations between the 

United States and China, but your work in East Asia and the 

Pacific and the manner in which you have worked with this committee and with the United States Senate. I do appreciate the close 

relationship and the sharing of information as we do the rebalance 

to Asia. I think it is been in the best interests of the United States. 

And, as you point out, the bilateral relationship between the 

United States and China is multifaceted. There are areas where we 

have common interests, and we can, hopefully, find a path forward. 

One of those, quite frankly, is a peaceful resolution of the conflicts 

within the China Sea. It is not in China’s interest to see military 

flareups or have this become expanded, because they depend upon 

commerce on the China Sea, as we do, as the region does. So, in 

my conversations with Chinese leaders, I think that they truly do 

not want to see a military flareup on the China Seas, and they 

want to keep the lanes open. But, it will take real leadership to 

have the rule of law prevail rather than the force of one country 

in determining the territorial disputes. 

We have a common interest on the environment. And it seems 

to me we can work together on that. We have some common interests in trade. The United States market is very important to 

China, and commerce between China and the United States is very 

FOREI-43947 with DISTILLER

15 

important to America’s economy. So, we have a lot of common interests. And, as you point out, we have some significant challenges. 

The Chinese progress on basic human rights is still very troublesome. The ability to express views contrary to the government in 

a safe and peaceful manner is certainly very much in question. The 

freedom of religion is a major issue and the protection of intellectual property. It is clear there are a lot of issues that need to be 

managed between the United States and China. 

I found one thing you said about U.S. intentions which I could 

not agree with you more on. Our intention is for China to continue 

to grow and be a constructive player in the region. We are fully 

prepared to compete with any country in the world, including 

China, as long as it is on a level playing field. But we also need 

markets for our products. And as China’s middle class grows, it 

provides consumers to buy American goods. So, our intentions are 

clearly for China to continue its economic growth, and do it in a 

way consistent with the respect for its neighbors, and to be a constructive player in the region. 

But, I must tell you, in my conversations with Chinese leaders, 

I do not think they believe that. Seems to me they believe that we 

are interested in holding China back and that the rebalance is 

more about keeping China isolated than it is about every country 

in the region growing. 

So, can you just share with us your view, if you agree with me— 

if you disagree with me, please let me know—as to how we deal 

with creating better trust between the United States and China, 

and do it in a way that does not compromise our positions on issues 

and our values, that we are pretty clear about what we expect in 

that relationship. 

Ambassador RUSSEL. Well, Senator Cardin, first of all, thanks for 

your kind words, and thank you particularly for your leadership, 

especially on the Asia Subcommittee. 

I very much agree with the points that you made in your statement. And I am very focused on the question of building strategic 

trust, both between the United States and China, but also between 

China and its neighbors, because the uncertainty and the concerns 

that China’s neighbors and many Americans feel about China’s 

long-term intentions, which, among other things, is fueled both by 

its problematic behavior with regard to territorial disputes, but 

also the opacity of its military modernization, represent an impediment to real progress, both in the bilateral relationship, but also 

in regional growth. 

I believe that one of the essential ingredients to developing real 

trust, as opposed to papering over differences, is direct, high-level 

dialogue. China is a one-party state, and the ability to speak 

directly to Chinese leaders is uniquely important. Since taking 

office, President Obama has met with the Chinese President or the 

Chinese Premier, I think, something on the order of 19 times, 

which is extraordinary. But, Secretary Kerry, along with other senior officials, similarly have maintained a very robust rhythm of 

high-level meetings interspersed, as I mentioned, by telephone calls 

and so on. And the S&ED, which is 2 weeks out, represents another important vehicle, both for the high-level direct dialogue, but 

also for the important stakeholders in our respective departments 

FOREI-43947 with DISTILLER

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of government and agencies who are working on projects or wrestling with disagreements through the course of the year, to meet 

in person and to take stock of what they have done, and to chart 

a program of work ahead for the coming year. 

A second area that is essential in building trust, I believe, is 

promoting people-to-people connections. And through our comprehensive high-level people-to-people dialogue, through our various educational exchanges, through our outreach programs to Chinese citizens and NGOs, and, frankly, through Chinese language 

training programs for Americans, we are ensuring that the next 

generation gets a firsthand understanding of what the other culture and the other system is all about. 

Thirdly, the economic relationship, as you mentioned, is hugely 

important. And, as China increasingly develops its own intellectual 

capital and acquires something worth protecting, we are confident 

that our messages about the need to protect intellectual property 

will start to ring true, because the Chinese are suffering both from 

counterfeit materials, but also from a lack of innovation. 

And then, lastly, as I alluded to, greater clarity in China’s military modernization will be an important element of creating trust 

between China and the United States and its neighbors. We have 

a strong military-to-military dialogue that involves high-level 

exchanges. The Secretary of Defense has recently been to China. 

We have got other visits in the works. And we are working hard 

to remove the uncertainties and the ambiguities in connection with 

our military-to-military relationship, including by going so far as to 

include China in some of our multilateral exercises. 

Senator CARDIN. Well, thank you very much. I think that gives 

us an agenda to work on this. It is not easy. I think people-to-people exchanges have been extremely helpful. When I was in China, 

one of my most enjoyable meetings was with students. It is a country that guards itself pretty carefully when it comes to expression 

of views. So, I have found students to be very refreshing in that 

regard. And I think we do have a real challenge on our hands to 

develop that trust, consistent with our positions on issues, so it is 

very clear that, for our strategic partnerships to grow, there are 

areas that need to be understood, and that that comes from the 

framework that we have two different governments. We understand that. And our goal is to improve that relationship and to 

make the progress that is important for U.S. interests. 

We are going to take—we are going to go to the second panel. 

Senator Menendez is going to be back in about a moment, so we 

are going to take a very short recess, and then Senator Menendez 

will reconvene the committee for the purposes of introducing the 

second panel. 

Ambassador RUSSEL. Thank you very much, Mr. Chairman. 

[Recess.] 

The CHAIRMAN [presiding]. This hearing will come to order again. 

Let me apologize to our witnesses. We have one more vote going 

on, but I thought that we have probably enough time to listen to 

both of your testimonies and maybe begin some questioning before 

we will have to take one more vote and another short recess. 

FOREI-43947 with DISTILLER

17 

But, we are pleased to be joined by two incredibly important witnesses—J. Stapleton Roy, distinguished scholar and founding director emeritus of the Kissinger Institute on China and the U.S. at 

the Woodrow Wilson International Center for Scholars, here in 

Washington; and Dr. Aaron Friedberg, professor of politics and 

international affairs, at Princeton, which is a university that is in 

service to the country, but located in the great State of New Jersey. 

So, we welcome you here. 

As I said to our State Department witness, your entire statements will be included in the record. I would ask you to summarize 

them in about 5 minutes or so, so we could enter into a dialogue. 

And we will start with you, Ambassador Roy. 

STATEMENT OF HON. J. STAPLETON ROY, DISTINGUISHED 

SCHOLAR AND FOUNDING DIRECTOR EMERITUS OF THE 

KISSINGER INSTITUTE ON CHINA AND THE UNITED STATES, 

WOODROW WILSON INTERNATIONAL CENTER FOR SCHOLARS, WASHINGTON, DC 

Ambassador ROY. Thank you, Mr. Chairman, particularly for 

holding this hearing on an issue which is of vital importance to the 

United States and to the peace of the world. 

The United States, in my judgment, has a sensible and constructive policy framework for dealing with a rising China, but successful implementation of this policy will require patience and perseverance. 

East Asian countries worry about U.S. staying power in the 

region. The United States rebalancing strategy is, in essence, an 

effort to demonstrate to our friends and allies in East Asia, and to 

China, that the United States has both the will and the resources 

to remain actively engaged in East Asia, politically, economically, 

and militarily, as we regain our economic health. 

Fortunately, top leaders in both China and the United States 

have concluded that unchecked strategic rivalry between the two 

countries is not in the interests of either. 

They have set the strategic goal of striking a stable and sustainable balance between competition and cooperation in the U.S.- 

China relationship. Accomplishing this will not be easy. A major 

driver of the growing strategic mistrust between China and the 

United States is the understandable desire of each side to have a 

military balance that favors its own interests. This is a natural 

preference, but it will not contribute to containing strategic rivalry 

between China and the United States. This is the heart of the strategic problem between the United States and China. We do not 

know whether a solution can be found, but finding a solution is 

worth the effort. 

In pursuing the goal, both China and the United States are confronted with serious contradictions in our position in the western 

Pacific. If we do not manage these contradictions properly, the strategic goal of constraining our strategic rivalry will be a vain hope. 

In China’s case, it must deal with the fundamental contradiction 

between its commitment to peaceful development and its equally 

strong commitment to defending China’s sovereignty and territorial 

integrity. If China strays from the path of peaceful development, 

FOREI-43947 with DISTILLER

18 

its hope of achieving the China dream of the great rejuvenation of 

the Chinese nation will be hopeless. 

Adhering to the path of peaceful development is easier said than 

done, because China is embroiled in territorial disputes with six of 

its neighbors. An additional aspect of this issue is that domestic 

influences on China’s foreign policy are becoming stronger, limiting 

China’s diplomatic flexibility. This has long been a problem in handling China’s relations with Japan, in large measure because 

domestic attitudes in China toward Japan, and historical memories 

are so strong, that Chinese leaders must take care not to let the 

spearhead of nationalism turn against themselves. Historical revisionism in Japan is also a major contributing factor to the current 

tensions affecting Japan’s relations with China and South Korea. 

In the case of the South China Sea, domestic influences on China’s handling of the issue have become more intense over the last 

decade, and China’s skillful diplomacy in Southeast Asia of a dozen 

years ago has largely been undone by China’s more assertive 

approach to territorial issues in the South China Sea. China’s leaders recognize the problem, and they are giving high-level attention 

to trying to strengthen China’s diplomacy with its neighbors. They 

had a special conference, in October last year, chaired by Xi 

Jinping, to address this question. But, China has still not found a 

satisfactory method of managing this contradiction, and this is contributing to the rise in regional tensions. 

In the case of the United States, let me just cite two contradictions in our approach. The first is, the relations between our two 

allies in Northeast Asia—South Korea and Japan—are not good. 

They are marked by significant tensions. A second contradiction for 

the United States is that two of our allies—Japan and the Philippines—are locked in territorial disputes with China over uninhabited islands that are of no interest or importance to the United 

States. There is no question in my mind that the United States will 

stand by our allies if they are subjected to aggression, but we do 

not wish to be dragged into an avoidable conflict with China over 

small issues, from our standpoint. 

For all these reasons, we cannot be complacent in looking to the 

future, although I think there are grounds for optimism that we 

can actually handle these problems and steer them in the right 

direction. 

There are troublesome negative aspects in our bilateral relations 

with China that, if not handled correctly, could increase regional 

tensions and damage the interests of both countries. We have not 

yet been able to stabilize the balance between cooperation and competition in the relationship. 

In the United States, the sharp increases in China’s defense 

spending, beginning in the mid-1990s, are feeding concerns that 

China poses a potential threat to the United States position in the 

Asia-Pacific. In my view, conventional diplomacy will not be sufficient to limit and hopefully reverse our strategic rivalry with 

China. 

It is the normal responses of human nature that have led to confrontations throughout history, and we can see this pattern unfolding in the crisis in Europe over Ukraine and in the rising tensions 

between China and Japan. This is normal behavior. You do someFOREI-43947 with DISTILLER

19 

thing I do not like; I respond with actions that you do not like. And 

you have this back-and-forth. This is the reason why rising powers 

have more often than not gotten into confrontation with established 

powers. 

It was unconventional behavior on the part of China and the 

United States 42 years ago that achieved the breakthrough in our 

relations that led to the establishment of U.S.-PRC diplomatic relations. Similarly, it took a leader of Deng Xiaoping’s courage and 

foresight to state, 35 years ago, that territorial problems between 

China and Japan are too complicated for the current generation to 

resolve, and should be left for future generations to resolve. By taking that unconventional position, Deng greatly facilitated the positive development of Sino-Japanese relations over the next quarter 

century. We need to be equally daring in our approach to stabilizing our relations with China. 

In conclusion, let me stress that China’s economic rise has benefited China’s neighbors and the region as a whole. All of China’s 

neighbors have an interest in continuing economic cooperation with 

China and do not support a containment strategy that would divide 

the region. Their interest is in responsible Chinese behavior as a 

major emerging power, not in constraining China’s growth. When 

China, in their eyes, behaves irresponsibly or seems ready to act 

coercively, they want the assurance provided by the reliable presence of a militarily strong country, such as the United States, that 

can offset Chinese growing power. 

At the same time, no regional country wants to be forced to 

choose between China and the United States. If the United States, 

in regional eyes, seems to be mishandling its relations with China 

in ways that make China a more nationalistic or dangerous neighbor, confidence in the United States regional role decreases. 

In short, our skill in dealing with China is directly linked to how 

successful we will be in retaining the confidence of our friends and 

allies in East Asia. This is a healthy dynamic. It rewards responsible behavior on the part of both China and the United States, and 

it creates disincentives for irresponsible behavior. This is important, because the central purpose of U.S. policy in East Asia is to 

have a positive and constructive relationship with China. 

Thank you. 

The CHAIRMAN. Thank you very much. 

Dr. Friedberg. 

STATEMENT OF DR. AARON L. FRIEDBERG, PROFESSOR OF 

POLITICS AND INTERNATIONAL AFFAIRS, PRINCETON UNIVERSITY, PRINCETON, NJ 

Dr. FRIEDBERG. Thank you very much, Senators. It is an honor 

for me to have this opportunity to express my views. 

The relationship between the United States and China is clearly 

mixed. It contains elements of cooperation as well as competition. 

In my view, the areas of cooperation are less impressive and less 

substantial than is sometimes claimed, while the sources of competition are deeper and more profound than many prefer to believe. 

I think that the current and emerging competition between the 

United States and China is not the result of misperception or misunderstanding. And, unfortunately, I do not believe that it will be 

FOREI-43947 with DISTILLER

20 

alleviated by dialogue or high-level meetings, as important as these 

may be. 

The competitive aspects of the relationship, in my view, spring 

instead from two deep sources. First are the classic dynamics of 

great-power politics. China is a rising power. Rising powers, historically, have wanted to assert themselves to reshape the rules, 

the institutions, and sometimes the territorial boundaries that 

were put into place when they were relatively weak. 

A second factor, which, in my view, is important, but does not 

always get the attention it deserves, is ideology. We often hear it 

said that China is no longer a Communist country, and therefore, 

there is no basis for ideological friction or mistrust between China 

and the United States. While it may be true that China’s leaders 

are no longer Marxists, they are still Leninists, by which I mean 

they continue to be committed to one-party rule, and they regard 

the United States and other democratic countries as posing an existential threat to their regime. It is in part for this reason that they 

want to push back American’s presence and influence in Asia. 

As regards the future of United States-China relations, in my 

view, if China’s power continues to grow, but if it continues to be 

ruled by a one-party authoritarian regime, the competitive aspects 

of the relationship are going to grow, while the areas of cooperation 

are going to dwindle. I should say I do not think this means that 

conflict between the two countries is inevitable. I do not believe 

that is the case. But, I am afraid that the risks of conflict will 

grow. And indeed, this is precisely what appears to be happening 

today. 

In the past 5 years, China has used stronger, more strident language and more assertive and, at times, forceful actions to assert 

its claims to control the waters and airspace off its eastern seaboard. Chinese spokesmen and some Western analysts have sought 

to deny that any shift has taken place or to explain those changes 

that have occurred as mere reactions to the behavior of others, or 

as the byproduct of competition among bureaucracies, or the unauthorized actions of a handful of rogue PLA officers, or a reflexive 

response to popular nationalist pressures. 

With the passage of time, it seems to me that these claims have 

become increasingly difficult to sustain. Beijing’s recent behavior 

appears to be deliberate, purposeful, and coordinated, but it suggests an adjustment in tactics and time lines rather than a fundamental shift in strategy. China appears to be pushing harder to 

achieve its long-standing goals of expanding its own regional power 

and influence while constricting the power, influence, and position 

of the United States. In the long run, Beijing evidently hopes to 

displace the United States and to restore China to what it regards 

as its rightful place as the preponderant power in the Asia-Pacific 

region. 

In addition to advancing its claims to control most of the water 

and resources off its coasts, Beijing is using calibrated threats in 

an attempt to intimidate its neighbors, to demonstrate the inadequacy of U.S. security guarantees, and, if possible, to drive wedges 

between the United States and some of its regional friends and 

allies. 

FOREI-43947 with DISTILLER

21 

China’s increased assertiveness, I think, reflects a mix of arrogance and insecurity. Since the onset of the global financial crisis 

in 2008–2009, many Chinese analysts and policymakers have concluded that the United States has entered into a period of unexpectedly rapid decline in its power and influence. Chinese planners 

appear to have concluded that, at least for the next several years, 

the United States will continue to be strategically preoccupied and 

financially constrained, and that, if they play their cards right during this period, they may be able to create facts and consolidate 

their position. 

But, this near-term confidence, I think, is mixed with longer 

term concern. Among other factors, slower economic growth and 

continuing revelations about the extent and depth of official corruption could threaten internal stability and regime survival. A more 

assertive stance may enable Beijing to achieve victories that contribute to its proclaimed goal of ‘‘national rejuvenation’’ and 

enhance the CCP’s legitimacy by casting it as the defender of China’s honor and greatness. Regardless of the results, however, the 

regime appears to believe that an atmosphere of increased tension 

and friction with foreign rivals can help it to rally support and 

deflect possible public resentment from its own inadequacies and 

failings. 

China’s recent actions are deliberately dangerous. Its leaders are 

manipulating risk, or playing chicken. They are knowingly creating 

hazardous situations, in the hopes that others will back down. I 

think there is an element of bluff, here. I do not think China’s leaders seek armed conflict. They certainly do not seek it with the 

United States. And, as a result, I think that, if faced with a firm 

response, they are likely to adopt a more cautious stance. Nevertheless, even if it is not intended to do so, the kind of behavior in 

which they are presently engaged could all too easily lead to confrontation and escalation. 

In the long run, China’s assertiveness may turn out to be counterproductive and even self-defeating. If its Asian neighbors respond by increasing their own capabilities and working more 

closely with one another and with the United States, they may be 

able to block Beijing’s initiatives and balance its power. But, such 

an outcome is not automatic or inevitable. In the absence of an 

effective American response, China may yet be able to successfully 

pursue a divide-and-conquer strategy, intimidating some of its 

neighbors into acquiescence while isolating and demoralizing others. Indeed, this appears to be what Beijing is attempting to do: 

reaching out to Washington, proclaiming its desire for a new type 

great-power relationship with the United States, while at the same 

time ratcheting up pressure on some key targets, especially United 

States allies—Japan and the Philippines, as well Vietnam. 

Just very briefly on the question of an American response. For 

most of the last two decades, the United States has pursued a 

mixed strategy toward China, seeking to engage it through trade, 

diplomacy, people-to-people contact, and so on, while at the same 

time taking steps to preserve a favorable balance of power in East 

Asia, even as China grows stronger. In my view, it is neither feasible nor, at this point, necessary to abandon this mixed strategy 

in favor of something radically different. What is required instead 

FOREI-43947 with DISTILLER

22 

is a readjustment of the blending of the two elements; and, in particular, an increased emphasis on the balancing portion of America’s strategic portfolio. 

The current administration began to move in this direction in 

2011, with its announcement of a pivot toward Asia. But, its efforts 

to date have been, and I think are widely perceived in the region 

to be, inadequate. There is growing concern on the part of friends 

and allies that, despite the rhetoric of its leaders, the United States 

may lack the resources, the focus, and perhaps the resolve necessary to withstand Chinese pressure and sustain a position of 

leadership. 

A variety of measures, I think, are necessary in order to counteract this. I would just emphasize two themes. On the one hand, I 

think it is necessary for the United States and its allies to take 

steps that impose some costs on China for its more assertive behavior. And, on the other, it is essential for us to increase the capacity 

of our allies, as well as our own, to deter and, if necessary, to defeat attempts at coercion. Among the various steps that are needed, 

I think one in particular stands out, and it is a long-term problem. 

The United States has to develop, articulate, and fund, together 

with its allies, a military strategy that will enable it to continue 

to project power into the western Pacific under any circumstances 

and despite the ongoing deployment by China of so-called antiaccess area denial capabilities. 

Our position in Asia is built on our alliances, and those, in turn, 

rest on assurances that we will come to the aid of our allies if they 

are threatened or attacked. Without an effective and timely 

response, Beijing’s ongoing military buildup will begin to call the 

credibility of our assurances into question, and this could weaken 

our alliances, increase the risk of aggression, and potentially 

endanger the peace and stability of the entire Asia-Pacific region. 

Thank you. 

[The prepared statement of Dr. Friedberg follows:] 

PREPARED STATEMENT OF AARON L. FRIEDBERG

INTRODUCTION

In the past 5 years China has used stronger, more strident language and more 

assertive, and at times, forceful actions to assert its claims to control the waters and 

air space off its eastern seaboard. Chinese spokesmen (and some Western analysts) 

have sought to deny that any shift has taken place, or to explain those changes that 

have occurred as mere reactions to the behavior of others. With the passage of time 

such claims have become increasingly difficult to sustain. 

Examples of China’s growing assertiveness continue to multiply. The most recent 

include Beijing’s unilateral declaration of an Air Defense Identification Zone that 

covers Japanese-controlled islands in the East China Sea in November of last year, 

the deliberate near-collision of a PLAN vessel with the U.S. Navy cruiser Cowpens 

in December and, in the past 2 months, the deployment of oil rigs and a small 

armada of naval and maritime patrol vessels into waters claimed by Vietnam. 

These developments raise three questions: 

—What explains Beijing’s increased assertiveness? 

—What are the likely implications of this behavior for China’s relations with its 

neighbors and with the United States? 

—And how should the U.S. respond? 

Explaining increased Chinese assertiveness 

With the end of the cold war, China began to pursue a consistent and generally 

cautious strategy for dealing with its neighbors and with the United States. This 

strategy reflected the wisdom of former party chief Deng Xiaoping who, in the wake 

FOREI-43947 with DISTILLER

23 

of the Tiananmen Square massacre, the fall of the Berlin Wall and the U.S. defeat 

of Iraq in the first Persian Gulf war advised his colleagues that China should ‘‘hide 

its capabilities and bide its time.’’ 

At least until recently Chinese strategy has evidently been governed by three 

axioms: 

—‘‘Avoid confrontation’’ (especially with the United States, but also with China’s 

wealthy and powerful neighbors). 

—‘‘Build ‘comprehensive national power’ ’’ (a concept Chinese analysts use to refer 

to all of the various dimensions and instruments of national capability). 

—‘‘Advance incrementally.’’ 

Regarding this last point: Chinese policymakers assessed that they were in a relatively weak position and needed time to build their strength, but they did not 

believe that they could or should remain passive. To the contrary, over the last two 

decades they have sought opportunities to enhance their country’s influence and 

strengthen its position, while simultaneously attempting to erode and constrict 

those of the United States. The ultimate aims of Chinese strategy appear to be twofold: 

—To preserve the Chinese Communist Party’s monopoly on domestic political 

power. 

—To displace the United States and restore China to its rightful place as the preponderant power in East Asia. 

Beijing’s recent behavior suggests an adjustment in tactics and timelines rather 

than a fundamental shift in strategy. China is pushing harder to achieve its longstanding goals. In addition to advancing its claims to control most of the water and 

resources off its coasts, it is using calibrated threats in an attempt to intimidate 

its neighbors, demonstrate the inadequacy of U.S. security guarantees, and, if possible, to drive wedges between the United States and some of its regional friends 

and allies. 

China’s increased assertiveness reflects a mix of arrogance and insecurity. Following the onset of the global financial crisis, many Chinese analysts and policymakers concluded that the United States had entered into a period of unexpectedly 

rapid decline in its relative power and influence. With their country’s fortunes seemingly on the rise, some argued that the time had come for China, if not to abandon 

‘‘hiding and biding,’’ then at least to adopt a more forward-leaning posture in its 

dealings with the rest of the world. Chinese planners appear to have concluded that, 

at least for the next several years, the United States will continue to be strategically 

preoccupied and fiscally constrained. If it plays its cards right during this period, 

China can ‘‘create facts’’ and consolidate its position. 

Near term confidence is mixed with longer term concern. Among other factors, 

slower economic growth and continuing revelations about the extent and depth of 

official corruption could threaten internal stability and regime survival. A more 

assertive stance may enable Beijing to achieve victories that contribute to ‘‘national 

rejuvenation’’ and enhance the CCP’s legitimacy by casting it as the defender of China’s honor and greatness. Regardless of the results, however, the regime appears 

to believe that an atmosphere of increased tension and friction with foreign rivals 

can help it to rally support and deflect possible public resentment from its own inadequacies and failings. 

Implications for regional peace and stability 

China’s recent actions are deliberately dangerous. Its leaders are manipulating 

risk or playing ‘‘chicken’’; they are knowingly creating hazardous situations in the 

hope that others will back down. Even if it is not intended to do so, such behavior 

could easily lead to confrontation and escalation. 

In the long run, China’s assertiveness could also turn out to be counterproductive 

and even self-defeating. If its Asian nations respond by increasing their own capabilities and working more closely with one another and with the United States they 

may be able to block Beijing’s initiatives and balance its power. But such an outcome is not automatic or inevitable. In the absence of an effective American 

response, China may yet be able to successfully pursue a divide and conquer strategy: intimidating some of its neighbors into acquiescence while isolating and demoralizing others. Indeed, this appears to be precisely what Beijing is now trying to do: 

reaching out to Washington and proclaiming its desire to form a ‘‘new type great 

power relationship’’ with the United States, while at the same time ratcheting up 

pressure on key targets, especially U.S. allies Japan and the Philippines, as well 

as Vietnam. 

FOREI-43947 with DISTILLER

24 

How should the U.S. respond? 

For most of the last two decades the United States, like China, has been pursuing 

an essentially constant strategy. Despite occasional shifts in emphasis, successive 

administrations have sought to engage China, primarily through trade and diplomacy, while at the same time taking steps to preserve a favorable balance of power 

in East Asia. In addition to maintaining and selectively strengthening its own military capabilities, Washington has sought to bolster relations with its traditional 

treaty allies and to build quasi-alliance relationships with other countries (including 

Singapore and India) that share its concerns about the possible implications of China’s growing strength. 

The objectives of U.S. strategy have been, first, to ‘‘tame’’ China by giving it a 

stake in the preservation of the existing international order and second, in the long 

run, to transform it, encouraging the evolution of its domestic political system away 

from authoritarianism and toward something more closely resembling liberal democracy. 

It is neither feasible nor, at this point, necessary to abandon this mixed strategy 

in favor of something different. What is required, instead, is a readjustment of the 

blending of the two elements and, in particular, an increased emphasis on the balancing portion of America’s strategic portfolio. The current administration began to 

move in this direction in 2011 with its announcement of a ‘‘pivot’’ toward Asia (later 

renamed the ‘‘rebalance’’), but its efforts to date have been, and are widely perceived 

in the region to be, inadequate. There is growing concern on the part of friends and 

allies that, despite the rhetoric of its leaders, the United States may lack the 

resources, the focus, and perhaps the resolve necessary to sustain a position of leadership. 

Among the measures that will be needed to alleviate these fears, one in particular 

stands out. The United States must develop, articulate fund and (together with its 

allies) implement a military strategy that will enable it to continue to project power 

into the Western Pacific, under any circumstances, and despite the ongoing deployment by China of so-called antiaccess/area denial capabilities. America’s position in 

Asia is built on its alliances and those, in turn, rest on assurances that it will come 

to the aid of its allies if they are threatened or attacked. Without an effective and 

timely response, Beijing’s ongoing military buildup will begin to call the credibility 

of those assurances into question, weakening U.S. alliances, increasing the risk of 

aggression, and potentially endangering the peace and stability of the entire AsiaPacific region. 

The CHAIRMAN. Well, thank you both. 

I have let you both go over time because you had a lot of good 

things to say, insights, which will mean that we are going to have 

to take a brief recess. We have one final vote. I think we will—Senator Corker and I both know how we are voting. We will come right 

back, and we will get into a line of questioning, because you have 

raised many issues beyond the questions I originally had. 

So, this committee will stand in recess, subject to the call of the 

Chair. 

[Recess.] 

The CHAIRMAN. This hearing will come back to order. 

Thank you both for your forbearance. 

You have both raised some very interesting points. So, let me ask 

you both. China: strategic competitor? Strategic rival? Strategic 

problem? Ever, potentially, a strategic ally? 

Ambassador ROY. All of the above. 

The CHAIRMAN. I was afraid that was going to be your answer. 

Ambassador ROY. No, seriously. I was, for 45 years, a U.S. Foreign Service officer, and spent 9 years working on the Soviet 

Union, and even longer than that dealing with China during periods when it was a hostile country and during periods when it was 

a friendly country and we were expanding our relations rapidly. 

Elements of cooperation and of competition are inherently part of 

relations between major powers. And certainly China is a major 

FOREI-43947 with DISTILLER

25 

power. I do not think that getting rid of strategic rivalry between 

the United States and China is a realistic approach to the relationship. 

But, calibrating the balance between cooperation on common interests and the rivalry elements that are part of major-power relations is what diplomacy is all about. And it does not, and should 

not, drive us in the direction of conflict if we can stabilize the strategic rivalry. The reason why we talk about trying to create this 

new type of bilateral relationship is because, if you do not constrain 

the strategic rivalry, it can drive you in the wrong direction and 

result in hostile rivalry, which returns you to a negative cold war 

type of relationship, which we are far away from in our relationship with China. 

The CHAIRMAN. Dr. Friedberg, I would like to hear from you, too. 

And one of the things that you said in your testimony, that I noted, 

was that this mixed strategy that we have—that maybe what we 

need is an adjustment, I think you said, of the blending. And can 

you speak to the overarching question I just asked Ambassador 

Roy, as well as—well, what is the blend—what should the blending 

look like? 

Dr. FRIEDBERG. As far as whether China’s a competitor, a rival, 

a problem, and so on, I think it is all of those things. I think we 

have to acknowledge the extent to which, in fact, there is this competitive or rivalrous component to the relationship. And I do not 

think we have always been as candid as we need to be in acknowledging that fact. For reasons that I indicated, I think the competitive aspects of the relationship are growing in intensity. I agree 

with Ambassador Roy that part of our objective should be to contain that and prevent that from spilling over and contaminating 

and coloring the entire relationship. 

I do not think it is inevitable that China and the United States 

need to be in a zero-sum relationship, enemies in the ways that the 

United States and the Soviet Union were during the cold war. But 

I also do not see much prospect for anything resembling an alliance 

or a genuine deep partnership between the United States and 

China for the foreseeable future. 

As far as the mixing of elements, in our strategy, with all of the 

debates about our policy, since the end of the cold war at least, in 

fact, both Republican and Democratic administrations have pursued a broadly similar strategy for dealing with China, and it has 

had these two components: engagement—obviously, the diplomatic 

part of the engagement goes all the way back to the late 1960s and 

early 1970s; the economic piece has become much more important, 

clearly, since the early 1990s. 

But, at the same time, I would say, from the mid-1990s onward, 

successive administrations have also sought deliberately to 

strengthen our position in the region to maintain a balance of 

power that is favorable to us and to our friends. And we have done 

that in three ways. One is by maintaining and strengthening our 

own military capabilities in the region. So, the pivot, in that sense, 

is not new; it really goes back to the Clinton administration. We 

have also tried to strengthen and build on our traditional alliance 

relationships, particularly with Japan, Korea, and Australia. And 

we have also developed what I would call quasi-alliance relationFOREI-43947 with DISTILLER

26 

ships with other countries in the region to whom we do not extend 

security guarantees, but who share with us, to some degree, a concern about the growth of Chinese power, including a small country 

like Singapore, and a very large one like India. 

What has happened over time is that we have modulated that 

blend, or changed that mix of elements. When the current administration first came into office during its first couple of years, it 

sought to play up engagement with China, as with Russia, and to 

downplay the balancing part of the formula. Since 2011, I think, 

in response to increased Chinese assertiveness, the Obama administration has sought to increase the balancing piece of the portfolio. 

I think they were correct to do that. My concern is that they have 

had difficulty in following through. 

The CHAIRMAN. Let me ask you—so, Ambassador Roy, you talked 

about patience, that it will require patience. And I often hear this 

when I travel in the region, when I speak to regional leaders who 

come here. I often hear about this element of patience. And I 

understand that. Except—or maybe you can help me and the committee understand how—as we exhibit patience, how do we also 

deal with issues like the intellectual property rights issue, the 

counterfeit issue, the cyber theft issue, currency manipulation? 

Those are all economic elements of this competition, even though 

those elements are not, obviously, legitimate—in international 

norms, legitimate competition. 

And so, how do we press those issues? How do we press issues 

about right of freedom of passage, navigation in the South China 

Sea? How do we press our—I hope, our human rights issues, even 

though I think we have increasingly been reluctant to do that? We 

do it, but it seems to me it is—the tier is all the way down there, 

in terms of pursuing human rights issues, whether it be in China 

or the way they treat Tibet. 

For both of you, give me a sense of how, as we engage, do we 

at the same time robustly pursue the very essence of this competition that we hope to be in in a more legitimate international way, 

when there are hundreds of thousands of jobs being lost in the 

United States, billions of dollars being lost. Patience has, obviously, 

its limitations. 

Ambassador ROY. It is a very good question. And it is one of the 

frustrating—— 

The CHAIRMAN. We only ask good questions here at the committee. [Laughter.] 

Ambassador ROY. Well—— 

The CHAIRMAN. No, it is not—that is not—I would like to think 

that is true, but it is humorous, if nothing else. But—— 

Ambassador ROY. When you would like to see changes in other 

countries, where you have only a very limited ability to actually 

force them to make the changes you would like to see, you need to 

have patience, and you need to understand the processes that 

would be most effective in accomplishing this. 

And, frankly, one of the reasons why I was comfortable representing a country that takes a high profile on human rights issues 

is because our high profile on human rights issues is a function of 

the fact that, from the beginning of our republic, we had built-in 

violations of human rights that were fundamental. We had slavery 

FOREI-43947 with DISTILLER

27 

embedded in our Constitution. For 70 years, we tried to solve it 

through a political process. We failed. We fought a bloody civil war, 

and then we reinstituted Jim Crow laws that persisted for nearly 

100 more years. 

When I was Ambassador in China, we created a linkage between 

human rights in China and most-favored-nations treatment and 

wanted fundamental improvements in seven areas of human rights 

in 1 year. Well, if the United States takes centuries to deal with 

fundamental human rights problems, why do we expect that other 

countries can deal with them overnight? So, that is why I say we 

need patience. 

Now, I have also reflected on this. If other countries had set the 

goal during the 19th century of forcing the United States to give 

up slavery, would it have been helpful? What actions would they 

have taken? Well, in fact, I think there were some factors that 

influenced us. For example, Britain eliminated slavery. So, in other 

words, some countries were setting a behavior pattern which actually influenced thinking in the United States. I have found that the 

power of example is much more useful in dealing with other countries on human rights issues, or on intellectual property protection 

issues than simply haranguing them about it. 

Now, on the intellectual property issue, the reality is, the countries that produce intellectual property are the ones most devoted 

to protecting it. And countries that do not produce intellectual 

property tend to think that theft of intellectual property is in their 

national interest. 

When I was a diplomat in the Republic of China on Taiwan, back 

in the 1960s, they were defiant on piracy issues. For example, they 

said, ‘‘Your textbooks are too expensive for us. We are a developing 

country; therefore we are going to steal them, and too bad.’’ And 

that is the way they behaved. And it took us decades to force a 

friendly government to begin to respect our intellectual property 

interests. So, that was an example of a country that was determined simply to act in its own interest, because, at the time, it was 

not producing intellectual property. 

Now, one of the reasons why I am optimistic, in the long term, 

about China’s moving toward greater respect for protection of intellectual property is because, unlike some of the countries I have 

served in, China has big ambitions about becoming a creator of 

intellectual property. And if you create intellectual property, you 

cannot do so effectively if you do not protect it. 

I have had meals with Chinese movie producers who described 

the types of movies they could produce and the ones they could not 

produce. And the ones they could not produce were the ones that 

could be easily ripped off inside China. They could not make any 

money, and therefore they simply did not produce those types of 

movies. But, in other areas, there were better protections, and 

therefore they could move ahead. 

So, I have discovered, in dealing at the highest levels of the Chinese Government, there is an intellectual understanding of the 

importance of protecting intellectual property, but it is a country 

that, historically, in modern history, has not produced much intellectual property, and therefore, there is a habit of ripping off intellectual property from others. 

FOREI-43947 with DISTILLER

28 

I recall 10 years ago, when we began to clamp down on downloading free music from the Internet, that our college students 

were all busy ripping off intellectual property. And we began to 

tighten the screws on them, and I think it is been substantially 

improved. But, in the process, our young people continued to think 

they had some—— 

The CHAIRMAN. Yes. But—— 

Ambassador ROY [continuing]. Right to—— 

The CHAIRMAN [continuing]. We did something about it. 

Ambassador ROY. We did something about it. 

The CHAIRMAN. And that is a—one of the fundamental—— 

Ambassador ROY. Well, I think we are actually making progress 

in this area. And if you talk to Microsoft and some of the other 

countries that have—companies that have been working on this, 

long term, it is not that there has not been progress; it is simply 

there has not been enough. And therefore, they are continuing to 

push ahead, and I think that the U.S. Government has to support 

those efforts. 

The CHAIRMAN. Let me turn to my colleagues. 

Senator Corker. 

Senator CORKER. Thank you, Mr. Chairman. 

Ambassador, Doctor, thank you both for being here. 

We had a group of Chinese businessmen here a couple of years 

ago, and I made some comments to them and used the word ‘‘competition’’ among other kinds of things, and then realized, in talking 

with them, that they do not view us that way at all. Now, these 

were businessmen. 

If we were having this same kind of hearing in China, and they 

had two witnesses that were talking about the United States, how 

do they view us? How does the citizenry generally view us? I know 

that is very diverse, with that many people. And how does the government actually view the United States? We look at them as competition, we look at them as a growing threat. Those are some of 

the words that you all have used. How do they view us? 

Dr. FRIEDBERG. Well, of course, as you indicate, it is a country 

of 1.3 billion people—— 

Senator CORKER. Yes. 

Dr. FRIEDBERG [continuing]. So there are a lot of—— 

Senator CORKER. Yes. 

Dr. FRIEDBERG [continuing]. Different opinions, although they do 

not all have the opportunity to be expressed because—— 

Senator CORKER. Yes. 

Dr. FRIEDBERG [continuing]. Of the character of the Chinese 

political regime. I think the Chinese strategic elites, so the people 

who worry about China’s strategy and about the United States in 

particular, do see the United States as a strategic competitor, as 

a threat to China’s interests. As I indicated, they believe that, for 

ideological reasons, the United States is fundamentally opposed to 

their current regime, seeks to encircle them, to block them from 

achieving their rightful place in the world, potentially to destabilize 

them from within, and so on. 

So, I think there is a deep-seated suspicion of the United States. 

And, in part, I believe that is one of the reasons that Chinese leaders and strategists want to extend their influence in the region and 

FOREI-43947 with DISTILLER

29 

would like to see the influence and presence of the United States 

diminish, because they see us as threatening. 

Throughout this broader swath of Chinese society, I think there 

is a much wider range of views. People in business see many opportunities, of course, in dealing with the United States. I see many 

Chinese students coming to the United States and studying. And, 

in many cases, they are very enthusiastic about American culture 

and society and so on. 

Senator CORKER. But, the people who make the decisions and, 

therefore, set the policy, see us the same way we see them. 

Dr. FRIEDBERG. Well, I think it is even darker. I think they 

really—as I said, I think they really believe that we want to—— 

Senator CORKER. Yes. 

Dr. FRIEDBERG [continuing]. Contain and bring them down. 

Senator CORKER. Yes. 

And you agree with that, Ambassador? 

Ambassador ROY. I think that represents one aspect of it. But, 

there is a very strong different aspect to it. China’s big goal, the 

China dream, is to modernize China. Chinese leaders at the very 

top recognize that they will greatly slow the process of modernization of China if they do not have good relations with modern countries. So that, going way back to the 1980s, when we established 

diplomatic relations, China has attached high importance to 

improving and sustaining relations with the modern countries of 

the world. These are the countries to whom they sent the students 

that they needed to get educated to bring back the skills that were 

part of the modernization process. And I still encounter an understanding of the importance of that factor. It is a stabilizing factor 

in a highly competitive relationship between the United States and 

China. China still wants good relations with the United States, 

because, otherwise, the Chinese dream is a fading chimera that 

they will never get closer to unless they are able to maintain the 

close relations with modern countries. 

But, modern countries have modern ideas. And what is significant, for somebody like me—who served in China as a U.S. Government official from 1978 to 1981, and then was there as Ambassador, and now I visit it—is the whole nature of thinking in China 

about political change, about government structures, has changed 

over the last 30–40 years, because all of a sudden, at every level 

of Chinese society—in the government, in the educational institutions, in the business community—you have people who have been 

educated in the West. They do not see our system as something 

that can be transplanted to China, but they understand that, in 

dealing with corruption, a free press can be helpful. Can China 

really address corruption within the Communist Party if it has a 

judicial system that is controlled by the Communist Party? So, 

already you are beginning to see different language coming in. 

If you look at the language of the Third Plenum Communique 

that came out in November of last year, all of a sudden they are 

talking about rule by law, because the corruption is when officials 

do not abide by the laws that are on the books, but simply arbitrarily exercise their power. And they are talking about having 

checks and balances on the exercise of power. Well, this is something that we addressed back in the Federalist papers in the 18th 

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30 

century. And yet, that type of discourse about exercising power in 

the sunlight, having the people serve as a check on the exercise of 

power, putting power in a cage so that it cannot be arbitrarily 

used, all of this is language taken from that Third Plenum document that emerged last November. You did not find these concepts 

part of the discourse in China before. 

So, this is how countries change. They have exposure to different 

societies. The modern ones are the ones that influence them most. 

And then they begin to borrow from those societies, and gradually 

you find that they are talking about issues in a different way. 

Again, I emphasize one other point. China’s the only authoritarian country in the world which has age limits on their senior 

leaders. China’s top leaders are expected to step down around the 

age of 70. We have had Presidential candidates who were near the 

age of 70. In China, you cannot have that. And they have put a 

two-term limit in effect, which means that the top leaders can only 

serve 10 years. And the replacements have to be 10 years younger 

or they will be over the age limits at the end of the period. 

So, one of the advantages of a democratic system of government 

is that we can change leaders, and changing leaders is often the 

only way that you can change bad policies. But, now China has 

generational shifts that are also built into a regular process of 

changing leaders, so that when we get the next change of leadership in China, in 2022, the people will be under 60 years old who 

take the top positions. They will have no memories of the cultural 

revolution. They will have spent their entire lives, adult lives, 

under conditions of reform and openness, with ready access to the 

outside world. 

Do we really expect that those leaders are going to use the same 

types of governance concepts inside China that the old generation, 

that was not university-educated, or, if they were educated, it was 

in Russia, or the Soviet Union, back in the 1950s? No. That is not 

the way humans behave. People reflect the experiences they have 

as part of their maturing process. And the experiences that the last 

30 years of Chinese have had are radically different from the experiences they had before China opened itself up to the outside world. 

But, we are talking about change over a period of decades, and 

that is why I talk about the need for patience and perseverance in 

dealing with China. 

Senator CORKER. If I can ask just one more question. 

The age issue you mentioned certainly would wreck the United 

States Senate. [Laughter.] 

The CHAIRMAN. Present company excluded. 

Senator CORKER. That is right. [Laughter.] 

So, it is understandable to see why you would undertake, from 

their perspective, cyber theft. It is enriching them. They can move 

ahead decades quickly by ripping us off. You can understand that 

counterfeiting and all of those things. Again, it is not proper, but, 

it is in their interests to rip us and other countries off to pursue 

a more rapid growth there. And it is unfortunate that they condone 

that. And I realize, over time, as you mentioned, that may well 

change as they develop their own. 

If they view us as a threat, and they view us as competition, 

what is in their national interest, relative to the silly disputes that 

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31 

are taking place in the South and East China Sea, which immediately, as you all mentioned in your earlier testimony, provokes a 

response, ‘‘They do something; we do something’’? How is that, 

again, in their overall strategic interest to cause us to want to 

engage more fully in that way because of their breaking of international norms? 

Dr. FRIEDBERG. Well, if I could start by just saying something on 

the previous issue, because I think it is related, I will give you the 

glass-half-empty view. It seems to me that the Chinese regime, 

although it has evolved and changed, and Chinese society has 

changed in many ways, maintains its commitment to the preservation of one-party rule. Its interest in reform is not rooted in principle so much as in practicality and a desire to maintain its control. 

And it has proven to be quite smart, sophisticated, but also ruthless in suppressing dissent and maintaining the dominance of the 

CCP. I think there is an anxiety on the part of the leadership 

about the future, for reasons that I suggested. And the ways in 

which the regime has sought to bolster its legitimacy, particularly 

since the decline of the appeal, such as it was, of Marxist-Leninist 

ideology, has been to emphasize economic growth and improvements in welfare, but also, increasingly, nationalism and this idea 

of a Chinese rejuvenation, the great Chinese dream, and so on. 

So, these disputes, although they appear to be over insignificant 

pieces of rock, actually are potentially extremely important, and I 

think, from the point of view of the regime, may be useful, or they 

may see them as being useful, as a way of rallying and mobilizing 

popular support behind the government and deflecting frustration 

and resentments outward against historic rivals, like Japan, and, 

to some degree, the United States. 

These disputes are about resources and about who is going to be 

the dominant power in the region. China is seeking to establish 

itself in that position, in part by forcing others to give way in the 

face of its pressure. But, I do think that these disputes have an 

internal function, and it is related to the regime’s concern about 

maintaining domestic control. 

So, yes, in the long run, I hope that Ambassador Roy is right and 

that we have this peaceful evolution, but, in the shorter term, I am 

concerned that the regime, in its efforts to maintain its control, 

may be undertaking dangerous and aggressive external policies. 

The CHAIRMAN. Senator Rubio. 

Senator RUBIO. Thank you. 

I wanted to return to this notion of—Secretary Russel, about— 

you used this term, ‘‘the China dream,’’ which I have heard used 

to describe the situation in China, their ambitions for their country. As it is been described to me in my visits to—in my visit to 

Asia, and by others since—and there might be some dispute about 

it—but, they view the China dream—they describe it as follows: 

that China views itself, from a historical perspective, as the world’s 

great power, that they view the last 150 years as an aberration in 

world history, and they are simply now reemerging into their rightful place. And ‘‘their rightful place’’ means not simply displacing 

the U.S. as a dominant power in the region, but, in fact, in some— 

in many respects, behaving like the dominant power, vis-a-vis their 

neighbors and the way they act toward their neighbors. I think 

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32 

that is further compounded by what is no doubt over the last 10 

years not just a massive expansion in their military capabilities, 

but by increasing assertiveness, for example, in their claims in the 

areas within the nine-dash line, their territorial claims, and potentially their claims on navigation rights, which is something that we 

should care about deeply. 

You described it as simply a desire to modernize the country, but 

others have described it as much more—much deeper than simply 

that, that, in fact—and perhaps you discussed this earlier, but that 

the China dream, in fact, is about establishing themselves as the 

world’s dominant power in a zero-sum game with the United States 

and the established institutions under the post-World War II 

world. What is the right way to view their mindset and—so that 

we can understand better some of the policy decisions they are 

making? 

Ambassador ROY. It needs to be viewed in its historical context 

in order to have some idea of what they are talking about. The two 

words that have generally characterized the goals of China’s 

reformers, going back to the Qing Dynasty in the late 19th century, 

have been wealth and power. This was what they wanted China to 

recapture. China used to be a country that had wealth and power, 

and then it lost it during its period of decline and exploitation by 

more powerful countries. 

And so, right up through the 20th century, the goal has been 

restoring China’s wealth and power. That is not a bad goal. All 

countries, in a sense, aspire to it. But, there are aspects of it which 

are dangerous. And one aspect of it that I find particularly disturbing is in the documents coming out of the 18th Party Congress, 

which was 2 years ago, in talking about why China needed powerful armed forces. They did not simply relate them to the defense 

needs of the country and to the economic development needs of the 

country, protecting their economic development. They said they 

needed powerful armed forces commensurate with the country’s 

international standing. That is a very dangerous concept. It means 

that China is now saying, ‘‘We need powerful armed forces because 

we are emerging as a great power.’’ 

And this represents a type of great-power chauvinism which I 

think is inherently dangerous. I cannot get anybody else to pay 

attention to what I see as a very dangerous phraseology emerging 

in that document. When I discuss it with my China colleagues, you 

know, they do not pay much attention to that phrase. But, to me, 

it is very disturbing. What does it mean for China to have powerful 

armed forces commensurate with its international standing? When 

its economy overtakes that of the United States, which might occur 

in the near future, does that mean they need armed forces that are 

bigger than those of the United States? 

So, in other words, I see two sides of this. I see a China which 

has legitimate aspirations to restore its wealth and power, and I 

see a China which also may have the typical ambitions of somebody who is getting strong enough to be the big bully in the block. 

Senator RUBIO. I guess, from their actions, though, you can deduce the following. I think this is a safe statement, and you are 

certainly an expert on this, so I am glad we have the opportunity 

to talk to you about it. Since the end of World War II especially, 

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33 

we have had an established international order that involves 

resolving disputes through mediation and other methods—— 

Ambassador ROY. Right. 

Senator RUBIO [continuing]. And so forth. There is been an economic order, as well, involving all sorts of things, from trade to currencies. And what I take from the actions I have seen recently is, 

the Chinese attitude toward this is, ‘‘We did not write these rules, 

we did not participate in their creation. They were written in a way 

to benefit the West or others, and we do not necessarily feel like 

we need to comply with them. In fact, we would like to reorder or 

rewrite, to some extent, by changing facts on the ground, in some 

instances, how all of this operates, moving forward. And as a rising 

power, we intend to do so.’’ And that includes, by the way, increasing, not just their military capacity, but their willingness to use 

that capacity, at least now, to various different means to assert 

their territorial claims. So, in fact, they are not just—this is not 

just a rhetorical—— 

Ambassador ROY. Right. 

Senator RUBIO [continuing]. Challenge that they pose. We are 

beginning to see this reflected in the actions that they are taking. 

Ambassador ROY. This gets into the question of whether China’s 

a status-quo power or whether it is trying to overthrow the status 

quo and establish a new one. I actually find that the truth, as I 

see it, is that China is somewhere in between that. And common 

sense tells you that when a new power emerges into an existing 

system, the existing system has to make certain accommodations. 

And if the system will not make the accommodations, then the rising power will want to change the system. 

But, in fact, the existing system is accommodating China to a 

significant degree, but not to a 100-percent degree. So, for example, 

China sees the World Bank and the Asian Development Bank as 

largely controlled by Western countries and, in the case of the 

Asian Development Bank, by Japan. And so, they are talking about 

setting up an Asia Infrastructure Investment Bank, which will be 

largely funded by billions of dollars from China and which will 

engage in reconstructing a new Silk Road. In other words, they will 

engage in infrastructure projects leading into Central Asia and the 

Middle East. So, they are thinking big in these terms. 

But, this is not the same, to me, as being anti-status-quo. It simply means that China wants more accommodation for its interests, 

and the question of whether we can maintain the stability of the 

international system is partly the degree to which China will 

accommodate itself to the existing institutions and the degree to 

which the existing institutions will accommodate themselves to the 

fact that China has growing stature in the world, has growing 

financial resources, it swings more weight in the world. It is now 

a giant factor in international trade, which is one of the reasons 

why our Transpacific Partnership has the door open for China to 

participate. Because what would be the sense of having a transpacific partnership in which the country that has the largest trade 

relationships with the countries that are members of the partnership is not within it? 

Senator RUBIO. I guess that my final question is, Is it fair to say 

that, among leading policymakers within the Communist Party in 

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34 

China, they view international relations as a zero-sum game, that, 

in order for them to increase, someone else has to decrease? Is 

that—— 

Ambassador ROY. No. In fact, who am I to say what their secret 

thoughts are? But, I have not encountered that view in any of the 

senior-level conversations that I have been privileged to be part of. 

Senator RUBIO. So, what about this, then? Is it fair to say that 

there are commentators or others within—and others close to the 

decisionmaking process—that view the United States as a declining 

power and China as a rising power? 

Ambassador ROY. I would say that is almost a universal perception in China, at the moment. 

Senator RUBIO. Universal, meaning—— 

Ambassador ROY. But, it is not just—— 

Senator RUBIO [continuing]. Among their political leadership? 

Ambassador ROY. I encounter that perception in Korea, in Japan, 

in Southeast Asia, and in Europe. In other words, I think there is 

a very dangerous perception out that the United States is a declining power because of the fact that we have not recovered in a 

robust fashion from the global financial crisis of 2008, and they see 

us as having a frozen political system that is unable to address our 

problems effectively. And, frankly, that perception is out there 

widely in the world. And I think it is wrong, because I think it 

leads to a misestimation of the latent capabilities of this country. 

But, frankly, we are feeding those misperceptions by not addressing our domestic problems more effectively, in my judgment. I 

mean, this is what I bring back when I travel abroad. 

And there is a second point that I will make, in terms of whether 

we are a declining country or not. I was in the Foreign Service and 

in the government a long time. During the first 30 years of my government career, every time I returned to the United States, it was 

better. We had an interstate highway system. We switched to jet 

aircraft. Things worked better. And, for the last 20 years, every 

time I return to the United States, I am ashamed to see that our 

infrastructure works less well, is less modern than you see in other 

countries. If you have been to China and ridden on their high-speed 

rail system, it makes you ashamed to take an Amtrak train to New 

York. You can barely stand up on it. And in China, the trains go 

at twice the speed and are smooth as silk. 

So, this disturbs me, as an American, because—I hate walking 

up escalators that do not work. [Laughter.] 

And in Washington, that is an everyday experience. And we are 

talking about technology that was developed at the end of the 19th 

century, and somehow we cannot even keep our escalators working. 

Dammit, I wish that Congress would—— 

[Laughter.] 

Ambassador ROY. [continuing]. Address these types of issues. 

Senator RUBIO. We have a bill on escalators this week, do we 

not? [Laughter.] 

The CHAIRMAN. Well, I am glad, Ambassador, we have given you 

a forum to express those—— 

[Laughter] 

The CHAIRMAN. As one of the members here trying to get a highway mass transit bill done—— 

FOREI-43947 with DISTILLER

35 

[Laughter.] 

The CHAIRMAN [continuing]. We are all in favor of that. 

Let me thank you both. I do have two quick questions. I want 

to take advantage of your expertise, here. And I leave this open to 

either—the first one, open to either one of you, and then the second 

one is for Dr. Friedberg. 

The way I see it—I also sit on the Senate Finance Committee, 

and the way I see it, China adopting a market-determined 

exchange rate would not only help rebalance their economy domestically, but certainly would go a long way toward correcting some 

of the imbalances that exist in our bilateral trade relationship. 

How quickly do you think that China will move toward a marketdetermined exchange rate? And what, if anything, can we do to 

encourage or support that within China? Any of you have—either 

one of you have any views on that? 

Ambassador ROY. It is going to take time. I think it may happen 

faster than we think. China is not comfortable holding trillions of 

dollars of foreign exchange reserves, much of which is in dollardenominated treasury instruments. And therefore, it is actively 

seeking to increase trade that is settled in renminbi. And it is 

reaching agreements with bilateral trading partners to settle the 

accounts using China’s currency. 

But, China still does not have open capital accounts. And until 

it moves to open capital accounts, it cannot become a reserve currency for other countries, effectively. So, they are not there yet, and 

they are not ready for that step yet, but they are definitely setting 

that as a goal. And I think we would be blinding ourselves if we 

think that we can simply assume the dollar will remain the principal international trading currency, given the current trends we 

see in patterns of international trade. 

They have already made quite rapid progress, in terms of the 

percentages in which their trade accounts are settled in nondollar 

currencies. So, it is something, I think, that we need to pay very 

close attention to. 

We are financing ourselves 50 percent through foreign borrowing. 

You know, in World War II, we financed it entirely by domestic 

savings. But, now we are financing it by foreign borrowing. If we 

ever reach the point where we have to borrow in foreign currencies, 

then we lose control over the terms of repayment. And that is what 

bankrupted Asia during the Asian financial crisis. Because the 

short-term dollar rates were lower than borrowing in local currencies, and because the currencies seemed stable, they were borrowing in short-term dollar terms, and all of a sudden the financial 

crisis caused the exchange rates to go gaga, and all of a sudden, 

Indonesia was bankrupt overnight because of that. We do not want 

to move in that direction, and that is one reason why we need to 

get our financial system functioning well. 

The CHAIRMAN. Let me turn to Dr. Friedberg. 

So, with reference to our rebalancing to Asia and your comments 

about, while you think it is right, you think it lacks the robustness 

that is necessary, you mentioned the capacity—helping the capacity 

of our allies to be a deterrent toward the type of actions that we 

might be concerned with by China. If you were to say—if you were 

sitting in the administration and you would say, ‘‘Here are the 

FOREI-43947 with DISTILLER

36 

three, four top things that I think we should do,’’ what would they 

be? I did not particularly care for rebalancing or pivoting, because 

I do not think we have ever left. The only question is, What is the 

degree of our engagement? 

Dr. FRIEDBERG. Well, the first one is very easy to say, but, I realize, very, very difficult to accomplish. I think we are going to have 

to increase defense spending, in the long run, and, in particular, 

we are going to have to increase the resources that are devoted to 

the kinds of capabilities we need to counter this emerging Chinese 

antiaccess area denial network. I do not think that is going to 

happen anytime soon. I think we are trying to make do with what 

we have. But, I think, in the long run, that is not going to be 

adequate. 

Related to that, I think we are going to have to develop and 

articulate a coherent and credible strategy for enabling ourselves 

to project power into the region under any circumstances in order 

to maintain our security commitments. One thing about the socalled rebalance or pivot, or whatever one wants to call it, that I 

think was not particularly well handled, was the premature discussion of the so-called air-sea battle concept, which attempts to begin 

to answer this question, but was not ready for prime time and has 

caused a lot of problems and confusion. Nevertheless, I think there 

is a gap there that needs to be filled. We have to have a credible 

story that we can tell ourselves about how we would use our forces 

if we needed to do so, and also to tell our allies. And we do not, 

at the moment. 

I think, as far as assisting our friends and allies, there are a 

number of things—and again, some of these things are currently 

being done, and perhaps they could be done more—the kinds of 

military exercises that we have engaged in, we are about to engage 

in with the Philippines, also with Japan, which demonstrate to any 

observers that we are prepared to use force, if necessary, to help 

our allies defend themselves in contingencies that might involve intrusion in their territorial waters, and so on, I think send a powerful deterrent signal. There are kinds of capabilities that our friends 

and allies would like to buy, some of which we sell, some of which 

other countries, like Japan, may be willing to sell, which increase 

their situational awareness, enable them to better patrol and control their territorial waters and airspace. I think those things make 

sense. 

We ought to be encouraging, even where we are not directly 

involved, the kinds of connections that are growing up among countries in the region that are intended to enhance their defense capabilities. Japan and Australia are talking about co-developing a new 

submarine for Australia. That makes sense, I think. Japan and 

India are engaged in naval conversations and maneuvers. Those 

things make sense. Even when we are not directly involved, we 

should be encouraging others to do things to help to maintain a 

balance. 

The CHAIRMAN. Well, thank you both for your very valuable 

insights. This obviously will be a continuing source of the committee’s attention. We look forward to engaging you along the way as 

we have different issues to pursue. 

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This hearing’s record will remain open until the close of business 

tomorrow. 

And, with the thanks of the committee, this hearing is adjourned. 

[Whereupon, at 4:20 p.m., the hearing was adjourned.] 

Æ 

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